EXECUTION COPY

 

CONFIDENTIAL

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Exhibit 10.21

 

COLLABORATION, EXCLUSIVE LICENSE, AND
COMPANION DIAGNOSTIC AGREEMENT

 

by and between

 

Merck Sharp & Dohme Research GmbH and

 

ENDOCYTE, INC.

 

 

 

 

COLLABORATION, EXCLUSIVE LICENSE AND COMPANION DIAGNOSTIC AGREEMENT

 

This Collaboration, Exclusive License and Companion Diagnostic Agreement (this
“Agreement”) is effective as of April 13, 2012, (the “Execution Date”) and is
entered into by and between Merck Sharp & Dohme Research GmbH, a corporation
organized and existing under the laws of Switzerland (“Merck”), and ENDOCYTE,
INC., a corporation organized and existing under the laws of Delaware
(“Endocyte”).

 

RECITALS:

 

WHEREAS, Endocyte has developed and controls certain technology and proprietary
materials related EC145 and certain back-up compounds;

 

WHEREAS, Endocyte has also developed and controls certain technology and
proprietary materials related to EC145’s companion diagnostic EC20;

 

WHEREAS, Merck is engaged in the research, development and commercialization of
human and animal therapeutics;

 

WHEREAS, Merck and Endocyte desire to collaborate to develop EC145 and
commercialize any resultant Product (as hereinafter defined) and desire to
collaborate on and coordinate the development and commercialization of the
Companion Diagnostic (as hereafter defined) and Product;

 

WHEREAS, in undertaking such activities, Merck desires to obtain and Endocyte
desires to grant Merck a license under the Endocyte Patent Rights and Endocyte
Know-How, upon the terms and conditions set forth herein and Endocyte desires to
grant such a license;

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, the receipt and sufficiency which are hereby
acknowledged, Merck and Endocyte hereby agree as follows:

 

Article 1 DEFINITIONS.

 

Unless specifically set forth to the contrary herein, the following terms,
whether used in the singular or plural, shall have the respective meanings set
forth below.

 

1.1“Act” means, as applicable, the United States Federal Food, Drug and Cosmetic
Act, 21 U.S.C. §§ 301 et seq., and/or the Public Health Research Act, 42 U.S.C.
§§ 262 et seq., as such may be amended from time to time.

 

1.2“Affiliate” means, with respect to any Person, any other Person that directly
or indirectly controls, is controlled by or is under common control with such
Person. A Person shall be deemed to control another Person if such Person
possesses the power to direct or cause the direction of the management, business
and policies of such Person, whether through the ownership of fifty percent
(50%) or more of the voting securities of such Person, by contract or otherwise.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 1

 

 

1.3“Agreement” shall have the meaning given such term in the preamble to this
document.

 

1.4“Allowable Expenses” shall have the meaning set forth in Schedule 1.117 (US
Adjusted Net Sales).

 

1.5“Applicable Laws” means all applicable laws, statutes, rules, regulations,
orders, judgments, injunctions and/or ordinances of any Governmental Authority
in the Territory, including cGLP, cGCP, and cGMP.

 

1.6“Back-up Compounds” mean [ * ] or [ * ], the structures of which are attached
hereto as Schedule 1.6.

 

1.7“Calendar Quarter” means the respective periods of three (3) consecutive
calendar months ending on March 31, June 30, September 30 and December 31.

 

1.8“Calendar Year” means each successive period of twelve (12) months commencing
on January 1 and ending on December 31.

 

1.9“Challenge” means any challenge to the validity or enforceability of any of
the Endocyte Patent Rights, including by:

 

1.9.1filing a declaratory judgment action in which any of the Endocyte Patent
Rights is alleged to be invalid or unenforceable;

 

1.9.2citing prior art pursuant to 35 U.S.C. §301 against any of the Endocyte
Patent Rights, filing a request for re-examination of any of the Endocyte Patent
Rights pursuant to 35 U.S.C. §302 and/or §311, or becoming a party to an
interference, or providing assistance to a Third Party which has become a party
to an interference, with an application for any of the Endocyte Patent Rights
pursuant to 35 U.S.C. §135; or

 

1.9.3filing or commencing any re-examination, opposition, cancellation, nullity
or similar proceedings against any of the Endocyte Patent Rights in any country.

 

1.10“Change of Control” means with respect to a Party: (1) the sale of all or
substantially all of such Party’s assets or business relating to this Agreement;
(2) a merger, reorganization or consolidation involving such Party in which the
voting securities of such Party outstanding immediately prior thereto cease to
represent at least fifty percent (50%) of the combined voting power of the
surviving entity immediately after such merger, reorganization or consolidation;
or (3) a person or entity, or group of persons or entities, acting in concert
(other than financial investment groups that do not have as a primary business
the development and/or commercialization of pharmaceutical products or companion
diagnostics) acquire more than fifty percent (50%) of the voting equity
securities or management control of such Party.

 

1.11“Clinical Supply Agreement” shall have the meaning set forth in Section
6.3.6.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 2

 

 

1.12“Clinical Trial” means a clinical study of the Product involving the
administration of Product to patients for any indication, and includes any Phase
I Clinical Trial, Phase I/II Clinical Trial, Phase II Clinical Trial, Phase IIb
Clinical Trial, Phase II/III Clinical Trial, and Phase III Clinical Trial.

 

1.13“Combination Product” means a Product which includes the Compound in
combination with one or more active ingredients (excluding any compounds
proprietary to Endocyte and not licensed under this Agreement) other than
Compound. All references to Product in this Agreement shall be deemed to include
Combination Product.

 

1.14“Commences” or “Commenced” means, with respect to a Clinical Trial, the
administration of the first dose to a patient in such Clinical Trial.

 

1.15“Commercially Reasonable Efforts” means that effort [ * ] with respect to
its own products or diagnostics, as the case may be, of similar scientific merit
and comparable commercial potential, taking into account all appropriate factors
that impact the applicable Party’s decisions as to resource allocation for its
products or diagnostics, such as intellectual property position, the cost of
development, regulatory risk, safety and efficacy, reimbursement factors,
parallel importation considerations, pricing, product life cycle and cost of
sales and marketing, also including the timing and promptness with which such
efforts and resources would be applied, and, in the case of [ * ]. The efforts
required by Merck or Endocyte necessary to constitute Commercially Reasonable
Efforts will not be reduced by consideration of the fact in and of itself, that
Merck or Endocyte has an interest in developing or commercializing
pharmaceuticals or diagnostics other than the Product or Companion Diagnostic
that may be marketed for the same therapeutic indications as such Product or
Companion Diagnostic.

 

1.16“Commercialize” shall mean any and all activities directed to the offering
for sale and sale of the Product, both before (to the extent permitted under
Applicable Laws) and after Product Approval has been obtained, including
activities related to promoting, marketing, distributing, selling, providing
support for, and post-Regulatory Approval Medical Affairs Activities for Product
or the Companion Diagnostic, as the case may be, and “Commercializing” and
“Commercialization” shall have correlative meanings.

 

1.17“Companion Diagnostic” means the diagnostic test that contains or comprises
EC20 and on which the Product depends to meet the Product’s labeled safety and
efficacy claims, including any and all formulations, combinations or methods of
delivery, and any other components that may be included in such diagnostic test
(such as folic acid and glass vials), including any improvements thereto.

 

1.18“Companion Diagnostic Trademark” means the trademark(s) Controlled by
Endocyte for use in connection with the Development and/or Commercialization of
the Companion Diagnostic in the Territory (including the names of any Clinical
Trials) and/or accompanying logos, trade dress and/or indicia or origin,
including, but not limited to, those listed on Schedule 1.18.

 

1.19“Compound” means EC145 and/or any Back-up Compounds.

 

1.20“Control”, “Controls” or “Controlled by” means (a) with respect to Patent
Rights, the possession by a Party of the right to grant a license or sublicense
to such Patent Rights as provided herein without violating the terms of any
agreement or arrangement with any Third Party and without violating any
Applicable Laws and (b) with respect to Know-How or Confidential Information,
the possession by a Party of the right to grant a license or sublicense or to
provide such Know-How or Confidential Information to the other Party as provided
herein without violating the terms of any agreement or arrangement with any
Third Party and without violating any Applicable Laws.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 3

 

 

1.21“Co-Promote” shall mean, with respect to the Co-Promotion Territory, to
promote a Product through Merck’s and Endocyte’s respective sales forces under a
single trademark in such Co-Promotion Territory. “Co-Promotion” shall have a
correlative meaning.

 

1.22“Co-Promotion Territory” means the United States.

 

1.23“Co-Promotion Territory Commercialization Plan” means, with respect to the
Product in the Co-Promotion Territory, the comprehensive plan that describes the
pre-launch, launch, and subsequent Commercialization activities (including
without limitation anticipated activities with respect to messaging, branding,
demographics and market dynamics, key tactics and strategies for implementing
those activities, and the associated budget and timelines for all such
activities (such budget, the “Joint Commercialization Budget”), as such plan may
be amended or updated.

 

1.24“Detail” shall mean a presentation in a face-to-face meeting in an
individual or group practice setting between a professional sales representative
and a target prescriber, for use of Product in the Field in the Co-Promotion
Territory, but shall not include merely a reminder or a sample or promotional
material drop. For clarity, medical liaisons shall not conduct Details.
“Detail,” when used as a verb, and “Detailing” shall have correlative meanings.

 

1.25“Develop” shall mean all non-clinical activities and clinical activities
designed to obtain any Regulatory Approval of the Product or Companion
Diagnostic in accordance with this Agreement or to be used in the
Commercialization of the Product or Companion Diagnostic (except for Phase IV
Clinical Trials), including the toxicology studies, pharmacokinetic,
pharmacodynamic and other non-clinical studies, statistical analysis and report
writing, Clinical Trial design, pre-Regulatory Approval Medical Affairs
Activities and operations, preparing and filing Regulatory Filings, and all
regulatory affairs related to the foregoing, as well as any and all activities
pertaining to Manufacturing and formulation development and lifecycle
management, including new indications, new formulations and all other activities
related to securing Regulatory Approval for Product or the Companion Diagnostic.
“Developing” and “Development” shall have correlative meanings.

