Exhibit 10.1

 

CONFIDENTIAL TREATMENT REQUESTED

 

 

 

 

LICENSE AGREEMENT

by and between

Eli Lilly and Company and

CERECOR INC.

 

 

 

 

 

Effective Date of September 08, 2016

 

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (this “Agreement”), effective as of this 8th day of
September,  2016 (the “Effective Date”), is by and between Eli Lilly and Company
(“Lilly”), and Cerecor Inc. (“Cerecor”), a corporation organized and existing
under the laws of Delaware (hereinafter referred to as “Licensee”).   Lilly and
Licensee are sometimes referred to herein individually as a “Party” and
collectively as the “Parties”.  

 

WHEREAS, Lilly and its Affiliates have discovered and developed the
Transmembrane AMPA Receptor Regulatory Protein (TARP) gamma-8-dependent AMPA
receptor antagonist designated as LY3130481;  

 

WHEREAS, Licensee desires to develop and commercialize LY3130481; and

 

WHEREAS, Licensee and Lilly desire to enter into a license arrangement whereby
Licensee will develop and commercialize LY3130481.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, Licensee and Lilly hereby agree as follows:

 

 

Article I - DEFINITIONS

 

As used in this Agreement, the following capitalized terms, whether used in the
singular or plural, shall have the respective meanings set forth below:

 

1.01 “Affiliate” shall mean any individual or entity directly or indirectly
controlling, controlled by or under common control with a Party to this
Agreement.  For purposes of this Agreement, the direct or indirect ownership of
fifty percent (50%) or more of the outstanding voting securities of an entity,
or the right to receive fifty percent (50%) or more of the profits or earnings
of an entity, shall be deemed to constitute control.  Such other relationship as
in fact results in actual control over the management, business and affairs of
an entity shall also be deemed to constitute control. 

 

1.02 “Calendar Quarter” shall mean the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30 and
December 31, for so long as this Agreement is in effect.

 

1.03 “Calendar Year” shall mean each successive period of twelve (12) months
commencing on January 1 and ending on December 31, for so long as this Agreement
is in effect.

 

1.04 “Change of Control” shall mean with respect to a Party:  (a) the sale to a
Third Party of all or substantially all of such Party’s assets and business; (b)
a merger, reorganization or consolidation involving such Party and a Third Party
in which the voting securities of such Party outstanding immediately prior
thereto ceases to represent at least fifty percent (50%) of the combined voting
power of the surviving entity immediately after such merger, reorganization or
consolidation; or (c) a person or entity, or group of persons or entities,
acting in concert acquire more than fifty percent (50%) of the voting equity
securities or management control of such Party.  Notwithstanding the foregoing,
a Change of Control shall not be deemed to occur (i) on account of the
acquisition of securities of a Party by any institutional investor, or affiliate
thereof, or similar investor, that acquires the Party’s securities in a
transaction or series of related transactions that are primarily a private
financing transaction of the Party or (ii) a sale of assets, merger, or other
transaction effected exclusively for the purpose of

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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changing domicile of the Party.  For clarity, any public offering of a Party’s
equity securities shall not be deemed to be a Change of Control.

 

1.05 “Clinical Trial” shall mean a Phase I Clinical Trial, Phase II Clinical
Trial, Phase III clinical Trial, Phase IIIb Clinical Trial and/or post-approval
clinical trial. 

 

 

1.06 “Commercialization” or “Commercialize” shall mean, with respect to Licensed
Product, any and all activities directed to the marketing, promotion,
distribution, offering for sale and selling of such product, importing and
exporting such product for sale, and interacting with Regulatory Authorities
regarding the foregoing.  Commercialization shall also include Commercialization
Studies.  “Commercialize” has a correlative meaning.

 

1.07 “Commercialization Studies” shall mean a study or data collection effort
for the Licensed Product that is initiated in the Territory after receipt of
Marketing Authorization for the Licensed Product and is principally intended to
support the Commercialization of the Licensed Product in the Territory;
provided, that such study or data collection effort is not principally to
support or maintain a Marketing Authorization or obtain a label change or
maintain a label.

 

1.08 “Commercially Reasonable Efforts” shall mean, with respect to the
performance of obligations or tasks of a Party, the level of efforts and
resources, normally used by a similarly situated biopharmaceutical company in
the exercise of its reasonable discretion relating to the Development or
commercialization of a product, in each case owned by it or to which it has
exclusive rights, having similar technical and regulatory factors and similar
market potential, profit potential and strategic value, and that is at a similar
stage in its Development or product life cycle as the Licensed Product, taking
into account issues of patent coverage, safety and efficacy, product profile,
competiveness of the marketplace, proprietary position, and profitability
(including pricing and reimbursement). 

 

1.09 “Compliance” shall mean the adherence by the Parties in all material
respects to all applicable laws and Party Specific Regulations, in each case
with respect to the activities to be conducted under this Agreement.

 

1.10 “Development” or “Develop” shall mean all preclinical research and
development activities and all clinical drug development activities, including,
among other things: drug discovery, toxicology, formulation, statistical
analysis and report writing, conducting clinical trials for the purpose of
obtaining  and maintaining Marketing Authorization (including without
limitation, post-marketing studies), and regulatory affairs related to all of
the foregoing.  Development shall include all clinical studies (including Phase
III-B) that are primarily intended to support or maintain a Marketing
Authorization, maintain a label or obtain any label change, but shall exclude
Commercialization Studies.

 

1.11 “Field” shall mean the prevention, diagnosis and/or treatment of all
disease in humans.

 

1.12 “First Commercial Sale” shall mean, with respect to a particular Licensed
Product in a particular country in the Territory, the first commercial sale of
such Licensed Product to a Third Party for end use or consumption in such
country in an arm’s length transaction by Licensee, its Affiliates or
sublicensee in the Field after the receipt of Marketing Authorization in such
country.  Sales for test marketing, sampling and promotional uses, Clinical
Trial purposes or compassionate or similar use shall not be considered to
constitute a First Commercial Sale.

 

1.13 “Generic Product” means, with respect to a particular Licensed Product in a
country, a generic or biosimilar pharmaceutical product, that is not produced,
licensed or owned by Licensee or any of

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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its Affiliates, that: (a) contains the same, or a bioequivalent of the, active
ingredient as a Licensed Product; and (b) is approved for use in such country by
a regulatory authority through a regulatory pathway by referencing clinical data
first submitted for obtaining regulatory approval for such Licensed
Product.  Generic Product includes any pharmaceutical products obtained via a
bioequivalence or bioavailability showing such as those covered by section
505(b)(2) or under 505(j) of the U.S. Federal Food, Drug, and Cosmetic Act or an
equivalent outside the United States.

 

1.14 “Good Clinical Practices” shall mean the then current Good Clinical
Practices as such term is defined from time to time by the United States Food
and Drug Administration (“FDA”), or analogous set of regulations, guidelines or
standards as defined by other relevant Regulatory Authority having jurisdiction
over the Development, Manufacture or sale of Licensed Product in a particular
jurisdiction of the Territory, if and to the extent the Development, Manufacture
or sale of Licensed Product takes place in such jurisdiction.

 

1.15 “Good Laboratory Practices” shall mean the then current good laboratory
practice regulations of the FDA as described in the United States Code of
Federal Regulations (“CFR”) or analogous set of regulations, guidelines or
standards as defined by other relevant Regulatory Authority having jurisdiction
over the Development, Manufacture or sale of Licensed Product in a particular
jurisdiction of the Territory, if and to the extent the Development, Manufacture
or sale of Licensed Product takes place in such jurisdiction.

 

1.16 “Good Manufacturing Practices” shall mean the then current Good
Manufacturing Practices as such term is defined from time to time by the FDA or
analogous set of regulations, guidelines or standards as defined by other
relevant Regulatory Authority having jurisdiction over the Development,
Manufacture or sale of Licensed Compound or Licensed Product in a particular
jurisdiction of the Territory, if and to the extent the Development, Manufacture
or sale of Licensed Compound or Licensed Product takes place in such
jurisdiction.

 

1.17 “Government Official” shall mean (i) an officer, or employee of: (a) a
government, or any department or agency thereof; (b) a government-owned or
controlled company, institution, or other entity, including a government-owned
hospital or university; or (c) a public international organization (such as the
United Nations, the International Monetary Fund, the International Committee of
the Red Cross, and the World Health Organization), or any department or agency
thereof; (ii) any political party or party official or candidate for public or
political party office; and (iii) any person acting in an official capacity on
behalf of any of the foregoing. 

 

1.18 “IND” shall mean an investigational new drug application with respect to
the Licensed Product filed with the FDA for beginning Clinical Trials in humans,
or any comparable application filed with the Regulatory Authorities of a country
other than the United States prior to beginning Clinical Trials in humans in
that country, as well as all supplements or amendments filed with respect to
such filings. 

 

1.19 “Internal Compliance Codes” shall mean a Party’s internal policies and
procedures intended to ensure that a Party complies with applicable laws, Party
Specific Regulations, and such Party’s internal ethical, medical and similar
standards.    

 

1.20 “Transmembrane AMPA Receptor Regulatory Protein (TARP) gamma-8-dependent
AMPA Receptor Antagonist”  shall mean an AMPA
 (α-amino-3-hydroxy-5-methyl-4-isoxazolepropionic acid) receptor antagonist or
inverse agonist which selectively targets transmembrane AMPA receptor regulatory
protein (TARP) gamma-8-dependent AMPA .

 

1.21 “Know-How” shall mean scientific and technical information, trade secrets
and data used or generated and owned or controlled, by a Party or on behalf of a
Party, which are based on, derived

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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from, or are directed to the Lilly Patent Rights with respect to Lilly Know-How,
Licensee Patent Rights with respect to Licensee Know-How, Licensed Compounds or
Licensed Products, or the manufacture or use of the foregoing, that are not in
the public domain, including but not limited to (a) unpatented ideas,
discoveries, inventions, or improvements, (b) information related to methods,
procedures, formulas, processes, tests, assays, techniques, regulatory
requirements and strategies useful in the development, testing, or analysis of
the Licensed Compounds or Licensed Products, (c) medicinal chemistry, medical,
pre-clinical, toxicological biological, chemical, pharmacological, safety,
manufacturing and quality control data or other scientific data and information
related thereto, and (iv) drawings, plans, designs, diagrams, sketches,
specifications or other documents containing or relating to such information.  

 

1.22 “Licensee” shall have the meaning given to such term in the preamble of
this Agreement.

 

1.23 “Licensee Know-How” shall mean Know-How developed by Licensee and/or any of
its Affiliates or sublicensees after the Effective Date pursuant to this
Agreement that is necessary for the Development, Commercialization or
Manufacture of Licensed Compound or Licensed Product.

 

1.24 “Licensee Patent Rights” shall mean those patents and patent applications
including all (a) continuations, continuations-in-part, divisionals and
substitute applications with respect to any such patent applications; (b)
patents issued based on or claiming priority to any such patent applications;
(c) any reissue, reexamination, renewal, extension (including any supplemental
protection certificate) or restoration of any such patents; (d) any confirmation
patent or registration patent or patent of addition based on any such patents;
(e) foreign counterparts and (f) any other patents and patent applications that
dominate the foregoing patents, that (x) are owned by Licensee as of the
effective date of termination of this Agreement, and (y) claim the Licensed
Compound or Licensed Product or their use, composition, formulation, preparation
or manufacture. 

 

1.25 “Licensed Compound” shall mean those compounds listed in Schedule 1.25,
including salts, esters, metabolites, prodrugs, acid forms, base forms,
steroisomers, racemates, tautomers, polymorphs, solvates, hydrates, crystalline
forms,  isotopic or radiolabeled equivalents, clathrates, hemihydrates,
anhydrides, chelates, conformers, congeners, amorphous solids, isomers,
enantiomers, conjugates, and complexes thereof. 

 

1.26 “Licensed Product” shall mean: 

 

(a)

any product containing a Licensed Compound which is covered in whole or in part
by any Valid Patent Claim of the Lilly Patent Rights;

(b)

any product containing a Licensed Compound, the manufacture or use of which is
covered in whole or in part by any Valid Patent Claim of the Lilly Patent
Rights; and

(c)

any pharmaceutical product containing a Licensed Compound, including all dosage
forms, formulations and line extensions thereof, including, without limitation,
a Combination Product, except in the context of the calculation of Net Sales
which is specifically addressed in Section 1.32.  For avoidance of any doubt and
notwithstanding anything to the contrary in this Agreement, the license granted
under Section 2.01 of this Agreement with respect to Combination Product is
limited to only the License Compound contained in such Combination Product and
does not grant or convey any rights with respect to any other compound or
ingredient that may be included in such Combination Product. 

 

1.27 “Lilly” shall have the meaning given to such term in the preamble to this
Agreement.

 

1.28 “Lilly Know-How” shall mean the Know-How (a) owned or controlled by Lilly
and/or any of its Affiliates as of the Effective Date, and/or (b) controlled by
Lilly pursuant to a written agreement

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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between Lilly and a Third Party executed during the Term for which Licensee has
elected to pay Third Party License Expenses in accordance with Section 2.06, in
each of (a) and (b) that was (i) used or generated by or on behalf of Lilly or
its Affiliates prior to the Effective Date in the Development or Manufacture of
Licensed Compound or Licensed Product or (ii) that is reasonably necessary for
the Development, Commercialization or Manufacture of Licensed Compound or
Licensed Product.  Lilly Know-How shall include without limitation the Know-How
that is listed on Schedule 1.28 or is otherwise provided to Licensee by Lilly
under this Agreement.  

 

1.29 “Lilly Patent Rights” shall mean solely (a) those patents and patent
applications listed in Schedule 1.29, and/or (b) those patent and patent
applications controlled by Lilly pursuant to a written agreement between Lilly
and a Third Party executed during the Term for which Licensee has elected to pay
Third Party License Expenses in accordance with Section 2.06, and in the case of
(b) all of Lilly’s rights together with all inventions disclosed or claimed
therein or covered thereby but only to the extent such rights or inventions are
reasonably necessary for the Development, Commercialization or Manufacture of
Licensed Compound or Licensed Product including all (i) continuations,
continuations-in-part, divisionals and substitute applications with respect to
any such patent applications; (ii) patents issued based on or claiming priority
to any such patent applications; (iii) any reissue, reexamination, renewal,
extension (including any supplemental protection certificate) or restoration of
any such patents; (iv) any confirmation patent or registration patent or patent
of addition based on any such patents; (v) foreign counterparts and (vi) any
other patents and patent applications that dominate the foregoing patents.