 

1.26“Development Costs” means, with respect to each Compound, Product and/or
Companion Diagnostic, all costs actually incurred by Merck or Endocyte and
specifically attributable to Development of such Compound, Product and/or
Companion Diagnostic, including:

 

1.26.1actual amounts paid to Third Parties, if any contracted to conduct aspects
of such Development work;

 

1.26.2internal costs incurred by Merck or Endocyte, as the case may be, in
connection with such Development (calculated at the FTE Rate);

 

1.26.3costs for Clinical Trials planning and implementation, Third Party
suppliers of clinical services, clinical site recruiting, training and
participation, monitoring of clinical sites, data analysis and data quality
assurance;

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 4

 

 

1.26.4costs for preparing, reviewing or developing data and documents for
submission to Regulatory Authorities, and

 

1.26.5the Cost of Goods (as defined in Schedule 1.117) of such Compound, Product
and/or Companion Diagnostic used in any Clinical Trials; and the costs of any
comparator drugs for use in Clinical Trials.

 

1.27“Diagnostic Follow-on” means any diagnostic test or product other than the
Companion Diagnostic Controlled by Endocyte that is intended to identify folate
expression in tumors, in any formulation, combination or method of delivery (and
as such diagnostic product may be commercialized by Endocyte in the future).

 

1.28“EC20” means folic acid conjugated to a peptidic metal-chelating moiety,
that chelates 99mTc, the structure of which is attached hereto as Schedule 1.28.

 

1.29“EC145” means folic acid conjugated to desacetylvinblastine hydrazide
(DAVLBH; potent Vinca alkaloid derivative), the structure of which is attached
hereto as Schedule 1.29.

 

1.30“Effective Date” shall have the meaning set forth in Section 13.1.

 

1.31“EMA” shall mean the European Medicines Agency and any successor Regulatory
Authority having substantially the same function.

 

1.32“Endocyte” shall have the meaning given such term in the preamble to this
Agreement.

 

1.33“Endocyte Existing Know-How” means any Know-How Controlled by Endocyte or
its Affiliates (other than a Third Party that becomes an Affiliate of Endocyte
as a result of a Change of Control of Endocyte) that is generated on or prior to
the Effective Date or other than in performance of activities conducted under
this Agreement (if generated after the Effective Date).

 

1.34“Endocyte Genus Patent Rights” means any Endocyte Licensed Patent Rights
that are not Endocyte Product-Specific Patent Rights, including the Endocyte
Licensed Patent Rights that are: (a) listed on Schedule 1.36(a) (the “[ * ]
Patents”), (b) listed on Schedule 1.36(b) (the “[ * ] Patents”), (c) listed on
Schedule 1.36(c) (the “[ * ] Patents”), (d) listed on Schedule 1.36(d) (the
“Misc. Patent”), (e) listed on Schedule 1.36(f) (the "[ * ]") and (f) listed on
Schedule 1.36(g) (the “[ * ]”).

 

1.35“Endocyte Know-How” means Endocyte Existing Know-How, Endocyte Program
Know-How, and Endocyte’s interest in any Joint Program Know-How.

 

1.36“Endocyte Licensed Patent Rights” means any Patent Rights Controlled by
Endocyte or any of its Affiliates (other than a Third Party that becomes an
Affiliate of Endocyte as a result of a Change of Control of Endocyte) that claim
or cover a Compound, Product, or Companion Diagnostic, or the manufacture,
formulation or use of a Compound, Product or Companion Diagnostic, and whose
claims are directed to or encompass an invention conceived and/or reduced to
practice prior to or on the Effective Date or other than in performance of
activities conducted under this Agreement (if generated after the Effective
Date), including, but not limited to, those Patent Rights listed on Schedule
1.36.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 5

 

 

1.37“Endocyte Patent Rights” means Endocyte Licensed Patent Rights, Endocyte
Program Patent Rights, and Endocyte’s interest in any Joint Program Patent
Rights.

 

1.38“Endocyte Priority Patents” means any and all patents and patent
applications in the Territory (which for the purpose of this Agreement shall be
deemed to include certificates of invention and applications for certificates of
invention), including divisionals, continuations, continuations-in-part,
reissues, renewals, substitutions, registrations, re-examinations,
revalidations, extensions, supplementary protection certificates, and the like
of any such patents and patent applications, and foreign equivalents of the
foregoing, that (a) are not Endocyte Patent Rights and (b) claim priority to an
Endocyte Patent Right.

 

1.39“Endocyte Product-Specific Patent Rights” means the Endocyte Licensed Patent
Rights that specifically claim a Compound or the use, formulation or manufacture
thereof, or patient selection methods for therapy with a Compound, including
those patents and patent applications set forth on Schedule 1.36(e) and any
divisionals, continuations, continuations-in-part, reissues, renewals,
substitutions, registrations, re-examinations, revalidations, extensions,
supplementary protection certificates, and the like of any such patents and
patent applications, and foreign equivalents thereof, in each case that
specifically claim EC145 or the use, formulation or manufacture thereof, or
patient selection methods for therapy with EC145. As per Section 11.2.2, in the
event a continuation or divisional patent application (or foreign equivalent, if
applicable) of an Endocyte Genus Patent Right is filed at request of Merck that
specifically claims a Compound or the use, formulation or manufacture thereof,
or patient selection methods for therapy with a Compound, that continuation or
divisional patent application (or foreign equivalent) will be an Endocyte
Product-Specific Patent Right.

 

1.40“Endocyte Program Know-How” means any Program Know-How Controlled by
Endocyte or any of its Affiliates.

 

1.41“Endocyte Program Patent Rights” means any Program Patent Rights Controlled
by Endocyte or any of its Affiliates.

 

1.42“Estimated US Launch” means the date estimated for launch of the Product in
the United States as proposed by Merck and approved by the JCC.

 

1.43“EU Marketing Authorization Application” shall have the meaning set forth in
Section 4.10.4.

 

1.44“European Union” or “EU” means the member states of the European Union as
then constituted.

 

1.45“Excepted Licensor” means Purdue.

 

1.46“FDA” shall mean the United States Food and Drug Administration and any
successor Regulatory Authority having substantially the same function.

 

1.47“Field” means any and all uses in humans or animals.

 

1.48“Filing” of an application for Product Approval shall mean the acceptance by
a Regulatory Authority of such filing, if applicable, or the date of filing of
such application, if the applicable Regulatory Authority does not have an
acceptance process or requirement.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 6

 

 

1.49“First Commercial Sale” means, with respect to a country in the Territory,
the first shipment of commercial quantities of a Product sold in such country to
a Third Party on arm’s length terms by Merck, its Affiliate or sublicensee for
use in the Field after the receipt of Product Approval 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.

 

1.50“First Other Cancer Indication” shall mean the first Other Cancer Indication
of the Product for which Merck Commences a Phase III Clinical Trial.

 

1.51“Five Major EU Countries” means France, German, Italy, Spain and the United
Kingdom.

 

1.52“Fourth Other Cancer Indication” shall mean the first Other Cancer
Indication for which Merck Files an application for Product Approval for the
Product in the United States or for which Merck receives Product Approval in the
EU and which is not the First Other Cancer Indication or the Second Other Cancer
Indication or the Third Other Cancer Indication.

 

1.53“FTE” means eighteen hundred (1800) hours of work devoted to or in support
of the Development or Commercialization of the Product or the Companion
Diagnostic in accordance with a Product Development Plan or the Co-Promotion
Territory Commercialization Plan that is carried out by one or more employees of
a Party (other than field sales force personnel), measured in accordance with
such Party’s normal time allocation practices. In no event shall an individual
account for more than one FTE year in any Calendar Year. Any individual who
devotes less than eighteen hundred (1800) hours per year shall be treated as an
FTE on a pro-rata basis upon the actual number of hours worked divided by
eighteen hundred (1800).  Any individual who actually works more than eighteen
hundred (1800) hours shall not be charged at greater than one FTE.  The eighteen
hundred (1800) hour amount shall be used without regard to the Parties’ own
internal definition of the number of hours that comprises a full time employee.

 

1.54“FTE Rate” means a rate of [ * ] per FTE per annum for personnel engaged in
Development or Commercialization. The FTE Rate shall be adjusted annually for
each Calendar Year after 2012 by an amount per Calendar Year to be determined by
multiplying the then-applicable FTE Rate by the cumulative increase or decrease
in the Consumer Price Index for all Urban Consumers, as published by the U.S.
Department of Labor, Bureau of Statistics, from the beginning of the prior
Calendar Year (available at http://www.bls.gov/cpi/home.htm), or if such index
is not available, a reasonable replacement. “FTE Rate” shall include wages and
salaries, employee benefits, bonus, travel and entertainment, supplies and other
direct expenses. “Supplies” include lab, animal related, and other research and
development operating supplies. “Other direct expenses” include contractors,
dues, subscriptions, meetings and purchased services (including training,
relocation, recruitment, communications and repairs and maintenance). FTE Rate
shall not include indirect allocations such as human resources, finance,
occupancy or depreciation and administrative support, which shall be borne by
each Party.

 

1.55“Further Development Plan” shall have the meaning set forth in Section
4.3.1.

 

1.56“Global Regulatory Steering Team” or “GRST” shall have the meaning set forth
in Section 3.2.2.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 7

 

 

1.57“cGLP” or “current Good Laboratory Practice” means the applicable
then-current standards for laboratory activities for pharmaceuticals or
biologicals, as set forth in the Act and any regulations or guidance documents
promulgated thereunder, as amended from time to time, together with any similar
standards of good laboratory practice as are required by any Regulatory
Authority in the Territory.