 

1.30 “Major European Country” shall mean each of France, Germany, Italy, Spain
or the United Kingdom.

 

1.31 “Manufacture” shall mean all activities related to the manufacturing of a
pharmaceutical product, or any ingredient thereof, including but not limited to
test method development and stability testing, formulation, process development,
manufacturing for use in non-clinical or clinical studies, manufacturing
scale-up, manufacturing Licensed Compound or Licensed Product quality
assurance/quality control development, quality control testing (including
in-process release and stability testing), packaging, release of product or any
component or ingredient thereof, quality assurance activities related to
manufacturing and release of product, distribution and regulatory activities
related to all of the foregoing.

 

1.32 “Marketing Authorization” shall mean, with respect to each country in the
Territory, the receipt of all approvals from the relevant Regulatory Authority
necessary to market and sell a Licensed Product in any country (including
without limitation all applicable Price Approvals even if not legally required
to sell Licensed Product in a country).

 

1.33 “Multiple Ascending Dose (MAD) Study” shall mean a study to  investigate
the pharmacokinetics, pharmacodynamics, safety and tolerability of multiple
doses of Licensed Product

 

1.34 “NDA” shall mean a New Drug Application, Marketing Application
Authorization, filing pursuant to Section 510(k) of the of the Food, Drug and
Cosmetic Act, or similar application or submission for Marketing Authorization
of a Licensed Product filed with a Regulatory Authority to obtain Marketing
Authorization for a pharmaceutical or diagnostic product in that country or in
that group of countries.

 

1.35 “Net Sales” shall mean with respect to a Licensed Product, the gross amount
invoiced by Licensee (including a Licensee Affiliate) or any sublicensee thereof
to unrelated Third Parties, excluding any sublicensee, for the Licensed Product
in the Territory, less the following items consistent with U.S. Generally
Accepted Accounting Principles consistently applied:

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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a)     Trade, quantity, and cash discounts allowed;

b)     Discounts, refunds, rebates, chargebacks, retroactive price adjustments,
and any other allowances which effectively reduce the net selling price;

c)     Licensed Product returns, rejections, damaged goods and allowances;

d)     Allowance for distribution expenses * * * *;

e)     The annual fee imposed on the pharmaceutical manufacturers by the U.S.
government;

f)     A reasonable allowance for uncollectible or bad debts; and

g)     Tariffs, duties, excise, sales, value-added and other similar taxes
(other than taxes based on income), customs duties or other government charges,
in each case imposed on the sale of Licensed product to the extent included in
the price and separately itemized on the invoice, including VAT, but only to the
extent that such VAT are not reimbursable or refundable.

 

Disposition of Licensed Product for, or use of the Licensed Product in, clinical
trials or other scientific testing, as free samples, or under compassionate use,
patient assistance, or test marketing programs or other similar programs or
studies where a Licensed Product is supplied without any charge shall not result
in any Net Sales.

 

Such amounts shall be determined from the books and records of Licensee,
affiliates of Licensee or any sublicensee maintained in accordance with U. S.
Generally Accepted Accounting Principles consistently applied.  Licensee further
agrees in determining such amounts, it will use Licensee’s then current standard
procedures and methodology, including Licensee 's then current standard exchange
rate methodology for the translation of foreign currency sales into U.S.
Dollars.

 

In the event that the Licensed Product is sold as part of a Combination Product
(where “Combination Product” means any pharmaceutical product which comprises
the Licensed Product and other pharmaceutically active compound(s) and/or
ingredients), the Net Sales of the Licensed Product, for the purposes of
determining royalty payments, shall be determined by multiplying the Net Sales
of the Combination Product (as defined in the standard Net Sales definition) by
the fraction, A / (A+B) where A is the weighted average sale price of the
Licensed Product when sold separately in finished form, and B is the weighted
average sale price of the other product(s) sold separately in finished form.

 

In the event that the weighted average sale price of the Licensed Product can be
determined but the weighted average sale price of the other product(s) cannot be
determined, Net Sales for purposes of determining royalty payments shall be
calculated by multiplying the Net Sales of the Combination Product by the
fraction A / C where A is the weighted average sale price of the Licensed
Product when sold separately in finished form and C is the weighted average sale
price of the Combination Product.

 

In the event that the weighted average sale price of the other product(s) can be
determined but the weighted average sale price of the Licensed Product cannot be
determined, Net Sales for purposes of determining royalty payments shall be
calculated by multiplying the Net Sales of the Combination Product by the
following formula:  one (1) minus (B / C) where B is the weighted average sale
price of the other product(s) when sold separately in finished form and C is the
weighted average sale price of the Combination Product.

 

In the event that the weighted average sale price of both the Licensed Product
and the other product(s) in the Combination Product cannot be determined, the
Parties shall negotiate in good faith and agree on another, commercially
reasonable means of calculating Net Sales with respect to such Combination
Product that fairly reflects the relative contribution, to the total market
value of such Combination Product, of the Licensed Product in the Combination
Product.

 

The weighted average sale price for a Licensed Product, other product(s),
or Combination Product

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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shall be calculated once each Calendar Year and such price shall be used during
all applicable royalty reporting periods for the entire following Calendar
Year.  When determining the weighted average sale price of a Licensed Product,
other product(s), or Combination Product, the weighted average sale price shall
be calculated by dividing the sales dollars (translated into U.S. dollars) by
the units of active ingredient sold during the twelve (12) months (or the number
of months sold in a partial calendar year) of the preceding Calendar Year for
the respective Licensed Product, other product(s), or Combination Product.  In
the initial Calendar Year, a forecasted weighted average sale price will be used
for the Licensed Product, other product(s), or Combination Product. Any over or
under payment due to a difference between forecasted and actual weighted average
sale prices will be paid or credited in the first royalty payment of the
following Calendar Year.

 

1.36 “Party” or “Parties” shall have the meaning given to such term in the
preamble to this Agreement.

 

1.37 “Party Specific Regulations” shall mean all judgments, decrees, orders or
similar decisions issued by any Government Official specific to a Party, and all
consent decrees, corporate integrity agreements, or other agreements or
undertakings of any kind by a Party with any Government Official, in each case
as the same may be in effect from time to time and applicable to a Party’s
activities contemplated by this Agreement.

 

1.38 “Phase I Clinical Trial” shall mean a clinical trial of a Licensed Product
in human patients at single and multiple dose levels with the primary purpose of
determining safety, metabolism, and pharmacokinetic and pharmacodynamic
properties of such Licensed Product, and which is consistent with 21 U.S. CFR §
312.21(a). For the avoidance of doubt, a Phase I Clinical Trial may include
studies of the Licensed Compounds with chemotherapy agents to determine
combination doses thereof.

 

1.39 “Phase II Clinical Trial” shall mean a clinical trial of a Licensed Product
in human patients, the principal purposes of which are to make a preliminary
determination that the Licensed Product is safe for its intended use, to
determine its optimal dose, and to obtain sufficient information about such
Licensed Product’s efficacy to permit the design of Phase III Trials, and which
is consistent with 21 U.S. CFR § 312.21(b).

 

1.40 “Phase III Clinical Trial” shall mean a clinical trial of a Licensed
Product in human patients, which trial is designed (a) to establish that the
Licensed Product is safe and efficacious for its intended use, (b) to define
warnings, precautions and adverse reactions that are associated with such
Licensed Product in the dosage range to be prescribed, (c) to be, either by
itself or together with one or more other Clinical Trials having a comparable
design and size, the final human Clinical Trial in support of Marketing
Authorization of such Licensed Product, and (d) consistent with 21 U.S. CFR §
312.21(c). “Phase III Trial” shall not include a Phase IIIb Trial.

 

1.41 “Phase IIIb Clinical Trial” shall mean a clinical trial of a Licensed
Product in human patients, which provides for product support (i.e., a clinical
trial which is not required for receipt of initial Marketing Authorization but
which may be useful in providing additional drug profile data or in seeking a
label expansion) commenced before receipt of Marketing Authorization for the
indication for which such trial is being conducted.

 

1.42 “Price Approval” shall mean the approval or determination by a Regulatory
Authority for the pricing or pricing reimbursement for a pharmaceutical product.

 

1.43 “Proprietary Information” shall mean, as applicable, unpublished patent
applications, Know-How and all other scientific, clinical, regulatory,
marketing, financial and commercial information or data, whether communicated in
writing, verbally or electronically, that is provided by one Party to the

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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other Party in connection with this Agreement.  All Know-How and other
information disclosed by or on behalf of either Party pursuant to the Mutual
Confidential Disclosure Agreement between Lilly and Licensee dated September 25,
2014 (the “Confidentiality Agreement”) shall be deemed to be Party’s Proprietary
Information disclosed hereunder.  The Parties agree that, effective as of the
Effective Date, the Confidentiality Agreement shall be terminated, and
superseded by this Agreement in its entirety.

 

1.44 “Regulatory Authority” shall mean any United States federal, state, or
local government, or any foreign government, or political subdivision thereof,
or any multinational organization or authority or any authority, agency or
commission entitled to exercise any administrative, executive, judicial,
legislative, police, regulatory or taxing authority or power, any court or
tribunal (or any department, bureau or division thereof), or any governmental
arbitrator or arbitral body with responsibility for granting licenses or
approvals, including Marketing Authorizations, necessary for the marketing and
sale of the Licensed Product in any country.

 

1.45 “Related Party” shall mean each of Licensee, its Affiliates, and their
respective sublicensees (which term does not include distributors), as
applicable.

 

1.46  “Territory” shall mean the entire world.

 

1.47 “Third Party” shall mean an entity other than Lilly and its Affiliates and
Licensee and its Related Parties.

 

1.48 “Valid Patent Claim” shall mean a claim of an issued and unexpired patent
included within the Lilly Patent Rights, that has not been revoked or held
unenforceable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, unappealable or unappealed within the time allowed
for appeal, and that has not been disclaimed, denied or admitted to be invalid
or unenforceable through reissue or disclaimer.

 

 

Article II - LICENSE

 

2.01 License Grant.  Subject to the terms and conditions of this Agreement,
Lilly hereby grants to Licensee and its Affiliates an exclusive, even as to
Lilly and its Affiliates,  transferrable as provided herein, royalty bearing
license in the Territory in the Field, with the right to grant sublicenses
(through multiple tiers) as provided herein, under the Lilly Patent Rights and
the Lilly Know-How to research, develop, make, have made, use, import, offer for
sale and sell the Licensed Compounds and Licensed Products in the Field in the
Territory during the Term.  Notwithstanding anything to the contrary in this
Agreement, Lilly retains rights under Lilly Patent Rights and Lilly Know-How for
internal, non-clinical research purposes.

 

2.02 No Non-Permitted Use.  Licensee hereby covenants that it shall not, nor
shall it cause or authorize, provide material support to or encourage any
Affiliate or sublicensee to knowingly use or practice, directly or indirectly,
any Lilly Know-How or Lilly Patent Rights for any purposes other than those
expressly permitted by this Agreement.

 

2.03 No Other Licenses.  Neither Party grants to the other Party any rights or
licenses in or to any intellectual property, whether by implication, estoppel,
or otherwise, other than the license rights that are expressly granted under
this Agreement.

 

2.04 Sublicenses. Beginning after the * * * * of the Effective Date, Licensee
may sublicense its rights under Section 2.01 to one or more Third Parties, to
the extent necessary or useful to enable such Third Parties to research,
develop, make, have made, use, import, offer for sale or sell Licensed
Compound(s)

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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or Licensed Product(s) in the Field in the Territory, and subject to the
conditions of this Section 2.04. Any such sublicenses granted hereunder shall
survive termination of this Agreement as further described in this Section 2.04.
 

 

(a)

Licensee shall remain responsible for its sublicensees' performance under this
Agreement.

 

(b)

Licensee shall provide, in the Development Report required pursuant to Section
3.03, a list of any sublicensees granted a sublicense during the preceding
twelve (12) months.  At Lilly's request, Licensee shall provide to Lilly a copy
of any sublicense agreement.

 

(c)

Each and every sublicense granted by Licensee to a sublicensee must be in a
written agreement, in English, executed by the sublicensee and giving its place
of business.  In addition, each and every such sublicense must be consistent
with those terms of this Agreement which are applicable to that portion of the
Field and/or Territory to which the sublicensee has been granted rights,
including, without limitation, must require the sublicensee to abide by
confidentiality and non-use obligations at least as stringent as those contained
in Article IX of this Agreement.

 

(d)

In the event that that this Agreement is terminated in its entirety by Licensee
pursuant to Section 12.02 or Lilly for any reason as permitted under the
Agreement, each sublicense granted by Licensee will survive such termination (as
a direct license from Lilly) on the terms and conditions of this Agreement (but
with the scope and limitations of any sublicense granted by Licensee, such as
territory, field and other limitations).

 

2.05 Exclusivity. For a period of * * * * following the Effective Date, Lilly
shall not, and shall ensure that none of its Affiliates will, either by itself
or through collaboration with a Third Party, conduct human clinical studies,
manufacture or commercialize anywhere in the Territory any product containing or
comprising a selective Transmembrane AMPA Receptor Regulatory Protein (TARP)
gamma-8-dependent AMPA Receptor Antagonist (such product, a “Competing
Product”).  In the event that Lilly acquires, is acquired by or merges with a
Third Party that is engaged in active development or commercialization of a
Competing Product at the closing of such acquisition or merger, then Lilly shall
not be deemed to be in breach of this Section 2.05 with respect to any such
Competing Product, and the terms of this Section 2.05 will not apply in any way
to limit or restrict, by or on behalf of a Party or its Affiliates, the
development, use, manufacture, marketing, sale, promotion or commercialization
of any such Competing Product that as of the date immediately prior to the
closing of such acquisition or merger was controlled by such Third Party. 