 

1.58“cGCP” or “current Good Clinical Practice” means the applicable then-current
standards for conducting clinical trials for pharmaceuticals or biologicals, as
set forth under the Act and any regulations or guidance documents promulgated
thereunder, as amended from time to time, together with any similar standards of
good clinical practice as are required by any Regulatory Authority in the
Territory.

 

1.59“cGMP” or “current Good Manufacturing Practice” shall mean the applicable
then-current standards for conducting manufacturing activities for
pharmaceutical products (and/or active pharmaceutical ingredients) as are
required by any applicable Regulatory Authority in the Territory.

 

1.60“Governmental Authority” means any court, agency, authority, department,
regulatory body or other instrumentality of any government or country or of any
national, federal, state, provincial, regional, country, city or other political
subdivision of any such government or any supranational organization of which
any such country is a member.

 

1.61“IND” means (a) (i) an Investigational New Drug Application, as defined by
the Act and the regulations promulgated thereunder, that is required to be filed
with the FDA before beginning clinical testing of a Product or the Companion
Diagnostic in human subjects, or any successor application or procedure, and
(ii) any counterpart of a United States Investigational New Drug Application in
any other country in the Territory, and (b) all supplements and amendments that
may be filed with respect to any filings described in the preceding clause (a).

 

1.62“Indication” means a separate and distinct disease or medical condition in
humans for which a Product that is in Clinical Trials is intended to treat,
prevent and/or diagnose and/or for which a Product has received Product
Approval; provided that with respect to cancer, Indication shall mean any type
or class of cancer and not a line of therapy of the same form of cancer.

 

1.63“Information” means any and all information and data, including without
limitation all Merck Program Know-How, all Endocyte Know-How, and all other
scientific, pre-clinical, clinical, regulatory, manufacturing, marketing,
financial and commercial information or data, whether communicated in writing or
orally or by any other method, which is provided by one Party to the other Party
in connection with this Agreement.

 

1.64“Initial Indications Development Plan” shall have the meaning set forth in
Section 4.2.1.

 

1.65“Invention” means any process, method, composition of matter, article of
manufacture, discovery, use or finding that is conceived and/or reduced to
practice in the performance of activities under this Agreement.

 

1.66“Joint Commercialization Committee” or “JCC” shall have the meaning set
forth in Section 3.2.3.

 

1.67“Joint Development Committee” or “JDC” shall have the meaning set forth in
Section 3.2.1.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 8

 

 

1.68“Joint Manufacturing Committee” or “JMC” shall have the meaning set forth in
Section 3.2.4.

 

1.69“Joint Program Know-How” means any Program Know-How Controlled jointly by
Merck and Endocyte.

 

1.70“Joint Program Patent Rights” means any Program Patent Rights Controlled
jointly by Merck and Endocyte.

 

1.71“Joint Steering Committee” or “JSC” shall have the meaning set forth in
Section 3.1.

 

1.72“Know-How” means any and all proprietary data, information and materials
(whether patentable or not) related to (i) a Compound, Product, and/or Companion
Diagnostic and/or (ii) the manufacture, formulation or use of Compounds,
Products and/or Companion Diagnostics. Know-How shall, include, without
limitation (a) ideas, discoveries, improvements, technology or trade secrets,
(b) pharmaceutical, chemical and biological materials, products, components or
compositions, (c) tests, assays, techniques, regulatory requirements and
strategies, data (including non-clinical and clinical data), methods,
procedures, formulas or processes, (d) technical and non-technical data and
other information relating to any of the foregoing, (e) drawings, plans,
designs, diagrams, sketches, specifications or other documents containing or
relating to such information or materials, and (f) business processes, price
data and information, marketing data and information, sales data and
information, marketing plans and market research.

 

1.73“Manufacture” or “Manufacturing” shall mean, with respect to Compound,
Product(s) and Companion Diagnostic, the receipt, handling and storage of active
pharmaceutical ingredients and other materials, the manufacturing, processing,
packaging and labeling (excluding the development of packaging and labeling
components for Regulatory Approval), holding (including storage), quality
assurance and quality control testing (including release) of such Compound,
Product or Companion Diagnostic (other than quality assurance and quality
control related to development of the manufacturing process, which activities
shall be considered Development activities) and shipping of such Compound,
Product or Companion Diagnostic.

 

1.74“Medical Affairs Activities” means activities designed to ensure or improve
appropriate medical use of, conduct medical education of, or further research
regarding, the Product, including by way of example:  (a) activities of medical
scientific liaisons who, among their other functions may (x) conduct service
based medical activities including providing input and assistance with
consultancy meetings, recommend investigators for clinical trials and provide
input in the design of such trials and other research related activities, and
(y) deliver non-promotional communications and conduct non-promotional
activities including presenting new clinical trial and other scientific
information; (b) support of continuing medical education (although not in
connection with content) or symposia; (c) development, publication and
dissemination of publications relating to a Product; (d) conducting advisory
board meetings; (e) the support of investigator-initiated trials; and (f)
establishment and implementation of risk, evaluation and mitigation and
strategies (REMS).

 

1.75“Merck” shall have the meaning given such term in the preamble to this
Agreement.

 

1.76“Merck Program Know-How” means any Program Know-How Controlled by Merck or
any of its Affiliates. For clarity, all [ * ] shall constitute Merck Program
Know-How.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 9

 

 

1.77“Merck Program Patent Rights” means any Program Patent Rights Controlled by
Merck or any of its Affiliates.

 

1.78“Net Sales” means the gross invoice price (not including value added taxes,
sales taxes, or similar taxes) of Product sold by Merck or its Related Parties
to the first Third Party after deducting, if not previously deducted, from the
amount invoiced or received:

 

1.78.1trade and quantity discounts other than early payment cash discounts;

 

1.78.2returns, rebates, chargebacks and other allowances;

 

1.78.3retroactive price reductions that are actually allowed or granted;

 

1.78.4deductions to gross invoice price of Product [ * ];

 

1.78.5[ * ];

 

1.78.6a [ * ], early payment cash discounts, transportation and insurance and
custom duties; and

 

1.78.7the [ * ] Product.

 

With respect to sales of Combination Products, Net Sales shall be calculated on
the basis of the gross invoice price of Product(s) containing the same strength
of Compound sold without other active ingredients. In the event that Product is
sold only as a Combination Product, Net Sales shall be calculated on the basis
of the gross invoice price of the Combination Product multiplied by a fraction,
the numerator of which shall be the inventory cost of Compound in the Product
and the denominator of which shall be the inventory cost of all of the active
ingredients in the Combination Product. Inventory cost shall be determined in
accordance with Merck's regular accounting methods, consistently applied. The
deductions set forth in Sections 1.78.1 through 1.78.7 will be applied in
calculating Net Sales for a Combination Product. In the event that Product is
sold only as a Combination Product and either Party reasonably believes that the
calculation set forth in this Paragraph does not fairly reflect the value of the
Product relative to the other active ingredients in the Combination Product, the
Parties shall negotiate, in good faith, other means of calculating Net Sales
with respect to Combination Products.

 

1.79“NSCLC” means the non-small cell lung cancer Indication for the Product.

 

1.80“NSCLC Phase IIb” has the meaning set forth in Section 4.2.1(b).

 

1.81“Other Cancer Indication” means a cancer Indication other than PROC or
NSCLC, and other than any line extension or line of therapy for patients with
PROC or NSLC and which targets a different tumor type than ovarian or lung
cancer; provided that [ * ] shall for purposes of this Agreement be considered
an Other Cancer Indication.

 

1.82“Party” means Merck or Endocyte, individually, and “Parties” shall mean
Merck and Endocyte, collectively.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 10

 

 

1.83“Patent Rights” means any and all patents and patent applications in the
Territory (which for the purpose of this Agreement shall be deemed to include
certificates of invention and applications for certificates of invention),
including divisionals, continuations, continuations-in-part, reissues, renewals,
substitutions, registrations, re-examinations, revalidations, extensions,
supplementary protection certificates, and the like of any such patents and
patent applications, and foreign equivalents of the foregoing.

 

1.84“Person” means any individual, partnership, joint venture, limited liability
company, corporation, firm, trust, association, unincorporated organization,
governmental authority or agency, or any other entity not specifically listed
herein.

 

1.85“Phase I Clinical Trial” means a human clinical trial in any country that
would satisfy the requirements of 21 CFR 312.21(a).

 

1.86“Phase I/II Clinical Trial” means a human clinical trial, the principal
purpose of which is to study the safety, dosage levels, and response to the
Product prior to the initiation of a Phase III trial.

 

1.87“Phase II Clinical Trial” means a human clinical trial in any country that
would satisfy the requirements of 21 CFR 312.21(b).

 

1.88“Phase IIb Clinical Trial” means a human clinical trial the principal
purpose of which is a determination of efficacy and safety, in the target
population, at the intended clinical dose or doses or range of doses, on a
sufficient number of subjects and for a sufficient period of time to confirm the
optimal manner of use of the Product (dose and dose regimen) prior to the
Initiation of a Phase III Clinical Trial.

 

1.89“Phase II/III Clinical Trial” means a human clinical trial that addresses
within a single trial the objectives that are routinely achieved through a
separate Phase IIb Clinical Trial and Phase III Clinical Trial.

 

1.90“Phase III Clinical Trial” means a human clinical trial in any country that
would satisfy the requirements of 21 CFR 312.21(c) and is intended to gather the
additional information about effectiveness and safety that is needed to evaluate
the overall benefit-risk relationship of a pharmaceutical product, to provide an
adequate basis for physician labeling for a pharmaceutical product.

 

1.91“Phase IV Clinical Trial” means a study or data collection effort for a
Product that is initiated in a country/countries after receipt of Product
Approval and is principally intended to support the Commercialization of the
Product in such country/countries and not to support or maintain a Regulatory
Approval or otherwise obtain any labeling change.

 

1.92“Price Approvals” means in countries in the Territory where Regulatory
Authorities may approve or determine pricing or pricing reimbursement for
pharmaceutical products, such approval or determination.

 

1.93“PROC” means the platinum resistant ovarian cancer Indication of the
Product.

 

1.94“PROC Clinical Trial” has the meaning assigned thereto in Section 4.2.1(a).

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 11

 

 

1.95“PROC Protocols” has the meaning assigned thereto in Section 4.2.1(a).

 

1.96“Product(s)” means any pharmaceutical or biological preparation in final
form containing or comprising Compound in any formulation, combination or method
of delivery, for sale by prescription, over-the-counter or any other method or
for use in any Clinical Trial.

 

1.97“Product Approval” means approval of a New Drug Application, Biologics
License Application, Worldwide Marketing Application, Marketing Application
Authorization, filing pursuant to Section 510(k) of the Act, or similar
application or submission for Regulatory Approval of a Product filed with a
Regulatory Authority in a given country or group of countries to obtain
marketing approval for a biological, pharmaceutical or diagnostic product in
that country or in that group of countries.

 

1.98“Product Development Plan” shall have the meaning set forth in Section
4.3.1.

 

1.99“Product Trademark” means (a) the trademark(s) Controlled by Endocyte as of
the Effective Date for use in connection with the Development and/or
Commercialization of Product in the Field in the Territory (including names of
Clinical Trials) and/or accompanying logos, trade dress and/or indicia or
origin, including, but not limited to, those listed on Schedule 1.99 (the
“Endocyte Product Trademarks” and (b) the trademark(s) Controlled by Merck
during the Term for use in connection with the Development and/or
Commercialization of Product in the Field in the Territory (including names of
Clinical Trials) and/or accompanying logos, trade dress and/or indicia or
origin.

 

1.100“Program Know-How” means all Know-How generated by either Party or its
Affiliates, Related Parties or subcontractors and their respective employees,
agents or consultants in the performance of activities under this Agreement.
Program Know-How excludes rights under Inventions and Program Patent Rights.

 

1.101“Program IP” means all Program Know-How and Program Patent Rights.

 

1.102“Program Patent Rights” shall mean all Patent Rights that claim or cover
Inventions made by or on behalf of one or more of the Parties and/or their
respective Affiliates or Related Parties or subcontractors and their respective
employees, agents, or consultants in the performance of activities under this
Agreement.

 

1.103“Prosecute” means (a) to prepare and file patent applications, including ex
parte re-examinations or re-issues thereof, and represent applicant(s) or
assignee(s) before relevant patent offices or other relevant authorities during
examination, ex parte re-examination and re-issue thereof, or in appeal
processes of any of the foregoing, or any equivalent ex parte proceedings, (b)
to secure the grant of any patents arising from such patent applications, (c) to
maintain in force any issued patents (including through payment of any relevant
maintenance fees), and (d) to make all decisions with regard to any of the
foregoing activities. “Prosecution” has a corresponding meaning.

 

1.104“Purdue Agreement” means that certain Amended and Restated Exclusive
License Agreement, effective as of December 21, 1995, between Endocyte and
Purdue Research Foundation (“Purdue”), as amended from time to time.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 12

 

 

1.105“Regulatory Approval” means, with respect to any country or region in the
Territory, any approval, product and establishment license, registration or
authorization of any Regulatory Authority required for the Manufacture, use,
storage, importation, exportation, transport, distribution or sale of the
Product in such country or region (including all Pricing Approvals even if not
legally required to sell Product in a country).

 

1.106“Regulatory Authority” means any applicable government regulatory authority
involved in granting approvals for the manufacturing, marketing, reimbursement
and/or pricing of Compound, Product or the Companion Diagnostic in the
Territory, including, in the United States, the United States Food and Drug
Administration and any successor governmental authority having substantially the
same function.

 

1.107“Regulatory Filings” means, collectively: (a) all INDs, Drug Approval
Applications, applications for designation as an “Orphan Product(s)” under the
Orphan Drug Act, for “Fast Track” status under Section 506 of the FDCA or for a
new strength under Section 505(b)(4)(B) of the FDCA and all other similar
filings (including counterparts of any of the foregoing in any country or region
in the Territory); (b) all supplements and amendments to any of the foregoing;
and (c) all data and other information contained in the foregoing.

 

1.108“Related Party” means each of Merck, its Affiliates, and their respective
sublicensees (which term does not include distributors), as applicable.

 

1.109“ROW Commercialization Plan” shall have the meaning set forth in Section
5.3.

 

1.110“Royalty Territory” means the Territory excluding the United States and its
territories and possessions.

 

1.111“Second Other Cancer Indication” shall mean the first Other Cancer
Indication for which Merck Commences a Phase III Clinical Trial and which is not
the First Other Cancer Indication.

 

1.112“Selling Expenses” means, with respect to each Product, all costs and
expenses associated with all U.S. field-based personnel of Merck and its
Affiliates, and of Endocyte, if it Co-Promotes such Product, that support the
Product and customer relationships related thereto.

 

1.113“Term” shall have the meaning set forth in Section 13.2.

 

1.114“Territory” means all of the countries in the world, and their territories
and possessions.

 

1.115“Third Other Cancer Indication” shall mean the first Other Cancer
Indication for which Merck Files an application for Product Approval for the
Product in the United States or for which Merck receives Product Approval in the
EU and which is not the First Other Cancer Indication or the Second Other Cancer
Indication.

 

1.116“Third Party” means an entity other than Merck and its Related Parties, and
Endocyte and its Affiliates.

 

1.117“US Adjusted Net Sales” shall have the meaning set forth in Schedule 1.117.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 13

 

 

1.118“Valid Patent Claim” means a claim of an issued and unexpired patent
included within the Endocyte Patent Rights, other than those patents within the
Joint Program Patent Rights, directed to [ * ] which has not been revoked or
held unenforceable or invalid by a decision of a court or other governmental
agency of competent jurisdiction (which decision is not appealable or has not
been appealed within the time allowed for appeal), and which claim has not been
disclaimed, denied or admitted to be invalid or unenforceable through reissue,
re-examination or disclaimer or otherwise.

 

LICENSE GRANTS.

 

1.119License Grants/Compound and Product.

 

1.119.1Merck’s Exclusive License. During the Term, and subject to the terms and
conditions of this Agreement, Endocyte hereby grants to Merck an exclusive (even
as to Endocyte), sublicensable (subject to the restriction set forth below),
royalty bearing license in the Field in the Territory under Endocyte Patent
Rights, Endocyte Know-How, Endocyte Product Trademarks and Companion Diagnostic
Trademarks to make, have made, use, offer to sell, sell, import and otherwise
Develop and Commercialize Compound and Product. Merck may grant sublicenses of
the rights granted to it under this Section 2.1.1 without Endocyte’s consent;
provided, however, that Merck may not grant a sublicense of all the
Commercialization rights in the United States to a Third Party without complying
with Section 2.5.

 

1.119.2Endocyte’s Limited License. During the Term, and subject to the terms and
conditions of this Agreement, Merck hereby grants to Endocyte a limited
non-exclusive license under Endocyte Patent Rights, Endocyte Know-How, Product
Trademarks, Merck Program Patent Rights, Merck Know-How and Merck’s interest in
any Joint Program Patent Rights and Joint Know-How solely to perform any
activities under the Product Development Plan and/or to perform its obligations
under this Agreement, including without limitation its Co-Promotion of the
Product and commercialization of the Companion Diagnostic.

 

1.119.3Non-Exclusive Un-Blocking Grant. In the event that the making, having
made, use, offer for sale, sale or import by Merck, or Merck’s Related Parties,
of Compound(s) or Product(s) would infringe during the term of this Agreement a
claim of issued letters patent which Endocyte owns or has the rights to
sublicense and which patents are not covered by the grants in Sections 2.1.1 and
2.2.1, Endocyte hereby grants to Merck, to the extent Endocyte is legally able
to do so, a non-exclusive, sublicensable, royalty-free (except as provided
hereafter) license in the Territory under such issued letters patent for Merck
and its Related Parties to develop, make, have made, use, sell, offer for sale
or import Compound(s) and Product(s) in the Territory; provided, however that,
to the extent the sublicensing of any such issued letters patent to Merck under
this Section 2.1.3, requires the payment to a Third Party licensor of such
issued letters patent, other than an Excepted Licensor, such sublicense shall be
conditional upon Merck agreeing [ * ]. Nothing in this Section 2.1.3 shall
obligate Endocyte in any way to obtain or procure, for Merck’s benefit, licenses
or rights under any Third Party intellectual property.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 14

 

 

1.120License Grants and Covenants/Companion Diagnostic.

 

1.120.1Merck’s Non-Exclusive License. During the Term, and subject to the terms
and conditions of this Agreement, Endocyte hereby grants to Merck a
non-exclusive, non-royalty bearing license, with the right to grant sublicenses
(subject to the restriction set forth below), under Endocyte Patent Rights,
Endocyte Know-How, and Companion Diagnostic Trademarks to (i) market and promote
the Companion Diagnostic in the Field in the Territory for use in connection
with the Product and (ii) use the Companion Diagnostic in any way necessary or
reasonably useful in order for Merck to exercise the license granted by Endocyte
in Section 2.1.1. Merck may grant sublicenses of the rights granted to it under
this Section 2.2.1 without Endocyte’s consent; provided, however, that Merck may
not grant a sublicense to market and promote the Companion Diagnostic in the
United States to a Third Party without complying with Section 2.5.

 

1.120.2Endocyte’s Covenant. Endocyte covenants that it will not grant to any
Third Party the rights granted to Merck in Section 2.2.1, except that Endocyte
at all times retains the rights to Commercialize the Companion Diagnostic
through one or more Third Party distributors in the Territory, and to employ a
contract sales force in any country of the Territory for promotion and sales of
the Companion Diagnostic on its behalf subject to Section 2.7.