 

2.06 Third Party Licenses.  During the Term, if Lilly obtains a license for any
Patent rights or Know-how from a Third Party that would be  necessary for the
Development, Commercialization or Manufacture of License Compound or License
Product for which payments would be due to such Third Party on account of such
license, then Lilly, provided it has the legal right to do so, shall notify
Licensee, identifying the relevant patent rights or Know-how.  If Licensee
provides Lilly with written notice in which (a) Licensee consents to including
such patent rights or Know-how as Lilly Patent Rights or Lilly Know-How under
this Agreement and (b) Licensee agrees to be responsible for (i) all royalty
payments due on account of a Licensed Product and all other current and future
payments specific to one or more License Products, and (ii) its pro rata share
of current and future payments which are reasonably applicable to both Licensed
Products and other products or services offered by Lilly or its licensees of
such patents rights and/or Know-How, in each of (i) and (ii) due to such Third
Party on account of the use of such patent rights or Know-how in connection with
the use, sale, offer for sale, importation, and development, manufacture or
commercialization of any Licensed Compound or Licensed Product in the
Field  (“Third Party License Expenses”), then, if legally permissible, such
patent rights or Know-how, as applicable, will be deemed Lilly Patent Rights or
Lilly Know-How

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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hereunder, as applicable.  Licensee shall have the discretion to terminate its
license under the Third Party License at any time and upon thirty (30) days’
written notice to Lilly provided that Licensee shall be responsible for all
Third Party License Expenses due and owing prior to the effective date of such
termination and shall be responsible for a proportional share of any subsequent
liability to the extent directly resulting from such termination.   For purposes
of clarity, upon the effective date of such termination, such patent rights and
know-how shall not be Lilly Patent Rights or Lilly Know-How.  

 

2.07 Section 365(n) of the Bankruptcy Code.  All rights and licenses granted
under or pursuant to any section of this Agreement are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code,
licenses of rights to “intellectual property” as defined under Section 101(35A)
of the Bankruptcy Code.  Each Party shall retain and may fully exercise all of
its rights and elections under the Bankruptcy Code or equivalent legislation in
any other jurisdiction.  Upon the bankruptcy of either Party, the other Party
shall further be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property, and such, if not already in its
possession, shall be promptly delivered to such other Party, unless the Party in
bankruptcy elects to continue, and continues, to perform all of its obligations
under this Agreement.

 

 

Article III – DEVELOPMENT AND COMMERCIALIZATION

 

3.01 Overview.  As of the Effective Date,  Licensee shall be solely responsible
for the Development and Commercialization, including all costs thereof, of the
Licensed Product in the Field in the Territory.  Licensee shall perform all of
its Development activities consistent with the IND for the Licensed Product and
in shall perform all of its Development and Commercialization activities
accordance with all applicable laws, rules and regulations.

 

3.02 Development and Commercialization Plans.

 

(a)

Initial Development Plan.  An initial Development plan for the Licensed Product
in the Field in the Territory is attached hereto as Attachment 3.02(a) (as may
be amended in accordance with this Agreement, the “Development Plan”). 

 

(b)

Annual Development Plan.  Not later than sixty  (60) days after December 31 of
each Calendar Year, Licensee shall submit to Lilly an updated Development Plan
for the pending Calendar Year.  Such update shall take into account the
anticipated Development activities, for the applicable development period, of
Licensee or a Related Party for the Development of Licensed Product in the
Field.  Lilly shall have the right to comment on such annual plan, provided,
however, that Licensee shall not be obligated to incorporate such Lilly comments
and Licensee retains final decision making authority with respect to all such
plans. 

 

(c)

Performance.  Licensee shall perform, and shall ensure that its Affiliates,
sublicensees, and Third Party contractors perform, the activities described in
the Development Plan in a professional manner and in compliance with, to the
extent applicable, Good Laboratory Practices, Good Clinical Practices and/or
Good Manufacturing Practices and in compliance with all other applicable laws,
rules, and regulations.

 

3.03 Development Reports.  Licensee shall submit to Lilly, every twelve  (12)
 months after the Effective Date until the First Commercial Sale, a written
report in reasonably sufficient detail describing the research, development and
manufacturing progress of Licensee or a Related Party for Licensed Compounds
and/or Licensed Products during the previous twelve (12) month period, as well
as a list of any sublicensees granted during the preceding twelve  (12)
 months.  All such reports shall be considered Proprietary Information of
Licensee.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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3.04 Commercialization.  Licensee shall provide Lilly with the anticipated
commercial launch of each Licensed Product in a country for which NDA (or
foreign equivalent) and Marketing Authorization has been obtained.   

 

3.05 Commercialization Reports.  Licensee shall submit to Lilly, every twelve
(12) months after First Commercial Sale of a Licensed Product, a written report
in reasonably sufficient detail describing the general commercialization
progress of Licensee or a Related Party for Licensed Compounds and/or Licensed
Products during the previous twelve (12) month period, including a list all
ongoing Commercialization Studies and the status of such studies in the United
States, the Major European Countries and Japan.   

 

3.06 * * * *

 

3.07 Subcontracting.  Consistent with the provisions of this Agreement and
subject to compliance with Section 9.01(d), Licensee may perform any activities
in support of its development and commercialization of Licensed Compounds and
Licensed Products through subcontracting to its Affiliates or Third Parties,
including Third Party subcontractors, contract service organizations, and
academic or government collaborators.

 

 

Article IV – TRANSFER OF LILLY KNOW-HOW & EXISTING STUDIES

 

4.01 Materials and Regulatory Filings Transfer.     

 

(a)

Promptly following the Effective Date, but in any event, within * * * * thereof:
(i) Lilly will provide Licensee with the Licensed Compounds listed in Schedule
1.25 and Lilly Know-How listed in Schedule 1.28; and (ii) Lilly shall transfer
to Licensee, in a mutually agreed manner, the quantities of available physical
inventory of Licensed Compounds solely as listed in Schedule 1.25 and shall
inform Licensee in writing as to the lot numbers and quantities of such physical
inventory that were made and stored in compliance with Good Manufacturing
Practices; provided that the quantities listed are general guidance estimates
only of the amounts currently anticipated to be available.  Licensee shall not
use such inventory for clinical or commercial purposes, except to the extent
that the inventory was made an stored in compliance with Good Manufacturing
Practices and is recertified and/or re-purified and certified as compliant prior
to such clinical or commercial use. Lilly shall have no responsibility to
recertify or re-test any physical inventory to be provided under the Agreement,
including if it is beyond its dating period (i.e., the material may require
additional stability data and/or analytical testing and/or re-purified prior to
use.  Lilly shall provide the reports and data as described in Schedule 1.28 in
a single copy in electronic format if available otherwise in paper.  Lilly shall
be responsible for the costs associated with transfer of Lilly Know-How subject
to Section 4.02 below. 

 

 

(b)

Promptly following the Effective Date, Lilly shall transfer to Licensee one (1)
copy of the material documents and records that have been generated by or on
behalf of Lilly with respect to any planned INDs and other drug approval
applications covering the Licensed Product in the Territory, as well as any
material correspondence between Lilly and Regulatory Authorities related to
Licensed Product in electronic format if available. 

 

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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(c)

In the event that any Regulatory Authority (a) threatens or initiates any action
to remove a Licensed Product from the market in any country in the Field in the
Territory or (b) requires Licensee, its Affiliates, or its sublicensees to
distribute a “Dear Doctor” letter or its equivalent regarding use of Licensed
Product in the Field, Licensee shall notify Lilly of such event within three (3)
business day after Licensee becomes aware of the action, threat, or requirement
(as applicable).  Licensee shall keep Lilly reasonably informed with respect to
any recall or withdrawal of Licensed Product in the U.S., Japan, or a Major
European Country; provided, however, that the final decision as to whether to
recall or withdraw a Licensed Product in the Territory shall be made by Licensee
in its sole discretion.  Licensee shall be responsible, at its sole expense, for
conducting any recalls or taking such other necessary remedial action.  Lilly
shall, at the request and reasonable expense of Licensee, cooperate with
Licensee (including providing assistance and support) on any recall or
withdrawal of Licensed Product to the extent necessary to comply with applicable
laws, rules and regulations or any requirements by the Regulatory Authority.

 

4.02 Transfer of Know-How.  Lilly shall, pursuant to Section 4.01(a), transfer
to Licensee, or a Third Party manufacturer designated by Licensee, all Lilly
Know-How that is reasonably necessary or useful to enable Licensee or its Third
Party manufacturer to Manufacture the Licensed Compound or Licensed Product. In
addition, as reasonably requested by * * * *.

 

 

 

Article V - DILIGENCE

 

5.01 Generally.  Licensee shall use Commercially Reasonable Efforts to Develop
and Commercialize (following Regulatory Approval) at least one Licensed Compound
or Licensed Product in the Field in the United States, a Major European Country
or Japan, whether alone or with or through one (1) or more Related Party.  

(a)

Licensee shall be responsible for overseeing, monitoring and coordinating all
regulatory actions, communications and filings with, and submissions to, the FDA
and other Regulatory Authorities in the Territory with respect to Licensed
Product. 

 

(b)

Licensee shall be solely responsible for interfacing, corresponding and meeting
with the FDA and other regulatory authorities throughout the Territory with
respect to Licensed Product. 

 

Pharmacovigilance and Product Complaints.

 

(a)

Licensee shall be solely responsible for the collection, review, assessment,
tracking and filing of information related to adverse events (“AEs”) associated
with Licensed Product, in accordance with 21 CFR 312.32, 314.80 and comparable
regulations, guidance, directives and the like governing AEs associated with
Licensed Product that are applicable outside of the United States. 

 

(b)

Licensee shall assume responsibility for maintaining a global safety database
for Licensed Product consistent with industry practices.

 

(c)

Licensee will be responsible to notify Lilly of any product complaints (non-AEs)
associated with material supplied by Lilly.  Lilly will be responsible to
support the investigation of the product complaints as it relates to the
activities conducted by Lilly and share the results of the investigation with
Licensee.

 

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

5.02 Understanding Regarding Diligence.  It is understood and agreed that the
obligation of Licensee to use Commercially Reasonable Efforts with respect to
the development of any specific Licensed Compound or Licensed Product under
Section 5.01 of this Agreement is expressly subject to the continuing absence of
any materially adverse condition or event relating to the safety or efficacy of
the Licensed Compound or Licensed Product, and the specific tasks that Licensee
shall undertake to develop or market any such Licensed Compound or Licensed
Product, in compliance with such Commercially Reasonable Efforts obligation,
shall be modified or delayed as may be required in Licensee’s reasonable opinion
in order to address any such materially adverse condition or event so long as
any such condition or event exists.  

 

 

   

Article VI – MANUFACTURING

 

6.01 Manufacturing Responsibility.  After the Effective Date, Licensee will be
responsible for the manufacturing and any ongoing or future stability studies
related to the Licensed Compound and Licensed Product for use by Licensee, its
Affiliates and its sublicensees in the Field in the Territory. 

 

 

Article VII - PAYMENTS; ROYALTIES AND REPORTS

 

7.01 Consideration for License.  In consideration for the license granted
hereunder, Licensee shall pay to Lilly a non-refundable, non-creditable, upfront
payment of two million U.S. dollars ($2,000,000), of which seven hundred fifty
thousand U.S. dollars ($750,000) shall be due within thirty (30) days of the
Effective Date of this Agreement, and the remaining balance of one million two
hundred fifty thousand U.S. dollars ($1,250,000) payable within thirty (30) days
after the first subject dosed with a  Licensed Product in a Multiple Ascending
Dose (MAD) study.  

 

7.02 Milestone Payments.    

 

(a)

Development and Commercialization Milestone Payments. Subject to the terms and
conditions of this Agreement and in further consideration for the license
granted herein, Licensee shall make each of the following one-time,
non-refundable, non-creditable milestone payments to Lilly for the first
Licensed Product to achieve such milestone: 

 

 

 

Milestone Event

Amount Due

The first subject dosed in a Phase 2 Clinical Trial.

$* * * *

The first subject dosed in a Phase 3 Clinical Trial.

* * * *

Acceptance for filing of an NDA or equivalent for a Licensed Product in the
United States

$* * * *

NDA approval for a Licensed Product in the United States

$* * * *

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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Milestone Event

Amount Due

NDA approval or equivalent for a Licensed Product by the European Medicines
Agency or in any Major European Country

$* * * *

NDA approval or equivalent for a Licensed Product in Japan

$* * * *

First Commercial Sale of a Licensed Product in the United States

$* * * *

First Commercial Sale of a Licensed Product in a Major European Country

$* * * *

First Commercial Sale of a Licensed Product in Japan

$* * * *

 

(b)

Aggregate Net Sales Milestone Payments.  Subject to the terms and conditions of
this Agreement and in further consideration for the license granted herein,
Licensee shall make each of the following one-time, non-refundable,
non-creditable milestone payments to Lilly the first time the aggregate Net
Sales of all Licensed Products meets or exceeds the following thresholds:

 

·

* * * * U.S. dollars ($* * * *) at the end of the first calendar year in which
aggregate Net Sales for Licensed Products in such calendar year exceeds $* * *
*; and

 

·

* * * * U.S. dollars ($* * * *) at the end of the first calendar year in which
aggregate Net Sales for Licensed Products in such calendar year exceeds $* * *
*.

 

·

* * * * U.S. dollars ($* * * *) at the end of the first calendar year in which
aggregate Net Sales for Licensed Products in such calendar year exceeds $* * *
*; and

 

·

* * * * U.S. dollars ($* * * *) at the end of the first calendar year in which
aggregate Net Sales for Licensed Products in such calendar year exceeds $* * *
*.

 

(c)

Notice and Payment.  Licensee shall notify Lilly in writing within ten (10)
business days after the achievement of each such milestone event by Licensee,
its Affiliates or a sublicensee giving rise to a payment obligation under this
Section 7.02 and Licensee shall pay Lilly the indicated amount no later than
forty-five (45) days after such notification to Lilly. 

 

7.03 Royalties.

 

(a)

Royalty Rates.  Subject to the terms and conditions of this Agreement, Licensee
shall pay to Lilly royalties on Net Sales made by Licensee, its Affiliates or
sublicensees of any Licensed Product commencing upon the First Commercial Sale
of a Licensed Product in a particular country in the Territory and will continue
on a Licensed Product-by-Licensed Product and country-by-country basis until the
later of (i) the expiration of the last to expire Valid Patent Claim covering a
Licensed Product in such country, or (ii) * * * *  (* * * *) years from First
Commercial Sale of the Licensed Product in such country, at the tiered rates in
U.S. dollars as set forth as follows: 

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

 

·

For the first $* * * * of annual worldwide Net Sales for such Licensed Products:
 * * * *; and

·

For the portion of  annual worldwide Net Sales for such Licensed Products
greater than $* * * * but less than or equal to $* * * *,  * * * *; and

·

For the portion  of annual worldwide Net Sales for such Licensed Products
greater than $* * * * but less than or equal to $* * * *,  * * * *; and

·

For the portion of annual worldwide Net Sales for such Licensed Products greater
than $* * * *,  * * * *.