 

1.121Negative Covenant; No Implied Licenses. Each Party covenants that it will
not knowingly use or practice any of the other Party’s intellectual property
rights licensed to it under this Article 2 except for the purposes expressly
permitted in the applicable license grant. Except as set forth in Sections 2.1
and 2.2, neither Party shall acquire any license or other intellectual property
interest, by implication or otherwise, in any Information disclosed to it under
this Agreement or under any patents or patent applications owned or controlled
by the other Party or its Affiliates.

 

1.122Exchange of Information. Upon execution of this Agreement, and on an
ongoing basis during the term of this Agreement, Endocyte shall disclose to
Merck in English and in writing or in an electronic format all Endocyte Know-How
not previously disclosed for Merck to practice the licenses granted in this
Section 2.1.1 and 2.1.2.

 

1.123Sublicensing.

 

1.123.1Scope of Permissible Sublicensing.

 

(a)Merck Sublicenses. In the event that Merck would like to grant a sublicense
of [ * ] rights under Section 2.1.1 or Section 2.2.1 in [ * ] to a Third Party,
Merck must obtain the prior written consent of Endocyte, which shall not be
unreasonably withheld, conditioned or delayed. Merck shall notify Endocyte
promptly of any grant of a sublicense under the licenses set forth in Sections
2.1.1 or 2.2.1, to the extent that any Purdue Licensed Patents are included in
such sublicense.

 

(b)Endocyte Sublicenses. The license granted by Merck to Endocyte in Section
2.1.2 may be sublicensed by Endocyte to a permitted subcontractor under Section
2.7 or with the prior written consent of Merck.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 15

 

 

1.123.2Sublicense Agreements. Each Party shall, in each agreement under which it
grants a sublicense under a license set forth in Section 2.5.1 (each, a
“Sublicense Agreement”), require the sublicensee to provide the following to the
other Party if this Agreement terminates and to the Party that is a party to
such Sublicense Agreement (“Sublicensor”) if such Sublicense Agreement
terminates: (i) the assignment and transfer of ownership and possession of all
Regulatory Filings and Regulatory Approvals held or possessed by such
sublicensee (which assignment could also be directly to the Sublicensor prior to
any such termination), and (ii) the assignment of, or a freely sublicensable
exclusive license to, all intellectual property controlled by such sublicensee
that covers or embodies a Compound or Product or Companion Diagnostic or its
respective use, Manufacture, sale, or importation and was created by or on
behalf of such sublicensee during the exercise of its rights or fulfillment of
its obligations pursuant to such Sublicense Agreement. Each Sublicense Agreement
shall be subject to the applicable terms and conditions of this Agreement and
any Third Party licenses sublicensed to the sublicensee. Sublicensor shall (x)
use reasonable efforts to procure the performance by any sublicensee of the
terms of each such Sublicense Agreement, and (y) be responsible for any breach
of this Agreement that is caused (directly or indirectly) by the performance (or
failures to perform) of its sublicense. The grant of any such sublicense will
not relieve Sublicensor of its obligations under this Agreement, except to the
extent they are satisfactorily performed by such sublicensee. To the extent
Merck grants a sublicense of any rights under the Purdue Licensed Patents, Merck
shall provide Endocyte with a copy of each Sublicense Agreement promptly after
the execution thereof, and Endocyte shall have the right to provide such copy to
Purdue, subject to Purdue’s confidentiality obligations under the Purdue
Agreement.

 

1.124Endocyte [ * ] Companion Diagnostic. Endocyte shall notify Merck in writing
at least [ * ] days prior to [ * ] the Companion Diagnostic to a Third Party
(not including Affiliates) [ * ] or otherwise, but excluding any [ * ]. Endocyte
shall consider in good faith any objections or concerns raised by Merck with
respect to any such [ * ] and its potential impact on the Product Approval or
Commercialization of the Product in such country or region, provided that in the
event such [ * ] in the Companion Diagnostic in the [ * ], Endocyte must [ * ].

 

1.125Use of Affiliates/Third Parties. Endocyte shall be entitled to use the
services of Affiliates and/or Third Parties to perform the Product Development
activities for which it has responsibility under this Agreement only upon
Merck’s prior written consent or as specifically set forth in Schedule 2.7.
Endocyte shall be entitled, without Merck’s prior written consent, to use the
services of Affiliates and/or Third Parties to perform activities supporting the
Development, Manufacture or Commercialization of the Companion Diagnostic. Merck
shall be entitled to use, without requirement of Endocyte’s consent, Related
Parties or Third Parties to support the Development, Manufacture or
Commercialization of the Compound and/or Product. Each of Merck and Endocyte
shall remain fully liable under this Agreement for the acts or omissions of
their respective Third Parties, Affiliates and/or Related Parties.

 

1.126Purdue Agreement. The Purdue Licensed Patents are licensed to Endocyte
pursuant to the Purdue Agreement. Merck acknowledges and agrees that its
sublicense rights to such Purdue Licensed Patents under this Agreement are at
all times subject to the applicable terms of the Purdue Agreement, a current
copy of which have been provided to Merck as of the Execution Date.

 

GOVERNANCE/INFORMATION SHARING

 

1.127Joint Steering Committee. Promptly after the Effective Date, the Parties
shall establish a committee to oversee, review and manage the Parties’
collaboration with respect to the Development, Manufacture, and
Commercialization of Compound, Product and Companion Diagnostic (the “Joint
Steering Committee” or “JSC”).

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 16

 

 

1.127.1Composition of the Joint Steering Committee. The JSC shall be comprised
of two (2) representatives of Merck and two (2) representatives of Endocyte.
Each Party may change its representatives to the JSC from time to time in its
sole discretion, effective upon notice to the other Party of such change. These
representatives shall have appropriate technical credentials, experience and
knowledge, and ongoing familiarity with Compounds, Products and Companion
Diagnostic, and sufficient seniority within the applicable Party consistent with
the scope of the JSC’s responsibilities. Additional representative(s) or
consultant(s) may from time to time, by mutual consent of the Parties, be
invited to attend JSC meetings, subject to such representative’s or consultant’s
written agreement to comply with the requirements of Article 8. The JSC shall be
co-chaired by one representative of Merck and one representative of Endocyte.
The co-chairs shall have the responsibilities set forth in Section 3.1.4, but
shall have no additional powers or rights beyond those held by the other JSC
representatives.

 

1.127.2Functions and Powers of the JSC. Subject to the Parties respective final
decision-making rights, the JSC shall have strategic oversight over the
Development, Manufacture and Commercialization of the Product and the Companion
Diagnostic, which shall include resolution of any disputes appropriately
elevated to the JSC pursuant to Section 3.3.2. The JSC shall have solely the
powers expressly assigned to it in this Article 3 and elsewhere in this
Agreement, and shall not have any power to amend, modify, or waive compliance
with this Agreement.

 

1.127.3Meetings. The JSC shall meet in accordance with a schedule established by
mutual written agreement of the Parties, but no less frequently than four (4)
times per Calendar Year, with the location for such meetings to be determined by
the JSC. Alternatively, the JSC may meet by means of teleconference,
videoconference or other similar communications equipment, provided that at
least one (1) JSC meeting per Calendar Year shall be in person. Each Party shall
be responsible for all expenses incurred by its representatives on the JSC,
including all costs of travel, lodging and meals.

 

1.127.4Agendas and Meeting Minutes. The co-chairs shall be responsible for
agreeing upon and distributing an agenda for each meeting of the JSC at least
five (5) Business Days in advance of any such meeting. Each Party shall have the
right to request the co-chairs to include any matter or issue related to the
Development, Manufacture or Commercialization of the Compound, Product and/or
Companion Diagnostic on the agenda for a JSC meeting, which requests shall be
accommodated by the co-chairs. The co-chairs shall alternate responsibility for
generating and issuing minutes of each JSC meeting, which shall include a
summary of any actions agreed at the meetings. The minutes will be issued in
draft form and provided to the Alliance Managers and the JSC representatives of
each Party for review. Any corrections or comments must be provided to the
co-chair with responsibility for preparing the minutes within ten (10) Business
Days after the draft minutes are issued, and such co-chair shall then issue the
approved (or, if no comments are provided within such ten (10)-Business Day
period, deemed approved) minutes in final form to the Alliance Managers and the
JSC representatives of each Party.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 17

 

 

1.128Subcommittees. Promptly after the Effective Date, the Parties will
establish the following subcommittees to oversee certain aspects of the
Development, Manufacture and Commercialization of Compound, Product and the
Companion Diagnostic: a Joint Development Committee, Global Regulatory Strategy
Team, Joint Commercialization Committee and Joint Manufacturing Committee.

 

1.128.1The Joint Development Committee or JDC.

 

(a)Composition of the JDC. The JDC shall be comprised of three (3)
representatives of Merck and three (3) representatives of Endocyte. Each Party
may change its representatives to the JDC from time to time in its sole
discretion, effective upon notice to the other Party of such change. These
representatives shall have expertise and operational responsibilities for
Development and/or registration of pharmaceutical products in the field of
oncology and/or Development and registration of companion diagnostics, and
sufficient seniority within the applicable Party consistent with the scope of
the JDC’s responsibilities. The JDC will also include, as an ad hoc committee
member, a representative of each of Merck and Endocyte from the JMC. The JDC
shall be chaired by a representative of Merck. The chair shall have the
responsibilities set forth in Section 3.2.5(e), but shall have no additional
powers or rights beyond those held by the other JDC representatives.

 

(b)Function and Powers of the JDC. Subject to the Parties’ respective final
decision-making rights, the JDC shall oversee the Development of Compound,
Product and the Companion Diagnostic, including but not limited to:

 

(i)Review and approval of the Product Development Plan and Companion Diagnostic
Development Plan, including amendments thereto, including proposed updates to
the Endocyte Development Budget;

 

(ii)Monitoring the Development activities under the Product Development Plan and
Companion Diagnostic Development Plan, including any changes thereto between
updates or amendments as provided in this Agreement;

 

(iii)Discussing any additional studies proposed by either Party for inclusion in
the Product Development Plan;

 

(iv)Discussing any anticipated Development Cost overruns related to the PROC
Clinical Trial;

 

(v)Coordinate and collaborate with respect to the pre-Product Approval Medical
Affairs Activities in support of Products and the Companion Diagnostic in the
Territory; and

 

(vi)Resolution of any disputes within the purview of the JDC, subject to the
Parties’ final decision-making rights and Section 3.3.2.

 

1.128.2The Global Regulatory Steering Team or GRST.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 18

 

 

(a)Composition of the GRST. The GRST shall be comprised of two (2)
representatives of Merck and two (2) representatives of Endocyte. Each Party may
change its representatives to the GRST from time to time in its sole discretion,
effective upon notice to the other Party of such change. These representatives
shall have expertise and operational responsibilities for registration of
pharmaceutical products in the field of oncology and/or registration of
diagnostics in the Territory, and sufficient seniority within the applicable
Party consistent with the scope of the GRST’s responsibilities. The GRST will
also include, as an ad hoc committee member, a representative of each of Merck
and Endocyte from the JMC. The GRST shall be chaired by a representative of
Merck. The chair shall have the responsibilities set forth in Section 3.2.5(e),
but shall have no additional powers or rights beyond those held by the other
GRST representatives.

 

(b)Function and Powers of the GRST. The GRST shall oversee, coordinate and
manage regulatory activities and the regulatory strategy for (i) Product and the
Companion Diagnostic with a goal of ensuring contemporaneous Regulatory Approval
of the Product and the Companion Diagnostic in each country in the Territory and
for each new Indication of the Product for which Regulatory Approval of the
Product is sought, and (ii) Endocyte’s filing of the EU Marketing Authorization
Application based on the Phase IIb data for PROC and the subsequent transfer of
such EU Marketing Authorization Application to Merck in accordance with Section
4.10.4, in each case, subject to final decision-making rights of the Parties as
set forth in Section 3.3.1, including:

 

(i)Coordination of all transfer activities as set forth in Section 4.10;

 

(ii)To the extent requested or reasonably necessary, coordination of attendance
by Merck at any meetings with Regulatory Authorities for the Companion
Diagnostic and by Endocyte at meetings with Regulatory Authorities for the
Product;

 

(iii)Ensuring appropriate information (i.e., material communications,
correspondence, and other related documents) sharing by the Parties with respect
to regulatory activities supporting the Companion Diagnostic and the Product for
the purpose of coordinating IND review and timing of Regulatory Approval; and

 

(iv)Coordination of all of the Parties’ activities with respect to the EU
Marketing Authorization Application as further specified in Section 4.10.4

 

1.128.3The Joint Commercialization Committee or JCC.

 

(a)Composition of the JCC. The JCC shall be comprised of two (2) representatives
of Merck and two (2) representatives of Endocyte. Each Party may change its
representatives to the JCC from time to time in its sole discretion, effective
upon notice to the other Party of such change. These representatives shall have
expertise and operational responsibilities for US, European and/or global
marketing of oncology pharmaceutical products and/or diagnostics, and sufficient
seniority within the applicable Party consistent with the scope of the JCC’s
responsibilities. The JCC will also include, as an ad hoc committee member, a
representative of each of Merck and Endocyte from the JMC. The JCC shall be
chaired by a representative of Merck. The chair shall have the responsibilities
set forth in Section 3.2.5(e), but shall have no additional powers or rights
beyond those held by the other JCC representatives.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 19

 

 

(b)Function and Powers of the JCC. Subject to the Parties’ respective final
decision-making rights, the JCC shall oversee and manage the Commercialization
of Product and the Companion Diagnostic, including but not limited to:

 

(i)Review and approval of the Co-Promotion Territory Commercialization Plan and
Companion Diagnostic Commercialization Plan;

 

(ii)Monitoring the Commercialization activities under the Co-Promotion Territory
Commercialization Plan and Companion Diagnostic Commercialization Plan;

 

(iii)Coordinating Co-Promotion of the Product in the Co-Promotion Territory,
including reviewing the Parties’ performance with regard to Co-Promotion of the
Product and reviewing the Parties sales reports pertaining to Products

 

(iv)Coordinating Commercialization activities and strategies for the Product and
the Companion Diagnostic throughout the Territory with a goal of ensuring (y)
that the Companion Diagnostic is appropriately Commercialized in each country of
the Territory in which the Product has received Product Approval and (z) that
the pricing strategy for the Companion Diagnostic is appropriate in each market
in the Territory;

 

(v)Coordinating pricing strategies for the Companion Diagnostic and the Product
in the Territory to the extent reasonably necessary;

 

(vi)Coordinating reimbursement of the Product and the Companion Diagnostic in
any countries of the Territory to the extent necessary;

 

(vii)Resolving disputes referred from the Co-Promotion Team;

 

(viii)Review and discuss Merck’s ROW Commercialization Plan;

 

(ix)Coordinate and collaborate regarding post-Regulatory Approval Medical
Affairs Activities for Products and the Companion Diagnostic in the Territory;
and

 

(x)Resolution of any disputes within the purview of the JCC, subject to the
Parties final decision-making rights and Section 3.3.2.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 20

 

 

(c)Regional/Country Teams – Coordination of Local Commercialization. The JCC
shall establish regional and/or country teams, depending on the particular
market, to oversee the coordination of the local Commercialization of the
Product and the Companion Diagnostic (“Regional/Country Teams”). The
Regional/Country Teams will be established twelve (12) months in advance of the
estimated launch date for the Product in such region and/or country, provided
that with respect to the countries United Kingdom, Germany, Spain, and Italy and
the regions Mid-Europe I (Portugal, Belgium, Poland, Hungary, Czech Republic,
Greece, Holland, Slovak Republic, Cyprus, Malta, and the Balkans) and Mid-Europe
II (Switzerland, Sweden, Austria, Denmark, Norway, Finland, and the Baltics),
Endocyte will identify a point of contact at the relevant local level as soon as
reasonably possible after the Effective Date so that the Parties can begin
planning and coordinating launch of the Product and Companion Diagnostic in such
countries and/or regions.

 

1.128.4The Joint Manufacturing Committee or JMC.

 

(a)Composition of the JMC. The JMC shall be comprised of two (2) representatives
of Merck and two (2) representatives of Endocyte. Each Party may change its
representatives to the JMC from time to time in its sole discretion, effective
upon notice to the other Party of such change. These representatives shall have
expertise and operational responsibilities in relevant areas, such as quality
assurance, forecasting and logistics, materials management, purchasing and
manufacturing, and sufficient seniority within the applicable Party consistent
with the scope of the JMC’s responsibilities. The JMC shall be chaired by a
representative of Merck. The chair shall have the responsibilities set forth in
Section 3.2.5(e), but shall have no additional powers or rights beyond those
held by the other JMC representatives.

 

(b)Function and Powers of the JMC. Subject to the Parties’ respective final
decision-making rights, the JMC shall coordinate clinical and commercial
Manufacture and supply associated with Compound, Product and the Companion
Diagnostic, including, but not limited to:

 

(i)Oversee and coordinate the transfer of Endocyte Existing Know-How as provided
in Section 6.2.1;

 

(ii)Agreeing upon and sharing both clinical and commercial forecasts and orders
for Companion Diagnostic and/or its components;

 

(iii)Ensuring that the Companion Diagnostic is Manufactured according to cGMP
and the specifications for the Companion Diagnostic;

 

(iv)Coordinating regarding regulatory activities, including CMC;

 

(v)Agreeing upon an appropriate risk management plan for Manufacture and supply
of the Companion Diagnostic, including agreeing upon an appropriate level of
safety stock for the Companion Diagnostic and/or its components;

 

(vi)Sharing material communications from and information about Third Party
suppliers for the Companion Diagnostic;

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 21

 

 

(vii)Sharing information and documentation in a timely basis regarding any
supply shortfalls or supply failures in connection with the Companion Diagnostic
and/or any of its components; and

 

(viii)Reviewing and discussing expansion of the Companion Diagnostic supply
chain to the extent necessary to support the global supply requirements for the
Companion Diagnostic.

 

1.128.5Subcommittees Generally.

 

(a)Limits on Power. The Parties acknowledge and agree that none of the
subcommittees formed under this Agreement shall have the power to amend any of
the terms or conditions of this Agreement.

 

(b)Meetings. The subcommittees shall meet in accordance with a schedule
established by mutual written agreement of the Parties, but no less frequently
than four (4) times per Calendar Year. The Parties acknowledge and agree that
each meeting held by each subcommittee may be held in-person, by
video-conference, teleconference or such other means mutually agreed upon by the
Parties, provided that at least one (1) meeting of each subcommittee per
Calendar Year will be in person. Each Party shall be responsible for all
expenses incurred by its representatives on the subcommittees, including all
costs of travel, lodging and meals.

 

(c)Additional Attendees. Subject to appropriate confidentiality undertakings
where applicable, additional participants may be invited by any member of a
given subcommittee to attend a meeting of that subcommittee where appropriate
(e.g., representatives of regulatory affairs, technical operations, or outside
consultants). Such additional participants shall not be deemed, or have any
rights or responsibilities of, a member of the applicable subcommittee.

 

(d)Participation. Endocyte’s participation in the JSC and all subcommittees is a
right and not an obligation. In the event that Endocyte [ * ], Merck shall [ *
].