 

 

(b)

Third Party Licenses – Royalty Offset.  Should Licensee or any of its Related
Parties determine in good faith that it is reasonably necessary to obtain a
license for a patent that is necessary to Develop, manufacture and/or
Commercialize Licensed Compounds and/or Licensed Products contemplated by this
Agreement, Licensee may offset royalty payments due hereunder by * * * *  (* * *
*%) percent of the amounts due under such third party license agreement,
provided, that under no circumstance will the royalties due to Lilly be offset
by more than * * * *  (* * * *%) percent of the royalties owed to Lilly. 

 

(c)

Early Generic Product Entry and/or No Lilly Patent Rights. For a given Licensed
Product, if in a given country within the Territory entry of a Generic Product
has occurred and subsequently the sales of the Licensed Product have declined by
* * * * percent (* * * *%) or more as compared to the two consecutive Calendar
Quarters immediately prior to such Generic Product entry (“Generic Competition
Threshold”), then the royalty payments due to Lilly for such Licensed Product in
such country shall be reduced by * * * * percent (* * * *%).   Such reduction
shall be first applied with respect to such country starting with sales in the
Calendar Quarter following the entry of such Generic Product.   

 

 

7.04 Reports; Payment of Royalty; Payment Exchange Rate and Currency
Conversions.

 

(a)

Royalties Paid Quarterly.  Licensee shall keep (and shall cause its affiliates
and requires its sublicensees to keep) complete and accurate books and records
that are necessary to ascertain and verify the payments owed hereunder.  Within
forty-five (45) calendar days following the end of each Calendar Quarter,
following the First Commercial Sale of a Licensed Product, Licensee shall
furnish to Lilly a written report for the Calendar Quarter showing the Net Sales
by country of Licensed Product sold by Licensee and its Related Parties in the
Territory during such Calendar Quarter and the royalties payable by country due
on such Net Sales under this Agreement for such Calendar Quarter.  Licensee
shall provide Lilly with a sales forecast for the subsequent 8 quarters. 
Licensee will mail such reports to the attention of:  Eli Lilly and Company,
Lilly Royalty Administration in Finance, Drop Code 1064, Lilly Corporate Center,
Indianapolis, Indiana, 46285.    Simultaneously with the submission of the
written report, Licensee shall pay to Lilly the royalty due for such Calendar
Quarter calculated in accordance with this Agreement. 

 

(b)

Method of Payment.  All payments to be made by Licensee to Lilly under this
Agreement shall be paid by bank wire transfer in immediately available funds to
such bank account as is designated in writing by Lilly from time to
time.  Royalty payments shall be made in United States dollars using the rate of
exchange as defined in 1.31 Net Sales.  

 

7.05 Maintenance of Records; Financial Audits.

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

 

(a)

Record Keeping by Licensee.    Licensee shall keep complete and accurate records
in sufficient detail to enable the royalties payable hereunder to be
determined.  As a part of Licensee’s annual fiscal year-end audit, Licensee will
provide to Lilly an Independent Auditor’s Report in which the Independent
Auditor will audit the royalties paid or to be paid under the
Agreement.  Commencing upon date of delivery by Licensee to Lilly of any royalty
report or record, and continuing for thirty (30) consecutive calendar days
thereafter, Lilly shall have the right to (i) identify concerns or discrepancies
in royalty payments, and (ii) discuss such concerns or discrepancies with an
Independent Auditor.  Upon conclusion of this thirty (30) day review period, the
royalty report or record submitted by Licensee to Lilly shall be deemed accepted
in its entirety.  

 

(b)

Underpayments/Overpayments.  If such Independent Auditor correctly concludes
that additional royalties were owed during such period, Licensee shall pay such
additional royalties within thirty (30) days of the date Lilly delivers to
Licensee such Independent Auditor’s written report so correctly
concluding.    Any overpayments by Licensee will be credited against the next
quarterly royalty obligation or, at Licensee’s request, promptly refunded to
Licensee. 

 

(c)

Confidentiality.  Lilly shall treat all financial information subject to review
under this Section 7.05, in accordance with the confidentiality provisions of
Article IX of this Agreement.

 

(d)

Late Payments.  Any amount owed by Licensee to Lilly under this Agreement that
is not paid within the applicable time period set forth herein shall accrue
interest at the rate of the one (1) month London Inter-Bank Offering Rate
(“LIBOR”) plus * * * * percent (* * * *%) as set by the British Bankers
Association as of the due date, or whatever is the legal limit if lower.

 

7.06 Income Tax.  If laws, rules, or regulations require the withholding of
income tax or other taxes imposed upon payments set forth in this Article VII,
Licensee will notify Lilly in writing of such payment or withholding
requirements prior to making the payment and provide such assistance to Lilly,
including the provision of such documentation as may be required by a tax
authority, as may be reasonably necessary to claim an exemption from or
reduction of such taxes. In the event Licensee withholds taxes under this
section and remits such taxes to the appropriate tax authority, Licensee will
furnish Lilly with proof of payment of such taxes promptly following payment
thereof. If taxes are paid to a tax authority, Licensee will provide Lilly all
such assistance as is reasonably required to obtain a refund of taxes withheld,
or obtain a credit with respect to taxes paid.

 

Article VIII – PATENTS

 

8.01 Ownership of Inventions.  As between the Parties, Licensee shall own the
entire right, title and interest in and to any and all Know-How discovered,
created, identified or made solely by it and its Related Parties and their
respective employees, agents or independent contractors in the course of
performing or exercising its rights under this Agreement, and all intellectual
property rights in any of the foregoing.  Inventorship shall be determined in
accordance with U.S. patent laws.

 

8.02 Prosecution and Maintenance of Patents.    Licensee shall have the first
right, but not the obligation, at its expense, to prepare, file, prosecute and
maintain Lilly Patent Rights in the Territory, on its own or through its
Affiliate, or through outside counsel or Third Party contractor.  Licensee will
provide Lilly with copies of any substantive papers filed with or received by a
patent office related to the maintenance of such patent filings.  Licensee shall
provide Lilly with drafts of any material filings in a reasonable amount of time
in advance of the anticipated filing date and shall consider Lilly’s reasonable
comments thereto in good faith.  The abandonment of any of the Lilly Patent
Rights shall be governed by Section 8.07. Promptly following the Effective Date,
Lilly shall transfer the existing,

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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complete patent files for all applicable patents and patent applications to
Licensee, shall file all documents necessary to transfer correspondence with the
U.S. Patent and Trademark Office and other applicable patent authorities to
Licensee and shall give Licensee’s designated patent counsel power of attorney
thereto.  Lilly shall cooperate with Licensee in the transfer of all prosecution
and maintenance responsibilities relating to the Lilly Patent Rights.  For
clarity, after such transfer, Lilly will cooperate, but will not be responsible
for further maintenance and annuity payments. 

 

8.03 Patent Term Restoration.  Licensee shall have the first right, but not the
obligation, with respect to election to obtain patent term restoration or
supplemental protection certificates or their equivalents in any country in the
Territory where applicable to Lilly Patent Rights.  Lilly agrees to reasonably
assist Licensee as needed with the filing and prosecuting of any such
application for patent term restoration or supplemental protection certificates
or their equivalents.   To the extent Licensee has elected to seek such patent
term restoration or supplemental protection certificates or equivalents,
Licensee (a) shall pay all costs associated with the preparation, filing and
prosecuting of any such application for patent term restoration or supplemental
protection certificates or their equivalents hereunder, (b) agrees to consult
with Lilly as to the preparation, filing, prosecution of such application for
patent term restoration or supplemental protection certificates or their
equivalents reasonably prior to any deadline or action, and (c) shall provide
Lilly with drafts of any material filings in a reasonable amount of time in
advance of the anticipated filing date and shall consider in good faith any
comments of Lilly. 

 

8.04 Interference, Derivation, Opposition, Reissue Reexamination and Post Grant
Review Proceedings.  Any Party shall, within ten (10) business days of learning
of any request for, or filing or declaration of, any interference, derivation,
opposition, reexamination, or post grant review (or similar administrative
proceedings) relating to Lilly Patent Rights, inform the other Party of such
event. Licensee shall have the first right, but not the obligation, to determine
a course of action with respect to any such proceeding and to control such
proceeding.  Lilly shall have the right to review any submission to be made in
connection with such proceeding.  In connection with any such interference,
derivation, opposition, reissue, reexamination, or post grant review proceeding
(or similar administrative proceedings) or correction relating to Lilly Patent
Rights, Lilly will cooperate fully and will provide Licensee with any
information or assistance that Licensee may reasonably request. Licensee shall
keep Lilly informed of developments in any such action or proceeding, including,
to the extent permissible by law, consultation and approval of any settlement,
the status of any settlement negotiations and the terms of any offer related
thereto.  To the extent Licensee has elected to control the foregoing, Licensee
shall bear the expense of such proceeding or action with respect to the Lilly
Patent Rights.

 

8.05 Enforcement and Defense.  In the event that either Licensee or Lilly
becomes aware of any alleged, threatened or actual commercially material
infringement of a Lilly Patent Right in a country in the Territory, or judicial
challenge to the validity of a Lilly Patent Right in a country in the Territory,
it will notify the other Party in writing to that effect within a reasonable
time period.  

 

(a)First Right of Licensee; Right of Lilly to Assume. Licensee shall have the
first right, but not the obligation, to bring a suit or otherwise take action
against any person or entity directly infringing, contributorily infringing or
inducing infringement of the Lilly Patent Rights.  If Licensee fails to bring a
suit or otherwise take action with respect to infringement of any Lilly Patent
Rights within (i) thirty (30) days with respect to potential infringement in the
context of a Paragraph IV certification, or (ii) sixty (60) days with respect to
potential infringement in some context other than a Paragraph IV certification,
following receipt of notice of the alleged infringement, Lilly shall have the
right to bring suit or otherwise take action with respect to such infringement
at its own expense and by counsel of its own choice, and Licensee shall have the
right, at its own expense, to be represented in any such suit by counsel of its
own choice.

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(b)Expenses and Cooperation. Each Party shall cooperate with and provide to the
Party enforcing any such rights under this Section 8.05 reasonable assistance in
such enforcement, at such enforcing Party’s request and expense. Lilly further
agrees to join, at Licensee’s expense, any such action brought by Licensee under
this Section 8.05 as a party plaintiff if required by applicable law to pursue
such action.  The enforcing Party under this Section 8.05 shall keep the other
Party regularly informed of the status and progress of such enforcement efforts,
and shall reasonably consider the other Party’s comments on any such
efforts.  In the event that Lilly is a party to such a legal action, no
settlement, consent judgment or other voluntary final disposition of the suit
may be entered into without the mutual consent of Licensee and Lilly, and such
consent shall not be unreasonably withheld.  In no event shall Licensee or Lilly
settle any such action or proceeding in a manner which restricts the scope, or
adversely affects the enforceability, of Lilly Patent Rights or Licensee Patent
Rights claiming or covering Licensed Compounds or Licensed Products without the
prior written consent of Licensee and Lilly, such consent shall not be
unreasonably withheld.

 

(c)Recovery.  Any recovery obtained by either or both of the Parties in
connection with or as a result of any action to enforce any Lilly Patent Rights,
whether by settlement or otherwise, shall first be applied to reimburse the
costs and expenses of the Party that brought and controlled such action and then
to reimburse the costs and expenses of the other Party in connection with such
action, and any amounts remaining after such reimbursement shall be retained by
the Party that brought and controlled such action, except that if Licensee is
the Party that brought and controlled such action, any remaining portion of such
recovery that is attributable to lost sales with respect to Licensed Products
shall be treated as Net Sales and subject to payment of royalties pursuant to
Section 7.03. 

 

8.06 Third Party Infringement Suit.  In the event that a Third Party sues
Licensee alleging that Licensee's, its Affiliates' or its sublicensees' making,
having made, importing, exporting or using Licensed Compound or distributing,
marketing, promoting, offering for sale or selling Licensed Product infringes or
will infringe a claim of a Third Party patent that specifically covers the
Licensed Compound or its manufacture, then Licensee may elect to defend such
suit.

 

8.07 Abandonment.  In the event that Licensee determines not to file, maintain
or continue prosecution of any patent or patent application within the Lilly
Patent Rights, Licensee shall provide Lilly written notice thereof at least
thirty (30) days before the applicable deadline. Upon receipt of such notice,
Lilly shall have the right, but not the obligation, at its expense, to assume
responsibility for filing, prosecuting, and maintaining such patents and patent
applications.  If Lilly decides to assume such responsibility, in its sole
discretion, it shall so notify Licensee in writing.

 

8.08 Supplemental Examination.  In the event that Licensee decides to file one
or more requests for supplemental examination for any U.S. patent within the
Lilly Patent Rights, Lilly will cooperate fully and will provide Licensee with
any information or assistance that Licensee may reasonably request, and
Licensees’ shall bear all expenses associated therewith, including, without
limitation, all expenses associated with the supplemental examination and any ex
parte reexamination ordered as a result of supplemental examination. 

 

Article IX - CONFIDENTIALITY AND PUBLICATION

 

9.01 Confidentiality.

 

(a)

Nondisclosure Obligation.  Each of Lilly and Licensee shall use any Proprietary
Information received by it from the other Party only in accordance with this
Agreement and shall not

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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disclose to any Third Party any such Proprietary Information without the prior
written consent of the other Party.  The foregoing obligations shall survive the
expiration or termination of this Agreement for a period of * * * *.  These
obligations shall not apply to Proprietary Information that:

 

(a)

is known by the receiving Party at the time of its receipt, and not through a
prior disclosure by the disclosing Party, as documented by the receiving Party’s
written records;

 

(b)

is at the time of disclosure, or thereafter becomes, published or otherwise part
of the public domain without breach of the obligations of confidentiality under
this Agreement by the receiving Party;

 

(c)

is subsequently disclosed to the receiving Party by a Third Party who has the
right to make such disclosure, as documented by the receiving Party’s written
records; or

 

(d)

is independently developed by the receiving Party or its Affiliates and without
the aid, use or application of any of the disclosing Party's Proprietary
Information, and such independent development can be documented by the receiving
Party’s written records.

 

(b)

Authorized Disclosure.  Each Party shall have the right to disclose Proprietary
Information received by it from the other Party to the extent required to be
disclosed by law, regulation, rule, act or order of any governmental authority
or agency to be disclosed, provided that notice is promptly delivered to the
other Party (to the extent permitted) in order to provide an opportunity to seek
a protective order or other similar order with respect to such Proprietary
Information and thereafter the receiving Party discloses to the requesting
entity only the minimum information required to be disclosed in order to comply
with the request, whether or not a protective order or other similar order is
obtained by the other Party.

 

(c)

Permitted Disclosures.  Notwithstanding provisions of Section 9.01(a), Licensee,
its Affiliates or sublicensees shall have the right to disclose Proprietary
Information received by it from Lilly:

 

(a)

to any institutional review board of any entity conducting Clinical Trials with
Licensed Product or to any governmental or other regulatory agencies in order to
obtain patents or to gain approval to conduct Clinical Trials or to market
Licensed Product, provided that such disclosure may be made only to the extent
reasonably necessary to obtain such patents or authorizations; or

 

(b)

to any bonafide potential or actual investor, investment banker, acquirer,
merger partner, or other potential or actual financial partner; provided that in
connection with such disclosure, Licensee shall require each disclosee to enter
into a confidentiality agreement with respect to such Proprietary Information.

 

(d)

Disclosure to Agents/Subcontractors.  Notwithstanding the provisions of Section
9.01(a) and subject to the other terms of this Agreement, each of Licensee and
Lilly shall have the right to disclose Proprietary Information to their
respective sublicensees, agents, subcontractors, consultants, Affiliates or
other Third Parties (collectively “Agents”) in accordance with this Section
9.01(d).  Such disclosure shall be limited only to those Agents directly
involved in the development, manufacturing, marketing or promotion of Licensed
Compound or Licensed Product (or for such Agents to determine their interest in
performing such activities) in accordance with this Agreement.   Any such Agents
must agree in writing to be bound by

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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confidentiality and non-use obligations no less restrictive than those contained
in this Agreement.

 

(e)

Disclosure to Taxing Authorities.  Notwithstanding the provisions of Section
9.01(a), either Party shall be permitted and allowed to provide a copy of this
Agreement to the United States Internal Revenue Service or other tax
authorities, if requested, without advanced written notice or approval of the
other Party.

 

9.02 Breach of Confidentiality.  The Parties agree that the disclosure of the
Disclosing Party’s Proprietary Information in violation of this Agreement may
cause the Disclosing Party irreparable harm and that any breach or threatened
breach of this Agreement by the Receiving Party entitles disclosing Party to
seek injunctive relief, in addition to any other legal or equitable remedies
available to it, in any court of competent jurisdiction.  For clarity, such
disputes shall not be subject to Article XIII.  

 

9.03 No Publicity.  A Party may not use the name of the other Party in any
publicity or advertising and may not issue a press release or otherwise
publicize or disclose any information related to the existence of this Agreement
or the terms or conditions herein, except (a) on the advice of its counsel as
required by law (e.g., any Securities and Exchange Commission filings and
disclosures) and provided the Party who will be disclosing such information has
consulted with the other Party to the extent feasible prior to such disclosure
with respect to the substance of the disclosure; or (b) as consented to in
advance by the other Party in writing. Notwithstanding the foregoing, Licensee
shall have the right without obtaining Lilly’s consent to make public
announcements concerning the Development or Commercialization of the Licensed
Product in the Field in the Territory under this Agreement, such as announcing
the commencement of any clinical trial for the Licensed Product, the publication
of data and results, the filing of regulatory filings for the Licensed Product
and the achievement of Marketing Authorization of the Licensed Product.  The
Parties have agreed on a form of initial press release that may be used by
either Party on an ongoing basis to describe this Agreement that is attached
hereto as Attachment 9.03.  Licensee shall provide Lilly with reasonable advance
written notice of any press release or other public disclosure of the results of
any of its work on Licensed Compound or Licensed Product under this Agreement. 

 

9.04 Scientific Publications.  Each Party recognizes the mutual interest in
obtaining valid patent protection and in protecting business interests and trade
secret information.  Consequently, except for disclosures permitted pursuant to
Section 9.01 and Section 9.03 of this Agreement, in the event that a Party
wishes to make a publication containing any Lilly Know-How or subject of Lilly
Patent Rights, such Party shall deliver to the other Party a copy of the
proposed written publication at least thirty (30) days prior to submission for
publication.  The Parties shall have the right to propose modifications to or
delay of the publication for patent reasons or trade secrets.  If a reviewing
Party requests a delay for patent reasons, the other Party shall delay
submission for a period of up to forty-five  (45) days to enable patent
applications protecting each Party’s rights in such information to be filed in
accordance with Article VIII of this Agreement.  Upon expiration of such delay,
the Party seeking to publish shall be free to proceed with the publication.  If
a Party requests modifications to the publication, the Party seeking to publish
shall edit such publication to prevent disclosure of trade secret or Proprietary
Information prior to submission of the publication.

 

9.05 Terms of Agreement.  Neither Party nor its Affiliates shall disclose any
terms or conditions of this Agreement to any Third Party without the prior
consent of the other Party, except as follows: a Party and its Affiliates may
disclose the terms or conditions of this Agreement (but not any other
Proprietary Information, which may be disclosed only as described elsewhere in
this Article IX), (a) on a need-to-know basis to its legal and financial
advisors to the extent such disclosure is reasonably necessary, provided that
such advisors are subject to confidentiality with regard to such information

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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under an agreement or ethical obligation; (b) to a Third Party or Related Party
in connection with (i) a financing (or proposed financing) or an equity
investment (or proposed investment) in such Party or its Affiliates, including
to its shareholders and prospective shareholders, (ii) the granting of a
sublicense pursuant to Section 2.04 or entry into any agreement with respect to
the development, manufacture or commercialization of a Licensed Product, (iii) a
merger, consolidation or similar transaction by such Party or its Affiliates,
(iv) the sale of all or substantially all of the assets of such Party or its
Affiliates to which this Agreement relates, or (v) in connection with a
securitization, provided that such Third Party executes a non-use and
non-disclosure agreement with confidentiality and non-use obligations similar to
those contained in this Agreement; (c) to the United States Securities and
Exchange Commission or any other securities exchange or governmental entity,
including as required to make an initial or subsequent public offering, or (d)
as otherwise required by law or regulation, provided that in the case of (c) and
(d) the disclosing Party shall (x) if practicable, provide the other Party with
reasonable advance notice of and an opportunity to comment on any such required
disclosure, (y) if requested by such other Party, seek, or cooperate with such
Party’s efforts to obtain, confidential treatment or a protective order with
respect to any such disclosure to the extent available at such other Party’s
expense, and (z) use good faith efforts to incorporate the comments of such
other Party in any such disclosure or request for confidential treatment or
protective order.

 

 

Article X - REPRESENTATIONS AND WARRANTIES

 

10.01 Representations and Warranties of Each Party.  Each of Lilly and Licensee
hereby represents, warrants and covenants to the other Party hereto as follows:

 

(a)

it is a corporation duly organized and validly existing under the laws of the
state or other jurisdiction of its incorporation;

 

(b)

the execution, delivery and performance of this Agreement by such Party has been
duly authorized by all requisite corporate action;

 

(c)

it has the power and authority to execute and deliver this Agreement and to
perform its obligations hereunder;

 

(d)

the execution, delivery and performance by such Party of this Agreement and its
compliance with the terms and provisions herein does not and will not conflict
with or result in a breach of any of the terms and provisions of or constitute a
default under (i) a loan agreement, guaranty, financing agreement, agreement
affecting a product or other agreement or instrument binding or affecting it or
its property; (ii) the provisions of its corporate charter or other operative
documents or bylaws; or (iii) any order, writ, injunction or decree of any court
or governmental authority entered against it or by which any of its property is
bound;

 

(e)

except for the governmental and Marketing Authorizations required to market the
Licensed Product in the Territory, the execution, delivery and performance of
this Agreement by such Party does not require the consent, approval or
authorization of, or notice, declaration, filing or registration with, any
governmental or Regulatory Authority and the execution, delivery or performance
of this Agreement will not violate any law, rule or regulation applicable to
such Party;

 

(f)

this Agreement has been duly authorized, executed and delivered and constitutes
such Party's legal, valid and binding obligation enforceable against it in
accordance with its terms subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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applicability relating to or affecting creditors' rights and to the availability
of particular remedies under general equity principles; and

 

(g)

it shall comply with all applicable laws and regulations relating to its
activities under this Agreement.

 

10.02 Lilly's Representations.  Lilly hereby represents, warrants and covenants
to Licensee that as of the Effective Date:

(a)

Schedule 1.29 accurately identifies all patents and patent applications owned or
controlled by Lilly as of the Effective Date that are necessary for the, and/or
in absence of a license, would prevent Licensee to, research, Develop,
Manufacture, use and/or Commercialize Licensed Compounds and Licensed Products
as contemplated by this Agreement;  

(b)

Lilly is the sole owner of the entire right, title and interest in and to all
patents, patent applications and other intellectual property rights within the
Lilly Patent Rights as set forth on Schedule 1.29 and Lilly Know-How.  Lilly has
the full and legal rights and authority to license to Licensee the Lilly Patent
Rights and Lilly Know-How, and (i) it has not previously transferred, assigned,
conveyed or otherwise encumbered its right, title and interest in and to the
Licensed Compound or Licensed Product to any Third Party, and (ii) no Third
Party has been granted by Lilly any license, option or other rights or interest
in or to the Lilly Patent Rights and Lilly Know-How or any part thereof, in each
case with respect to any Licensed Compound or Licensed Product.  Lilly has not
received, nor is it aware of, any claims or allegations that a Third Party has
any right or interest in or to any patent or patent application in the Lilly
Patent Rights or in or to the Lilly Know-How with respect to any Licensed
Compound or Licensed Product, or any claims or allegations by a Third Party that
any patents or patent applications within the Lilly Patent Rights are invalid or
unenforceable;

(c)

To the best of its knowledge, no intellectual property rights of any Third Party
were infringed or misappropriated during the creation of the Lilly Patent Rights
or Lilly Know-How;

(d)

 All patents and patent applications within the Lilly Patent Rights are in good
standing with the applicable patent office.  In particular, all required filings
have been timely made, and all maintenance fees, renewal fees, annuities and the
like have been timely paid.  Timely payment includes payment of any fee for
which the fee is payable (e.g., within the fee payment window) even if the
surcharge date or final deadline for payment of such fee would be in the future.

(e)

To the best of its knowledge and belief, Lilly has provided Licensee with all
relevant information reasonably required for Licensee to properly evaluate and
conduct due diligence on the Lilly Patent Rights, and all such information is
true and accurate. 

(f)

All physical inventory of the Licensed Compound designated LY3130481 that is
transferred to Licensee pursuant to Section 4.01(a) and that has been
recertified prior to the Effective Date by Lilly as in compliance with Good
Manufacturing Practices (i) were manufactured, stored and transported in
accordance with Good Manufacturing Practices and any applicable federal, state
and local laws, rules and regulations and (ii) complies at the time of delivery
with the specifications established by Lilly for administration to humans.

 

10.03 Licensee's Representations.  Licensee hereby represents and warrants as of
the Effective Date, and covenants during the Term, to Lilly that, it will not
knowingly use in any capacity, in connection with any services to be performed
under this Agreement, any individual who has been debarred pursuant to the
United States Food, Drug and Cosmetic Act. Licensee represents and warrants that

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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there are no pending or, to Licensee’s knowledge, threatened judicial,
administrative or arbitral actions, claims, suits or proceedings pending as of
the Effective Date hereof against Licensee which, to Licensee’s knowledge,
either individually or together with any other, would have a material adverse
effect on the ability of Licensee to perform its obligations under this
Agreement or any agreement or instrument contemplated hereby.

 

10.04 No Inconsistent Agreements.  Neither Party has in effect, and after the
Effective Date neither Party shall enter into, any oral or written agreement or
arrangement that would be inconsistent with its obligations under this
Agreement.

 

10.05 Representation by Legal Counsel.  Each Party hereto represents that it has
been represented by legal counsel in connection with this Agreement and
acknowledges that it has participated in the drafting of this Agreement.  In
interpreting and applying the terms and provisions of this Agreement, the
Parties agree that no presumption shall exist or be implied against the Party
that drafted such terms and provisions.

 

10.06 Disclaimer.  EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE X, THE LICENSED
COMPOUND, LICENSED PRODUCT, LILLY PATENT RIGHTS, LILLY KNOW-HOW, LICENSEE PATENT
RIGHTS AND LICENSEE KNOW-HOW ARE PROVIDED “AS IS” AND WITHOUT ANY REPRESENTATION
OR WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY
PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE MATERIALS WILL NOT
INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

   

 

Article XI - INDEMNIFICATION AND LIMITATION ON LIABILITY

 

11.01 Indemnification by Licensee.  Licensee shall indemnify, defend and hold
harmless Lilly and its Affiliates, and each of its and their respective
employees, officers, directors and agents (each, a “Lilly Indemnified Party”)
from and against any and all liability, loss, damage, cost, and expense
(including reasonable attorneys' fees), (collectively, a “Liability”) that a
Lilly Indemnified Party may incur, suffer or be required to pay resulting from
or arising out of a suit or action brought by a Third Party with respect to (i)
the Development, Manufacture, Commercialization, promotion, distribution, use,
marketing, sale or other disposition of the Licensed Compound or Licensed
Product by Licensee, its Affiliates or sublicensees, (ii) any breach by Licensee
of any of its representations, warranties and covenants contained in Article X
herein or any material breach of its obligations under this Agreement, and (iii)
the negligence and/or willful misconduct of Licensee, its Affiliates or
sublicensees with respect to its obligations under this Agreement.
Notwithstanding the foregoing, Licensee shall have no obligation under this
Agreement to indemnify, defend or hold harmless any Lilly Indemnified Party with
respect to any Liabilities to the extent that they result from the negligence or
willful misconduct of Lilly, Lilly Indemnified Party or any of their respective
employees, officers, directors or agents or that result from Lilly's breach of
its obligations under this Agreement.