 

(e)Agenda and Meeting Minutes. The chair of each subcommittee shall be
responsible for distributing an agenda for each meeting of such subcommittee at
least five (5) Business Days in advance of any such meeting. Each Party shall
have the right to request the chair to include any matter or issue related to
the Development, Manufacture or Commercialization of the Compound, Product
and/or Companion Diagnostic, depending on the subject-matter of the particular
subcommittee, on the agenda, which requests shall be accommodated by the chair.
The chair of the subcommittee shall be responsible for generating and issuing
minutes of each subcommittee meeting, which shall include a summary of any
actions agreed at the meeting. The minutes will be issued in draft form and
provided to the Alliance Managers and the subcommittee representatives of each
Party for review. Any corrections or comments must be provided to the chair
within ten (10) Business Days after the draft minutes are issued, who shall then
issue the approved (or, if no comments are provided within such ten
(10)-Business Day period, deemed approved) minutes in final form to the Alliance
Managers and the subcommittee representatives of each Party.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 22

 

 

1.129Decision-making and Dispute Resolution.

 

1.129.1Decision-Making; Final Decision-Making Rights. The JSC and each of its
subcommittees shall act by consensus to the extent that the JSC or such
subcommittee has decision-making authority under this Agreement. The
representatives from each Party on the JSC or a subcommittee will have,
collectively, one (1) vote on behalf of that Party. In the event an issue arises
at the JSC or at the subcommittee level on which the JSC or subcommittee (as
applicable pursuant to Section 3.3.2), after a good faith effort, cannot reach
consensus, the resolution and/or course of conduct shall be [ * ]:

 

(a)[ * ] any disputes regarding Development of the Product in the PROC Clinical
Trial in accordance with the Initial Indications Development Plan, which
disputes shall be determined as set forth in Section 4.2.2;

 

(b)[ * ] any disputes regarding Development of the Product in the NSCLC Phase
IIb in accordance with the Initial Indications Development Plan, which disputes
shall be determined as set forth in Section 4.2.3:

 

(c)[ * ] any disputes relating to the terms and conditions of the Co-Promotion
Agreement unless otherwise provided in Schedule 5.2 or the Co-Promotion
Agreement; provided, however, that [ * ] with respect to the Co-Promotion
Territory Commercialization Plan;

 

(d)[ * ] any disputes relating to the Development, Manufacture or
Commercialization of the Companion Diagnostic or Diagnostic Follow-On, which
disputes [ * ], except as otherwise expressly set forth herein; and

 

(e)[ * ] unilaterally alter or amend the terms and conditions of this Agreement.

 

1.129.2Dispute Resolution. The subcommittees and the JSC shall endeavor to reach
consensus on all issues.

 

(a)In the event that any disputes cannot be unanimously agreed to at the
subcommittee level within [ * ] days, such disputes will be resolved by the
Party with final decision-making rights at set forth in Section 3.3.1, without
escalation to the JSC, except for the following disputes, which will be elevated
to the JSC:

 

(i)Disputes regarding matters that would potentially result in any [ * ] for
both the Product and the Companion Diagnostic as set forth in the Product
Development Plan, the Co-Promotion Commercialization Plan, the ROW
Commercialization Plan, the Companion Diagnostic Development Plan, and the
Companion Diagnostic Commercialization Plan or comprise [ * ] and

 

(ii)Disputes regarding the [ * ].

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 23

 

 

(b)In the event that a dispute is elevated to the JSC pursuant to Section
3.3.2(a) or the JSC cannot, after good faith efforts for a period of [ * ] days,
reach consensus on a dispute of first impression, then the dispute shall be
resolved by the Party with final decision-making rights as set forth in Section
3.3.1. In the event that neither Party has final decision-making rights over
such dispute, the dispute shall be referred for resolution to the [ * ], for
Merck, and the [ * ], for Endocyte, or (ii) a Commercialization-related issue,
the issue shall be referred for resolution to the [ * ], for Merck, and the [ *
], for Endocyte. These executives are referred to collectively as the
"Executives". In the event that the Executives cannot resolve the dispute, then
[ * ].

 

1.130Alliance Managers.

 

1.130.1Appointment. Each Party shall appoint an employee who shall oversee
interactions between the Parties for all matters related to this Agreement (each
an “Alliance Manager”). The Alliance Managers shall have the right to attend all
JSC, JDC, GRST, JMC or JCC meetings as non-voting participants and may bring to
the attention of the JSC, JDC, GRST, JMC or JCC any matters or issues either of
them reasonably believes should be discussed, and shall have such other
responsibilities as set forth in Section 3.4.2 or as the Parties may mutually
agree. Each Party may replace its Alliance Manager at any time or may designate
different Alliance Managers by notice in writing to the other Party.

 

1.130.2Responsibilities of the Alliance Managers. The Alliance Managers shall
have the responsibility of creating and maintaining a constructive work
environment between the Parties. Without limiting the generality of the
foregoing, each Alliance Manager shall:

 

(a)identify and bring disputes and issues that may result in disputes (including
without limitation any asserted occurrence of a material breach by a Party) to
the attention of the JSC in a timely manner, and function as the point of first
referral in all matters of conflict resolution. In doing so, it is not intended
that the Alliance Manager(s) act as a substitute for, or insert any delay in,
the formal dispute resolution mechanisms set forth in this Agreement, but rather
that the Alliance Manager(s) shall endeavor to maintain a positive and
constructive relationship between the Parties at the working level;

 

(b)provide a single point of communication for seeking consensus both internally
within the Parties’ respective organizations and between the Parties;

 

(c)plan and coordinate cooperative efforts, internal communications and external
communications between the Parties with respect to this Agreement; and

 

(d)take responsibility for ensuring that meetings and the production of meeting
agendas and minutes occur as set forth in this Agreement, and that relevant
action items resulting from such meetings are appropriately carried out or
otherwise addressed.

 

1.131General Committee Authority. Each committee shall have solely the powers
expressly assigned to it in this Article 3 and elsewhere in this Agreement. No
committee shall have any power to amend, modify, or waive compliance with this
Agreement. It is expressly understood and agreed that neither Merck nor Endocyte
shall have any right to unilaterally modify or amend, or waive its own
compliance with, the terms of this Agreement.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 24

 

 

1.132Discontinuation of Participation on a Committee. Each committee shall
continue to exist until the first to occur of (a) the Parties mutually agreeing
to disband the committee or (b) termination of such committee as permitted under
Article 13.

 

1.133Compliance with Law and Ethical Business Practices.

 

1.133.1In conducting its activities hereunder, Endocyte shall comply in all
respects with Applicable Laws and accepted pharmaceutical industry business
practices. Consistent with the ‘Compliance Program Guidance for Pharmaceutical
Manufacturers,’ published by the Office of Inspector General, U.S. Department of
Health and Human Services (the “OIG Guidance”), Endocyte agrees to maintain a
compliance program and policies with respect to its Detailing and other
Co-Promotion activities pursuant to this Agreement containing all of the
elements described in such guidance document, as well as completing any required
reporting to federal, state or local governmental entities. Merck hereby
represents that as of the Execution Date it has provided to Endocyte a true and
correct copy of its current Corporate Integrity Agreement (the “Corporate
Integrity Agreement”) located on the website
http://www.oig.hhs.gov/fraud/cia/agreements/merck_CIA.pdf. Updates and
amendments to the Corporate Integrity Agreement, during the Term, will be
provided through such website. Endocyte hereby certifies that prior to
commencing any Co-Promotion of the Product with Merck as set forth in Article 5,
it will have in place and enforce for its (and its Affiliate’s) employees a code
of conduct and compliance program that is substantially comparable to Merck’s
Ethical Operating Standards and Compliance Program, including as provided under
Merck’s current Corporate Integrity Agreement. Endocyte shall immediately notify
Merck in writing of any deviations from applicable regulatory or legal
requirements. Each year, during the Term, Merck will send a description of its
Compliance Program and a copy of its Ethical Operating Standards to Endocyte and
Endocyte shall either: (a) make a copy of Merck’s Ethical Operating Standards
and a description of Merck’s Compliance Program available to its employees who
meet the definition of Third Party Personnel as set forth in Section II.C.8 of
the Corporate Integrity Agreement or (b) represent to Merck that it has and
enforces a substantially comparable set of Ethical Operating Standards (or code
of conduct) and Compliance Program for those employees.

 

1.133.2Each Party shall conduct the Development and Commercialization of
Compound, Products and Companion Diagnostic in accordance with all Applicable
Laws. Each Party hereby certifies that it has not and will not employ or
otherwise use in any capacity the services of any person or entity debarred
under Section 21 USC 335a, and to its knowledge, any person or entity under
investigation for debarment, in performing any activities under this Agreement.
Each Party shall notify the other Party immediately if any such debarment occurs
or any such investigation comes to its attention, and shall, with respect to any
person or entity so debarred, promptly remove such person or entity from
performing any further activities under this Agreement.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 25

 

 

1.133.3Merck and Endocyte agree to conduct the services contemplated herein in a
manner which is consistent with both Applicable Laws and good business ethics.
Each Party’s corporate policy requires that business must be conducted within
the letter and spirit of the law.

 

1.133.4Neither Party shall make any payment, either directly or indirectly, of
money or other assets (hereinafter collectively referred as a “Payment”) to
government or political party officials, officials of international public
organizations, candidates for public office, or representatives of other
businesses or persons acting on behalf of any of the foregoing (hereinafter
collectively referred as “Officials”) where such Payment would constitute
violation of any law. In addition, regardless of legality, neither Party shall
make any Payment either directly or indirectly to Officials if such Payment is
for the purpose of influencing decisions or actions with respect to the subject
matter of this Agreement.

 

1.133.5Each Party acknowledges that no employee of the other Party or its
Affiliates shall have authority to give any direction, either written or oral,
relating to the making of any commitment by such Party or its agents to any
Third Party in violation of terms of this or any other provision of this
Agreement.

 

1.133.6No employee of a Party or its Affiliates shall have authority to give any
direction, either written or oral, relating to the making of any commitment by
such Party or its agents to any Third Party in violation of terms of this or any
other provisions of this Agreement.