 

11.02 Indemnification by Lilly.  Lilly shall indemnify, defend and hold harmless
Licensee and its Affiliates, and each of its and their respective employees,
officers, directors and agents (each, a “Licensee Indemnified Party”) from and
against any Liability that a Licensee Indemnified Party may incur, suffer or be
required to pay resulting from or arising in connection with a suit or action
brought by a Third Party with respect to (i) any breach by Lilly of any of its
representations, warranties and covenants contained in Sections 10.01, 10.02 and
10.04 herein or any material breach of its obligations (ii) the negligence
and/or willful misconduct of Lilly, and (iii) the Development, Manufacture, use
or other disposition of the Licensed Compound or Licensed Product by Lilly or
its Affiliates prior to the

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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Effective Date, including, with respect to the Existing Studies. 
Notwithstanding the foregoing, Lilly shall have no obligation under this
Agreement to indemnify, defend or hold harmless any Licensee Indemnified Party
with respect to any Liabilities to the extent that they result from the
negligence or willful misconduct of Licensee, Licensee Indemnified Party or any
of their respective employees, officers, directors or agents or that result from
Licensee's breach of its obligations under this Agreement.

 

11.03 Conditions to Indemnification. The obligations of the indemnifying Party
under Sections 11.01 and 11.02 are conditioned upon the delivery of written
notice to the indemnifying Party of any potential Liability promptly after the
indemnified Party becomes aware of such potential Liability.  The indemnifying
Party shall have the right to assume the defense of any suit or claim related to
the Liability if it has assumed responsibility for the suit or claim in
writing;  however, if in the reasonable judgment of the indemnified Party, such
suit or claim involves an issue or matter that could have a materially adverse
effect on the business operations or assets of the indemnified Party, the
indemnified Party may retain control of the defense or settlement thereof by
providing written notice of such effect to the indemnifying Party, but in no
event shall such action or notice be construed as a waiver of any
indemnification rights that the indemnified Party may have at law or in
equity.  If the indemnifying Party defends the suit or claim, the indemnified
Party may participate in (but not control) the defense thereof at its sole cost
and expense.  The foregoing notwithstanding, the Parties acknowledge and agree
that failure of the indemnified Party to promptly notify the indemnifying Party
of a potential Liability shall not constitute a waiver of, or result in the loss
of, such Party’s right to indemnification under Section 11.01 or 11.02, as
appropriate, except to the extent that the indemnifying Party’s rights, and/or
its ability to defend against such Liability, are materially prejudiced by such
failure to notify.

 

11.04 Settlements.  Neither Party may settle a claim or action related to a
Liability without the consent of the other Party, and such consent shall not be
unreasonably withheld, if such settlement would impose any monetary obligation
on the other Party or require the other Party to submit to an injunction or
otherwise limit the other Party's rights under this Agreement.  Any payment made
by a Party to settle any such claim or action shall be at its own cost and
expense.

 

11.05 Limitation of Liability.    NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
ANY SPECIAL, INCIDENTAL, PUNITIVE, CONSEQUENTIAL OR INDIRECT DAMAGES OR LOSS OF
PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF
ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.  NOTWITHSTANDING THE FOREGOING,
NOTHING IN THIS SECTION 11.05 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE
INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER SECTION 11.01 OR 11.02,
OR DAMAGES AVAILABLE FOR A PARTY’S BREACH OF CONFIDENTIALITY OBLIGATIONS IN
ARTICLE IX OR EXCLUSIVITY OBLIGATIONS IN SECTION 2.05.

 

11.06 Insurance.  Licensee shall procure and maintain insurance, including
product liability insurance, adequate to cover its obligations hereunder and
which are consistent with normal business practices of prudent companies
similarly situated at all times during which any Licensed Product is being
clinically tested in human subjects or commercially distributed or sold by or on
behalf of Licensee.  It is understood that such insurance shall not be construed
to create a limit of Licensee’s liability with respect to its indemnification
obligations under this Article 11.  Licensee shall provide Lilly with written
evidence of such insurance upon request.  Licensee shall provide Lilly with
written notice at least thirty (30) days prior to the cancellation, non renewal
or material change in such insurance or self-insurance which materially
adversely affects the rights of Lilly hereunder.        

 

 

Article XII - TERM AND TERMINATION

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COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
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12.01 Term and Expiration.  This Agreement shall be effective as of the
Effective Date and unless terminated earlier by mutual written agreement of the
Parties or pursuant to Sections 12.02 or 12.03 below, the term of this Agreement
shall continue in effect on a country-by-country and product-by-product basis
until the expiration of Licensee’s obligation to pay royalties under Article VII
herein (the “Term”).  Upon expiration of this Agreement in its entirety,
Licensee’s license pursuant to Section 2.01 shall become a fully paid-up,
royalty-free, irrevocable, perpetual non-exclusive license. 

 

12.02 Termination by Licensee.  Notwithstanding anything contained herein to the
contrary, Licensee shall have the unilateral right to terminate this Agreement
in its entirety without cause at any time by giving ninety  (90) days advance
written notice to Lilly.  In the event of such termination, the rights and
obligations hereunder shall terminate; provided, however, that any payment
obligations due and owing as of the termination date shall continue. 

 

12.03 Termination for Cause.

This Agreement may be terminated, in its entirety by written notice by either
Party at any time during the Term of this Agreement:

 

(a)

upon or after the breach of any material provision of this Agreement if the
breaching Party has not cured such breach within (A) sixty (60) days (other than
breaches subject to (B)) and (B) one-hundred twenty (120) days with respect to
any material breach of Licensee’s diligence obligations, in each case following
receipt of written notice from the non-breaching Party requesting cure of the
breach or, if such breach is not susceptible of cure within such sixty  (60) day
or one-hundred twenty (120) day period, as applicable, the breaching Party has
not taken appropriate steps to commence such cure during such sixty (60)-day
period or one-hundred twenty (120) day period, as applicable and continued to
diligently pursue such cure in a manner reasonably assuring such cure within a
reasonable period of time thereafter (not to exceed one hundred eighty (180)
days).  The Parties acknowledge and agree that one example of how appropriate
steps may be satisfied by Licensee, is by Licensee providing Lilly with a
reasonable plan, which Lilly agrees is reasonable, for curing such material
breach, and using commercially reasonable efforts to implement such plan in
accordance therewith.  Any right to terminate under this Section 12.03(a) shall
be stayed and the cure period tolled in the event that, during any cure period,
the Party alleged to have been in material breach shall have initiated dispute
resolution in accordance with Article XIII with respect to the alleged breach,
which stay and tolling shall last so long as the allegedly breaching Party
diligently and in good faith cooperates in the prompt resolution of such dispute
resolution proceedings.  In the event that Lilly exercises it right to terminate
this Agreement pursuant to this Section 12.03(a) for Licensee’s material breach
of its diligence obligation under Article V, then such termination shall be
solely with respect to the Licensed Product concerned and the remainder of the
Agreement (other than with respect to such terminated Licensed Product) shall
continue in full force and effect; or 

 

(b)

upon the filing or institution of bankruptcy, reorganization, liquidation or
receivership proceedings by or against the other Party, or upon an assignment of
a substantial portion of the assets for the benefit of creditors by the other
Party, or in the event a receiver or custodian is appointed for such Party’s
business, or if a substantial portion of such Party’s business is subject to
attachment or similar process; provided, however, that in the case of any
involuntary bankruptcy proceeding, such right to terminate shall only become
effective if the proceeding is not dismissed within one hundred eighty (180)
days after the filing thereof.

 

12.04 Effect of Termination on License.  In the event this Agreement is
terminated in accordance with this Agreement, the rights and license granted to
Licensee and its Affiliates under Section 2.01 of

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

this Agreement shall terminate and all rights to the Licensed Compound and
Licensed Product granted under this Agreement shall revert to Lilly, provided
that all sublicenses granted under Section 2.04 shall survive to the extent so
provided in Section 2.04 herein.

 

12.05 Effect of Termination Generally; Survival.  Expiration or termination of
this Agreement shall not relieve the Parties of any obligation accruing prior to
such expiration or termination, and the provisions of Article I (Definitions),
Article IX (Confidentiality), Article XI (Indemnification and Limitation on
Liability), Article XIII (Dispute Resolution), Article XIV (Miscellaneous) and
Section 8.01, Section 10.06, Section 10.07, Section 12.01, Section 12.02,
Section 12.03(b), Section 12.04, Section 12.05 and Section 12.06, Section 12.07,
and Section 12.08 shall survive the expiration or termination of this
Agreement.  Any expiration or early termination of this Agreement shall be
without prejudice to the rights of either Party against the other accrued or
accruing under this Agreement prior to termination, including the obligation to
pay royalties for Licensed Product sold prior to such termination.

 

12.06 Licensed Product Reversion.  Upon termination of this Agreement in its
entirety by Lilly for any reason or by Licensee pursuant to Section 12.02, at
Lilly's option and upon Lilly's written request, and at Licensee's expense, the
following provisions shall apply:

 

(a)

Subject to Section 12.06(b),  Licensee shall, at its sole expense, transfer to
Lilly (or its nominee) all physical inventories of Licensed Compound and
Licensed Product, and all INDs, Marketing Authorizations, drug approval
applications for Marketing Authorizations, and all supporting documentation for
such filings and applications (to the extent assignable and not cancelled)
assigned to Licensee by Lilly hereunder to the extent relating to Licensed
Product then being Commercialized or in Development. 

 

(b)

For a period of sixty (60) days after the effective date of termination, the
Parties shall negotiate in good faith the financial terms (including, without
limitation, royalties, milestones and upfronts) and conditions for (i) the
transfer of all regulatory filings and documentation, and all physical
inventories of Licensed Compound and Licensed Product pursuant to Section
12.06(a) and any other transition assistance required, (ii) the grant of a
royalty-bearing license to Lilly under Licensee Know-How and/or Licensee Patent
Rights existing as of such effective date of termination with respect to the
Licensed Product then being developed as of the date of such termination, and
(iii) the transition to Lilly of all clinical trials conducted by Licensee under
Licensee’s IND for Licensed Product that are ongoing as of the date of
termination.  Such sixty (60) day period may be extended by mutual written
agreement of the Parties for an additional thirty (30) days.  In the event that
the Parties are unable to mutually agree upon the commercially reasonable
compensation and terms with respect to the foregoing within such period, the
matter shall be referred to a mutually agreed upon third party expert in the
valuation of life sciences assets, each Party shall provide to such third party
all information in its control necessary for such third party to resolve such
matter, and the costs for such expert shall be borne equally by the Parties.

 

(c)

Upon the request of Lilly, Licensee shall use reasonable efforts to assign to
Lilly any sublicenses previously granted by Licensee related to Licensed
Product.

 

12.07 Termination in Part.  In the event that this Agreement is terminated in
part with respect to an individual Licensed Product, the terms of Sections 12.04
through 12.06 shall apply accordingly to such terminated Licensed Product, as
opposed to termination of the Agreement as a whole.

 

12.08 Return of Proprietary Information.  Not later than thirty days (30) days
after the termination of this Agreement in its entirety, each receiving Party
shall, at the disclosing Party’s discretion, either

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

destroy or return or cause to be returned to the disclosing Party, all
Proprietary Information of the disclosing Party in tangible form received from
the disclosing Party and any other documents containing the disclosing Party's
Proprietary Information, and all copies thereof, including those in the
possession of the receiving Party's Agents pursuant to Section 9.01(d), except
that the receiving Party may retain one (1) copy of the disclosing Party’s
Proprietary Information in its confidential files in a secure location solely
for the purposes of (i) determining its obligations hereunder, (ii) complying
with any applicable regulatory requirements, or (iii) defending against any
product liability claim.

 

Article XIII – DISPUTE RESOLUTION

 

13.01 Informal Discussions.  Except as otherwise provided herein, in the event
of any controversy or claim arising out of or relating to this Agreement, or the
rights or obligations of the Parties hereunder, or the relationship between the
Parties with respect to the Licensed Compound or Licensed Product, the Parties
shall first try to settle their differences amicably between themselves. Either
Party may initiate such informal dispute resolution by sending written notice of
the dispute to the other Party, and within thirty (30) days after such notice
appropriate representatives of the Parties shall meet for attempted resolution
by good faith negotiations.  If such representatives are unable to resolve
promptly such disputed matter within the said thirty (30) days, either Party may
refer the matter by written notice to the other under Section 14.07 to the Vice
President of Lilly, or designee, and the Chief Executive Officer of Licensee, or
designee, for discussion and resolution.  If such individuals or their designees
are unable to resolve such dispute within sixty (60) days of such written
notice, either Party may initiate arbitration proceedings in accordance with the
provisions of this Article XIII.

 

13.02 Arbitration.  All disputes arising out of or relating to this Agreement,
or the rights or obligations of the Parties hereunder, or relating in any way to
the relationship between the Parties with respect to the Licensed Compound or
Licensed Product, shall be finally and exclusively settled by arbitration by a
panel of three (3) arbitrators, provided such dispute is not an “Excluded
Claim”.  As used in this Section 13.02, the phrase “Excluded Claim” shall mean a
dispute, controversy or claim that concerns (a) the validity or infringement of
a patent, trademark or copyright; (b) misappropriation of trade secrets; or (c)
any antitrust, anti-monopoly or competition law or regulation, whether or not
statutory.  

 

(a)

The arbitration proceeding shall be conducted under the Commercial Arbitration
Rules of the American Arbitration Association (“AAA”) with such proceedings to
be held in Newark, New Jersey, United States.  In all cases, the arbitration
proceedings shall be conducted in the English language, and all documents that
are submitted in the proceeding shall be in the English language.  Judgment upon
the award rendered by arbitration may be issued and enforced by any court having
competent jurisdiction.  

 

(b)

If a Party intends to begin an arbitration to resolve a dispute, such Party
shall provide written notice to the other Party, informing the other Party of
such intention and any statement of claim required under the applicable
arbitration rules (as determined in accordance with Section 13.02(a)).  Within
twenty (20) business days after its receipt of such notice, the other Party
shall, by written notice to the Party initiating arbitration, add any additional
issues to be resolved that would be considered mandatory counterclaims under
Delaware law.  For clarity, the resolution of any disputes regarding such
counterclaims shall be conducted in the same proceedings as the initial claims.

 

(c)

Within forty-five (45) days following the receipt of the notice of arbitration,
the Party referring the matter to arbitration shall appoint an arbitrator and
promptly notify the other Party of such appointment.  The other Party shall,
upon receiving such notice, appoint a second arbitrator within twenty one (21)
days, and the two (2) arbitrators shall, within fifteen (15) days of the
appointment of the second arbitrator, agree on the appointment of a
third  arbitrator who will

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

act with them and be the chairperson of the arbitration panel.  In the event
that either Party shall fail to appoint an arbitrator within thirty (30) days
after the commencement of the arbitration proceeding, the arbitrator shall be
appointed by the AAA.  In the event of the failure of the two (2) arbitrators to
agree within sixty (60) days after the commencement of the arbitration
proceeding to appoint the chairperson, the chairperson shall also be appointed
by the AAA. 

 

(a)

All of the arbitrators shall have significant legal or business experience in
pharmaceutical licensing matters.  The arbitrators shall not be employees,
directors or shareholders of either Party or any of their Affiliates.

 

(b)

Each Party shall have the right to be represented by counsel throughout the
arbitration proceedings.

 

(c)

To the extent possible, the arbitration hearings and award will be maintained in
confidence.

 

(d)

In any arbitration pursuant to this Agreement, the award or decision shall be
rendered by a majority of the members of the panel provided for herein, with
each member having one (1) vote.  The arbitrators shall render a written
decision with their resolution of the dispute that shall set forth in reasonable
detail the facts of the dispute and the reasons for their decision.  The
decision of the arbitrators shall be final and non-appealable and binding on the
Parties.

 

13.03 Injunctive Relief.  By agreeing to arbitration, the Parties do not intend
to deprive any competent court of such court's jurisdiction to issue a
pre-arbitral injunction, pre-arbitral attachment or other order in aid of the
arbitration proceedings and the enforcement of any award or judgment. Without
prejudice to such provisional remedies in aid of arbitration as may be available
under the jurisdiction of a national court, the court of arbitration shall have
full authority to grant provisional remedies and to award damages for failure of
any Party to respect the court of arbitration's order to that effect.

 

13.04 Expenses of Arbitration and Expert Determination.    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).  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.

 

Article XIV -  COMPLIANCE WITH ANTI-CORRUPTION LAWS

 

14.01 Compliance. In connection  with this Agreement, Licensee has complied and
will comply with all applicable local, national, and international laws,
regulations, and industry codes dealing with government procurement, conflicts
of interest, corruption or bribery, including, if applicable, the U.S. Foreign
Corrupt Practices Act of 1977 (“FCPA”), as amended, and any laws enacted to
implement the Organisation of Economic Cooperation and Development (“OECD”)
Convention on Combating Bribery of Foreign Officials in International Business
Transactions.

 

14.02 Prohibited Conduct. In connection with this Agreement, Licensee has not
made, offered, given, promised to give, or authorized, and will not make, offer,
give, promise to give, or authorize, any bribe, kickback, payment or transfer of
anything of value, directly or indirectly, to any person or to any Government
Official for the purpose of:  (i) improperly influencing any act or decision of
the person or Government Official; (ii) inducing the person or Government
Official to do or omit to do an act in violation of a lawful or otherwise
required duty; (iii) securing any improper advantage; or (iv) inducing

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

the person or Government Official to improperly influence the act or decision of
any organization, including any government or government instrumentality, to
assist Licensee or Lilly in obtaining or retaining business.

 

Article XV - MISCELLANEOUS

 

15.01 Assignment/Change of Control. 

 

(a)

Except as provided in this Section 15.01, this Agreement may not be assigned or
otherwise transferred, nor may any right or obligation hereunder be assigned or
transferred, by either Party without the consent of the other Party; provided,
however, that Lilly may, without such consent, assign the Agreement and its
rights and obligations hereunder to an Affiliate or in connection with a Change
of Control. Licensee may, without Lilly’s consent, assign this Agreement and its
rights and obligations hereunder to an Affiliate or in connection with a
Licensee Change of Control.

 

(b)

Any permitted assignee shall assume all assigned obligations of its assignor
under the Agreement.  The terms and conditions of this Agreement shall be
binding upon and shall inure to the benefit of the Parties and their respective
successors and permitted assigns.  This Agreement shall be binding upon, and
inure to the benefit of, each Party, its Affiliates, and its permitted
successors and assigns.  Each Party shall be responsible for the compliance by
its Affiliates with the terms and conditions of this Agreement.

 

(c)

The Licensed Patent Rights and Know-How, in the case of Lilly as assignor or
transferor, or the Licensee Patent Rights and Licensee Know-How, in the case of
Licensee as assignor or transferor, shall exclude any Patent Rights and Know-How
controlled by any acquirer (or any Affiliate thereof, excluding the Party hereto
that becomes an Affiliate of the acquirer as a result of such transaction)
either (i) prior to the Change of Control or (ii) developed outside of any
activities under this Agreement.  Also, notwithstanding anything to the contrary
in this Agreement, the obligations under this Section 15.01 shall exclude
 patent rights and know-how of Lilly that its acquires (through purchase,
license or otherwise) or discovers/develops outside the activity of this
Agreement after the Effective Date except for the specific patent rights that
fall within the specific definition of Lilly Patent Rights and Lilly Know-How. 
 

 

(d)

Any attempted assignment not in accordance with Section 15.01 shall be null and
void.

   

   

15.02 Governing Law.  This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of Delaware, United States of
America without giving effect to its conflict of law principles, and the
national patent laws relevant to the patent at issue.  Subject to the terms of
this Agreement, all disputes under this Agreement shall be governed by binding
arbitration pursuant to the mechanism set forth in Article XIII herein,
provided, however, that notwithstanding anything to the contrary in this
Agreement, nothing herein shall prohibit a Party from bringing a dispute
involving an actual or alleged breach of confidentiality or an actual or alleged
misappropriation or infringement of its intellectual property rights in a court
of competent jurisdiction.

 

15.03 Waiver.  Any delay or failure in enforcing a Party's rights under this
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such Party's rights to the future enforcement of its
rights under this Agreement, nor operate to bar the exercise or enforcement
thereof at any time or times thereafter, excepting only as to an express written
and signed waiver as to a particular matter for a particular period of time.

 

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

15.04 Independent Relationship.  Nothing herein contained shall be deemed to
create an employment, agency, joint venture or partnership relationship between
the Parties hereto or any of their agents or employees, or any other legal
arrangement that would impose liability upon one Party for the act or failure to
act of the other Party.  Neither Party shall have any power to enter into any
contracts or commitments or to incur any liabilities in the name of, or on
behalf of, the other Party, or to bind the other Party in any respect
whatsoever.

 

15.05 Compliance with Internal Compliance Codes.  All Internal Compliance Codes
shall apply only to the Party to which they relate.  The Parties agree to
reasonably cooperate with each other to help insure that each Party is able to
comply with the substance of its respective Internal Compliance Codes and, to
the extent practicable, to operate in a manner consistent with its usual
Compliance related processes.

 

15.06 Export Control.  This Agreement is made subject to any restrictions
concerning the export of products or technical information from the United
States of America that may be imposed upon or related to Lilly or Licensee from
time to time by the government of the United States of America.  Furthermore,
Licensee agrees that it will not export, directly or indirectly, any technical
information acquired from Lilly under this Agreement or any Licensed Products
using such technical information to any country for which the United States
government or any agency thereof at the time of export requires an export
license or other governmental approval, without first obtaining the written
consent to do so from the Department of Commerce or other agency of the United
States government when required by an applicable statute or regulation.

 

15.07 Entire Agreement; Amendment.  This Agreement, including the Schedules
hereto and thereto, sets forth the complete, final and exclusive agreement and
all the covenants, promises, agreements, warranties, representations, conditions
and understandings between the Parties hereto and supersedes and terminates all
prior agreements and understandings between the Parties with regard to the
subject matter of this Agreement in the Territory, including the Confidentiality
Agreement.  There are no other covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties other than as are set forth herein and therein.  No subsequent
alteration, amendment, change, waiver or addition to this Agreement shall be
binding upon the Parties unless reduced to writing and signed by an authorized
officer of each Party.

 

15.08 Notices.  All notices which are required or permitted hereunder shall be
in writing and sufficient if delivered personally, sent by facsimile or a PDF
document sent by electronic mail (and promptly confirmed by personal delivery,
registered or certified mail or overnight courier), sent by
nationally-recognized overnight courier or sent by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:

 

 

 

 

 

Uli Hacksell

or uhacksell@cerecor.com

 

if to Licensee, to:

Cerecor Inc.

400 East Pratt Street

Baltimore, MD 21202

Attn :  John Kaiser or  Uli Hacksell

jkaiser@cerecor.com or uhacksell@cerecor.com

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

With copy to (which copy shall not constitute notice):

 

Kenneth J. Krisko, Esq.

Cooley LLP

One Freedom Square

Reston Town Center

11951 Freedom Drive

Reston, VA  20190-5656

Ph. 703-456-8581

kkrisko@cooley.com

 

if to Lilly, to:

 

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, Indiana 46285

Attention: General Counsel

Fax: 317-433-3000

 

 

Any such notice shall be deemed to have been received on the earlier of the date
actually received or the date five (5) days after the same was posted or
sent.  Either Party may change its address or its facsimile number by giving the
other Party written notice, delivered in accordance with this Section 15.08.

 

15.09 Force Majeure.  Failure of any Party to perform its obligations under this
Agreement (except the obligation to make payments when properly due) shall not
subject such Party to any liability or place them in breach of any term or
condition of this Agreement to the other Party if such failure is due to any
cause beyond the reasonable control of such non-performing Party (“Force
Majeure”), unless conclusive evidence to the contrary is provided.  Causes of
non-performance constituting Force Majeure shall include, without limitation,
acts of God, fire, explosion, flood, drought, war, riot, sabotage, embargo,
strikes or other labor trouble, failure in whole or in part of suppliers to
deliver on schedule materials, equipment or machinery, interruption of or delay
in transportation, a national health emergency or compliance with any order or
regulation of any government entity acting with color of right.  The Party
affected shall promptly notify the other Party of the condition constituting
Force Majeure as defined herein and shall exert reasonable efforts to eliminate,
cure and overcome any such causes and to resume performance of its obligations
with all possible speed; provided that nothing herein shall obligate a Party to
settle on terms unsatisfactory to such Party any strike, lockout or other labor
difficulty, any investigation or other proceeding by any public authority or any
litigation by any Third Party.  If a condition constituting Force Majeure as
defined herein exists for more than ninety (90) consecutive days, the Parties
shall meet to negotiate a mutually satisfactory resolution to the problem, if
practicable.  If the Parties cannot in good faith reach a satisfactory
resolution to the problem within sixty (60) days of meeting, the matter shall be
handled pursuant to the dispute resolution provisions of Article XIII herein.

 

15.10 Severability.  If any provision of this Agreement is declared illegal,
invalid or unenforceable by a court having competent jurisdiction, it is
mutually agreed that this Agreement shall continue in accordance with its terms
except for the part declared invalid or unenforceable by order of such court,
provided, however, that in the event that the terms and conditions of this
Agreement are materially altered, the Parties will, in good faith, renegotiate
the terms and conditions of this Agreement to reasonably substitute such invalid
or unenforceable provisions in light of the intent of this Agreement.

 

15.11 Extension to Affiliates.  In each case where an Affiliate of Licensee has
an obligation pursuant to this Agreement or performs an obligation pursuant to
this Agreement, Licensee shall cause and compel such Affiliate to perform such
obligation and comply with the terms of this Agreement.   For

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

the purposes of this Agreement, the Licensee shall be responsible for the
contractual obligations of Affiliates.  Licensee shall remain fully liable for
any acts or omissions of its Affiliates.

 

15.12 Counterpart.  This Agreement shall become binding when any one or more
counterparts of it, individually or taken together, shall bear the signatures of
each of the Parties hereto.  This Agreement may be executed in any number of
counterparts, each of which shall be an original as against either Party whose
signature appears thereon, but all of which taken together shall constitute but
one and the same instrument.

 

15.13 Captions.  The captions of this Agreement are solely for the convenience
of reference and shall not affect its interpretation.

 

15.14 Further Actions.  Each Party agrees to execute, acknowledge and deliver
such further instruments, and to do all other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.

 

15.15 Signatures.  For purposes of this Agreement, signatures sent by facsimile
or PDF shall also constitute originals.

 

 

 

[Signature Page Follows.]

 

* * * * CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
representatives of the Parties.

 

 

 

 

 

 

 

ELI LILLY AND COMPANY

 

CERECOR INC.

By:

/s/ Jan M. Lundberg

 

By:

/s/ Uli Hacksell

Title:  

Executive Vice President, Science and Technology, and President, Lilly Research
Laboratories

 

Title:  

Chief Executive Officer

 

 

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

 

 

Schedule 1.25

Licensed Compound (LY3130481)

Material Transfer

 

API Inventory

 

 

 

 

 

 

* * * *

Lot#

Inventory

Unit

Project ID

LSN / LY

* * * *

* * * *

* * * *

GM

* * * *

LY3130481

 

 

 

 

 

 

 

Drug product inventory needs to be relabeled before its use in a clinical trial.
Cerecor needs to extend the stability study to extend the dating for the drug
product.

 

DP Inventory

 

 

 

 

 

 

Project ID

WUXI FP No.

WUXI Batch
No.

Description

Inventory

Warehousing
Date

* * * *

* * * *

* * * *

* * * *

* * * *

27-Mar-14

 

* * * *

* * * *

* * * *

* * * *

27-Mar-14

 

* * * *

* * * *

* * * *

* * * *

27-Mar-14

 

* * * *

* * * *

* * * *

* * * *

9-Apr-14

 

 

 

 

 

 

 

 

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

 

Schedule 1.28

 

Lilly Know-How

 

In addition to all files currently located in Lilly’s dataroom:

·

Table of content of all documents included in the Product Data Package

 

·

Preclinical reports (ADME/PK, Pharmacology)

o

* * * *

o

* * * *

o

* * * *

o

* * * *

 

·

Toxicology reports

o

* * * *

 

·

Regulatory documents (some may be in paper)

o

* * * *

 

·

CMC

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

o

* * * *

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

o

* * * *

o

* * * *

o

* * * *

·

List and copies of draft and final manuscripts/publications

o

* * * *

o

* * * *

·

Presentations and associated files in PowerPoint

o

* * * *

o

* * * *

·

Intellectual Property Materials

o

* * * *

o

* * * *

o

* * * *

·

Marketing

o

* * * *

·

Material Transfer Agreements

o

* * * *

·

Due Diligence Gaps

The following are the gaps identified during due diligence review of the data
room and is needed as part of tech transfer

o

CMC Drug Substance Gaps:

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

o

CMC Drug Product Gaps:

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

-

* * * *

-

* * * *

-

* * * *

o

Non-clinical reports - Need final signed protocol and study reports for the
following studies:

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

-

* * * *

 

 

*Note: Lilly has not confirmed that all items listed in this Schedule 1.28 exist
as of the Effective

Date.  Upon request by Cerecor, Lilly will make a reasonable search for any
additional items listed above and not previously provided to Cerecor.

 

 

 

 

 

 

 

 

 

 

 

 

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

 

 

Schedule 1.29

Lilly Patent Rights

 

 

 

 

 

 

 

 

 

 

 

Docket

Number

Country

Application Number

Application Date

Patent Number

Grant Date

Status

Sub Status

* * * *

A.R.I.P.O.

* * * *

* * * *

 

 

Filed

Filed

* * * *

AAAA-Series Summary

 

 

 

 

Docketed

Mailed

* * * *

Algeria

* * * *

* * * *

 

 

Filed

Filed

* * * *

Argentina

* * * *

* * * *

 

 

Filed

Published

* * * *

Australia

* * * *

* * * *

 

 

Filed

Case Allowed

* * * *

Brazil

* * * *

* * * *

 

 

Filed

Filed

* * * *

Brunei

* * * *

* * * *

 

 

Filed

Mailed

* * * *

Canada

* * * *

* * * *

 

 

Filed

Filed

* * * *

Chile

* * * *

* * * *

 

 

Filed

Filed

* * * *

China P.R.

* * * *

* * * *

 

 

Filed

Published

* * * *

Colombia

* * * *

* * * *

 

 

Filed

Published

* * * *

Costa Rica

* * * *

* * * *

 

 

Filed

Filed

* * * *

Dominican Republic

* * * *

* * * *

 

 

Filed

Published

* * * *

Ecuador

* * * *

* * * *

 

 

Filed

Filed

* * * *

Egypt

* * * *

* * * *

 

 

Filed

Filed

* * * *

El Salvador

* * * *

* * * *

 

 

Filed

Filed

* * * *

Eurasian Patent Convention

* * * *

* * * *

 

 

Filed

Published

* * * *

European Patent Convention

* * * *

* * * *

 

 

Filed

Published

* * * *

Guatemala

* * * *

* * * *

 

 

Filed

Filed

* * * *

Gulf Cooperation Council

* * * *

* * * *

 

 

Filed

Filed

* * * *

Honduras

* * * *

* * * *

 

 

Filed

Filed

* * * *

Hong Kong

* * * *

* * * *

 

 

Filed

Published

* * * *

India

* * * *

* * * *

 

 

Filed

Filed

* * * *

Indonesia

* * * *

* * * *

 

 

Filed

Filed

* * * *

Israel

* * * *

* * * *

 

 

Filed

Filed

* * * *

Japan

* * * *

* * * *

 

 

Filed

Published

* * * *

Jordan

* * * *

* * * *

 

 

Filed

Filed

* * * *

Lebanon

* * * *

* * * *

 

 

Filed

Filed

* * * *

Macao

 

 

 

 

Docketed

Mailed

* * * *

Malaysia

* * * *

* * * *

 

 

Filed

Filed

* * * *

Mexico

* * * *

* * * *

 

 

Filed

Published

* * * *

Morocco

* * * *

* * * *

 

 

Filed

Filed

* * * *

New Zealand

* * * *

* * * *

 

 

Filed

Filed

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

* * * *

Nigeria

* * * *

* * * *

 

 

Filed

Case Allowed

* * * *

Pakistan

* * * *

* * * *

 

 

Filed

Filed

* * * *

Panama

* * * *

* * * *

 

 

Filed

Published

* * * *

Patent Cooperation Treaty

* * * *

* * * *

 

 

Inactive

National

* * * *

Peru

* * * *

* * * *

 

 

Filed

Published

* * * *

Philippines

* * * *

* * * *

 

 

Filed

Filed

* * * *

Korea South

* * * *

* * * *

 

 

Filed

Published

* * * *

Singapore

* * * *

* * * *

* * * *

* * * *

Granted

Granted

* * * *

South Africa

* * * *

* * * *

 

 

Filed

Filed

* * * *

Sri Lanka

* * * *

* * * *

 

 

Filed

Filed

* * * *

Taiwan

* * * *

* * * *

 

 

Filed

Published

* * * *

Thailand

* * * *

* * * *

 

 

Filed

Filed

* * * *

Trinidad & Tobago

* * * *

* * * *

 

 

Filed

Filed

* * * *

Tunisia

* * * *

* * * *

 

 

Filed

Filed

* * * *

Ukraine

* * * *

* * * *

 

 

Filed

Filed

* * * *

United States

* * * *

* * * *

* * * *

* * * *

Granted

Granted

* * * *

Venezuela

* * * *

* * * *

 

 

Filed

Published

* * * *

Vietnam

* * * *

* * * *

 

 

Filed

Filed

* * * *

AAAA-Series Summary

 

 

 

 

Docketed

Mailed

* * * *

Patent Cooperation Treaty

* * * *

* * * *

 

 

Filed

Published

* * * *

Taiwan

* * * *

* * * *

 

 

Filed

Published

* * * *

United States

* * * *

* * * *

 

 

Filed

Filed

 

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

Attachment 3.02(a)

 

Initial Development Plan

 

 

Picture 4 [cerc20160930ex10010783c001.jpg]

 

Development Path for 2016/2017/2018

 

Technology Transfer:

·

* * * *

Non-Clinical:

·

Write IND summaries

·

* * * *

·

Plan and conduct 6-month Rat Toxicity Study (2017/2018)

·

Plan and conduct 9-month Monkey Toxicity Study (2017/2018)

·

Plan and conduct Segment 2 Repro Toxicity Studies (2017/2018)

Regulatory:

·

IND development and submission to FDA

·

* * * *

CMC:

·

Initiate discussion with SynTheAll Pharmaceutical CO., Ltd. (STA), a subsidiary
of WuXi AppTec. regarding the product transfer from Lilly to Cerecor

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

·

Re-certify current API and reference standard by 2Q2016

·

Manufacture, package and label CTM using the current API supply for the SAD/MAD
studies by 1H2017

·

Write CMC Module 2 and 3 sections of the IND by 2Q2017

·

Manufacture API at STA for preliminary Tox studies by 3Q2-17

 

Clinical:

·

* * * *

·

Write IND summaries

·

Finalize Phase 1 SAD/MAD protocols and Phase 2/3 strategy

·

* * * *

·

Anticipate Phase 1 study start: 2H2017; study end: 1H2018

 

Intellectual Property:

·

* * *  *

 

 

 

 

****CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

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

 

 

Attachment 9.03

 

Initial Press Release

 

 

Picture 9 [cerc20160930ex10010783c002.jpg]

DRAFT – NOT FOR RELEASE

 

Cerecor Announces Acquisition of Phase 1-ready TARP-γ8-AMPA Receptor Antagonist 

(CERC-611) from Lilly

Phase 1 development for epilepsy expected to commence in 2017

BALTIMORE, September 12, 2016 - Cerecor Inc. (NASDAQ: CERC), a clinical-stage
biopharmaceutical company developing treatments to make a difference in the
lives of patients with neurological and psychiatric disorders, today announced
that it has acquired exclusive, worldwide rights from Eli Lilly and Company
(“Lilly”) to develop and commercialize LY3130418 (now designated as CERC-611).
CERC-611 is a Phase 1-ready, potent and selective Transmembrane AMPA Receptor
Regulatory Protein (TARP)-γ8-dependent AMPA receptor antagonist. TARPs are a
fairly recently discovered family of proteins that have been found to associate
with and modulate the activity of AMPA receptors. TARP-γ8-dependent AMPA
receptors are localized primarily in the hippocampus, a region of importance in
complex partial seizures and particularly relevant to seizure origination and/or
propagation. Research also suggests that selectively targeting individual TARPS
may enable selective modulation of specific brain circuits without globally
affecting synaptic transmission which may lead to improved efficacy, safety and
tolerability. Cerecor expects to submit an investigational new drug application
(“IND”) to the United States Food and Drug Administration (“FDA”) and, upon
acceptance of the IND by the FDA, commence Phase 1 development of CERC-611 in
2017. 

CERC-611 was discovered and developed by Lilly for the treatment of epilepsy, a
neurological disorder affecting over 50 million people worldwide, 150,000 new
cases are diagnosed in the US annually, and 30-40% of treated patients are
resistant to current pharmacotherapies with only 8% of treated patients being
maintained seizure free.  The disorder, if not controlled can lead to severe
pathology and death. “There is a significant unmet need for new mechanisms that
provide a new approach to treatment of epilepsy with improved efficacy, safety,
tolerability and ease-of-use,” said Ron Marcus, MD, Chief Medical officer and
Head, Regulatory Affairs at Cerecor. 

AMPA receptor antagonists are known anticonvulsant agents and their ability to
modulate excitatory neurotransmission is key to their anti-epileptic therapeutic
potential.  However, since AMPA receptor activity is so ubiquitous in the
central nervous system (“CNS”),  a non-selective AMPA antagonist approach
affects many areas of the CNS resulting in undesired effects, such as ataxia,
sedation, falls, and/or dizziness, which are shared by all known general or
broad spectrum AMPA receptor antagonists.  Typically, doses of these medications
needed to obtain anti-convulsant activity are close to, or overlap with, doses
at which undesired effects are observed. “Because of the predominant hippocampal
location of TARP-γ8-dependent AMPA receptors, we believe that the efficacy and
side effect profile of CERC-611 may represent an improvement compared to current
antiepileptics,” said Uli Hacksell, Ph.D., Cerecor’s CEO, President and
Chairman.    “We are excited to make CERC-611 a key addition to our pipeline and
we expect to file an IND and commence Phase 1 clinical in 2017.”

Under the terms of the agreement, Cerecor will immediately assume full
development and commercialization responsibilities of CERC-611. Lilly will
receive an upfront licensing fee as well as milestone and tiered royalty
payments. 

About CERC-611

CERC-611 (TARP-γ8-AMPA) is a potent and selective TARP-γ8-dependent AMPA
receptor antagonist that we believe is the first molecule to selectively target
and functionally block regionally-specific AMPA receptors after oral
dosing.  This selectivity was engineered into CERC-611 using structure-activity
relationship  information to achieve selective blockade of the AMPA receptor
regulator protein or TARP gamma 8 (γ8) (high density expression in hippocampus,
a region of importance in partial epilepsies) while sparing AMPA receptors
thought to be associated with TARP‑γ2 (high density expression in cerebellum
regulating the ataxia and falling associate with broad spectrum AMPA receptor
antagonists). 

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CERC-611 has been observed to have positive preclinical activity in multiple
animal models of epilepsy, neuropathic pain, and depression. 

 

About Cerecor

Cerecor is a clinical-stage biopharmaceutical company developing innovative drug
candidates to make a difference in the lives of patients with neurological and
psychiatric diseases. We are committed to the development of drugs that improve
lives by applying our extensive knowledge and experience in central nervous
system disorders. Cerecor is currently pursuing the development of two clinical
Phase 2-stage product candidates: CERC-301 and CERC-501.

 

CERC-301 as an oral, NR2B specific N‑methyl‑D‑aspartate receptor antagonist that
is currently in a Phase 2 clinical trial as an oral, rapidly acting adjunctive
treatment for patients with severe major depressive disorder (“MDD”) who are
failing to achieve an adequate response to their current antidepressant
treatment. We expect top-line data from this trial in the first half of 2017.
Cerecor received fast track designation by the United States Food and Drug
Administration in November 2013 for CERC‑301 for the treatment of MDD. We
believe CERC‑301 has the potential to be a first-in-class medication that may
significantly reduce depressive symptoms in a matter of days.

 

CERC-501 is a potent and selective kappa opioid receptor (“KOR”), antagonist
that is currently in a Phase 2 clinical trial for smoking cessation that is
expected to provide top-line data in December 2016.  In addition to Cerecor’s
Phase 2 trial, three externally-funded clinical trials are being conducted to
evaluate the use of CERC-501 in treating depressive symptoms, stress related
smoking relapse and cocaine addiction. One study is being conducted under the
auspices of the National Institute of Mental Health , the second is a
collaboration between Cerecor and Yale investigators with funding from the
National Institutes of Health  funding and the third study is being conducted at
Rockefeller University Hospital and is funded by a private foundation.

 

Cerecor has one preclinical stage asset, CERC-406, a brain penetrant
catechol‑O‑methyltransferase inhibitor with potential procognitive activity.

 

For more information about the Company and its products, please
visit www.cerecor.com or contact Mariam E. Morris, Chief Financial Officer, at
(443) 304-8002.

 

Forward-Looking Statements

 

This press release may include forward-looking statements made pursuant to the
Private Securities Litigation Reform Act of 1995. Forward-looking statements are
statements that are not historical facts. Such forward-looking statements are
subject to significant risks and uncertainties that are subject to change based
on various factors (many of which are beyond Cerecor’s control), which could
cause actual results to differ from the forward-looking statements. Such
statements may include, without limitation, statements with respect to Cerecor’s
plans, objectives, projections, expectations and intentions and other statements
identified by words such as “projects,” “may,” “will,” “could,” “would,”
“should,” “continue,” “seeks,” “aims,” “predicts,” “believes,” “expects,”
“anticipates,” “estimates,” “intends,” “plans,” “potential” or similar
expressions (including their use in the negative), or by discussions of future
matters such as the development of product candidates or products, technology
enhancements, possible changes in legislation, and other statements that are not
historical. These statements are based upon the current beliefs and expectations
of Cerecor’s management but are subject to significant risks and uncertainties,
including those detailed in Cerecor’s filings with the Securities and Exchange
Commission. Actual results may differ from those set forth in the
forward-looking statements. Except as required by applicable
law, Cerecor expressly disclaims any obligations or undertaking to release
publicly any updates or revisions to any forward-looking statements contained
herein to reflect any change in Cerecor’s expectations with respect thereto or
any change in events, conditions or circumstances on which any statement is
based.

 

 

Media Contact:

MacDougall Biomedical Communications

Joe Rayne – 781-235-3060

ir@cerecor.com

 

137782646 v1 

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