 

1.134Standstill.

 

1.134.1Merck agrees that upon the Effective Date and for a period lasting until
the earlier of the [ * ] of the [ * ] for the [ * ] in the [ * ] to have such [
* ] and [ * ] after the [ * ] (the “Standstill Period”), neither Merck nor any
of its Affiliates shall, in any manner, directly or indirectly without the prior
written consent or invitation of Endocyte or its Board of Directors:

 

(a)make, effect, initiate, cause or participate in any acquisition of beneficial
ownership of any voting securities of Endocyte or any voting securities of any
subsidiary of Endocyte, if the effect of such acquisition would be to entitle
Merck to cast directly or indirectly more than [ * ] of the voting power in any
election of directors of Endocyte;

 

(b)make, effect, initiate, cause or participate in any acquisition of any
material assets of Endocyte or any material assets of any subsidiary of Endocyte
that would place Endocyte or Merck under a legal obligation to make a public
disclosure of such activity;

 

(c)engage or become a participant in any “solicitation” of (x) “proxies” (as
such terms are defined in Regulation 14A under the Exchange Act) or (y) consents
to vote any Endocyte voting securities;

 

(d)form, join or participate in a “group” (as defined in the Exchange Act) for
the purpose of taking any action under clauses (a) through (c) of this Section;

 

(e)agree or offer to take, or encourage or propose (publicly or otherwise) the
taking of any action referred to in subsection (a), (b), (c), or (d) of this
Section 3.8.1;

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 26

 

 

(f)assist, induce or encourage any other person to take any action of the type
referred to in subsection (a), (b), (c), (d), or (e) of this Section 3.8.1;

 

(g)enter into any discussions, negotiations, arrangement or agreement with any
other person relating to any of the foregoing;

 

1.134.2Nothing in this Section 3.8 shall preclude Merck from making proposals on
a confidential basis, to Endocyte or its Board of Directors, or from seeking a
waiver from Endocyte of any provision set forth in this Section 3.8, on a
confidential basis, and provided such proposal or waiver is not designed to, nor
could reasonably be required to, result in public disclosure of such proposal or
waiver by either Merck or Endocyte. In addition, nothing in this Section 3.8,
shall prohibit Merck from making an offer on a confidential basis to Endocyte to
acquire Endocyte's rights to the Compound, Product and/or Companion Diagnostic.

 

1.134.3The prohibitions set forth in the foregoing Section 3.8 (a) (collectively
the “Standstill Provisions”) shall not apply to (i) any investment in any
securities of Endocyte or its subsidiaries by or on behalf of any independently
managed pension plan or employee benefit plan or trust, including without
limitation (A) any direct or indirect interests in portfolio securities held by
an investment company registered under the Investment Company Act of 1940, as
amended, or (B) interests in securities comprising part of a mutual fund or
broad based, publicly traded market basket or index of stocks approved for such
a plan or trust in which such plan or trust invests; or (ii) interests in
securities of Endocyte or any of its subsidiaries held by a person acquired by
Merck (or any of Merck’s Affiliates) on the date such person first entered into
an agreement to be acquired by Merck (or such Affiliate) or acquired after such
person was acquired by Merck (or such Affiliate) pursuant to an agreement
requiring (but only to the extent requiring) such person to acquire such
securities, which agreement was in effect on the date such person first entered
into an agreement to be acquired by Merck (or such Affiliate), or (iii)
interests in any assets or securities of Endocyte, as debtor, that are acquired
in a transaction subject to the approval of the U.S. Bankruptcy Court pursuant
to proceedings under the U.S. Bankruptcy Code.

 

1.134.4Upon the occurrence of a Trigger Event (defined below) with respect to
Endocyte, Merck shall immediately thereafter cease to be bound by the Standstill
Provisions. For purposes of this Agreement, (i) a “Trigger Event” shall occur
with respect to Endocyte upon (a) Endocyte entering into a definitive agreement
concerning a Business Combination Transaction; or (b) Endocyte publicly
announcing that it (or its Board of Directors) endorses or otherwise recommends
an offer from a Third party relating to a Business Combination Transaction.

 

1.134.5“Business Combination Transaction” means (1) any direct or indirect
divestiture, out-license or sale by Endocyte or any of its subsidiaries to an
unrelated party of assets, in one or a series of related transactions, for
aggregate consideration equal to a majority of the market capitalization of
Endocyte immediately prior to entering into such transaction, or a majority of
the voting securities of Endocyte, (2) any tender offer or exchange offer that
if consummated would result in any person or group beneficially owning a
majority of the voting securities of Endocyte, or (3) any merger, consolidation,
business combination, recapitalization or similar transaction involving Endocyte
involving the direct or indirect acquisition of a majority of the market
capitalization of Endocyte or a majority of the voting securities of Endocyte
(other than the issuance of new securities by Endocyte solely in connection with
a bona fide capital raising transaction).

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

Page 27

 

 

DEVELOPMENT

 

1.135Overview. As of the Effective Date, Merck shall be solely responsible for
the Development of the Compound and Product in the Field in the Territory,
subject to and except as otherwise provided in this Article 4. Endocyte shall be
solely responsible for the Development of the Companion Diagnostic in the Field
in the Territory. Each Party shall perform all Development activities assigned
to such Party under and in accordance with the Product Development Plan and
Companion Diagnostic Development Plan, as applicable.

 

1.136Product Development/Initial Indications Development Plan.

 

1.136.1Overview. An initial version of the initial indications Development plan
covering Development of the Product in PROC and in NSCLC (the “Initial
Indications”) is attached hereto as Schedule 4.2 (as may be amended in
accordance with this Agreement, the “Initial Indications Development Plan”). In
particular, the Initial Indications Development Plan will include:

 

(a)Development of the Product in PROC through receipt of Product Approval in the
EU and US, including the protocol for the ongoing Phase III Clinical Trial known
as the “PROCEED” study (the “PROC Protocol” and such trial referred to as the
“PROC Clinical Trial”) and an outline of the content of a future amendment to
the PROC Protocol;

 

(b)Development of the Product in NSCLC through completion of the Phase IIb
Clinical Trial, including the protocol for such Phase IIb Clinical Trial (the
“NSCLC Phase IIb”) and an outline of the content of a future amendment to this
protocol; and

 

(c)Timelines for Clinical Trials and Regulatory Filings during the Term in
connection with obtaining Regulatory Approval in the US and the EU for PROC and
NSCLC.

 

1.136.2PROC. Endocyte will be responsible for conducting and [ * ] the
Development of the Product in the PROC Clinical Trial in accordance with the
Initial Indications Development Plan. Merck will be responsible for and [ * ]
any additional Clinical Trials that may be required for obtaining Regulatory
Approval of the Product in PROC with respect to the EU and US and all other
countries in the Territory. Notwithstanding anything to the contrary in this
Section 4.2.2, in the event that Regulatory Authorities in the US or EU require
that changes be made to the PROC Protocols, the [ * ] amending the PROC
Protocols.

  

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 28

 

 

1.136.3NSCLC. Endocyte will be responsible for conducting the Development of the
Product in the NSCLC Phase IIb in accordance with the Initial Indications
Development Plan. Endocyte will transfer the responsibility for NSCLC Phase IIb
to Merck in sufficient time, as determined by the JDC, for Merck to be in a
position to conduct a Phase III Clinical Trial (if necessary) after completion
of the NSCLC Phase IIb. Merck will have responsibility for and conduct such
Phase III Clinical Trial and will have responsibility for conducting any
additional Clinical Trials that may be required for obtaining Regulatory
Approval of the Product in NSCLC anywhere in the Territory. Merck will [ * ] the
Development of the Product in NSCLC; provided, however, that Endocyte will [ * ]
the NSCLC Phase IIb as set forth in the Initial Indications Development Plan,
except that in the event that Endocyte would like to [ * ] the NSCLC Phase IIb
draft protocol included in the Initial Indications Development Plan, then [ * ]
regarding such amendment.

 

1.137Product Development/Further Development Plan.

 

1.137.1Overview. A Development plan covering Development of the Product in
additional Indications other than in PROC or NSCLC is attached hereto as
Schedule 4.3 (as may be amended in accordance with this Agreement, the “Further
Development Plan”) (the Further Development Plan and the Initial Indications
Development Plan, together with any amendments thereto as set forth in this
Article 4 shall be referred to as the “Product Development Plan”). The Further
Development Plan initially will include the following:

 

(a)A Phase I/II Clinical Trial of the Product in at least [ * ] (other than [ *
]), which is set forth in Schedule 4.3 (the “Additional Indications”) and

 

(b)A Phase III Clinical Trial of the Product in the [ * ] cancer Indication (“[
* ]”) to be conducted following obtaining Regulatory Approval of the Product in
[ * ] in [ * ]. The [ * ] Phase III Clinical Trial would be contingent upon
preliminary verification of activity and the demonstration of acceptable safety
and tolerability in a Phase I study, which would also be included in the Further
Development Plan. For clarity, [ * ] will not be one of the Indications that are
Additional Indications.

 

1.137.2Responsibility and Decision-Making. Merck will be responsible for the
conduct of Development of the Product in the Additional Indications and [ * ].
Merck will [ * ] the Development of the Product in Additional Indications and [
* ].

 

1.138Amendments to the Initial Indications Development Plan and Further
Development Plan.

 

1.138.1Amendments to the Product Development Plan. Not later than [ * ] of each
Calendar Year, Merck shall submit to the JDC for review and approval an updated
Product Development Plan for the pending Calendar Year. The updates shall take
into account completion, commencement, changes in or cessation of Development
activities not contemplated by the then-current Product Development Plan. The
updates shall also include: (i) the proposed overall program of Development for
the Product in all Indications, including timing and a reasonably detailed
description of any and all Clinical Trials and any nonclinical studies planned;
provided that, except as provided below with respect to the PROC Clinical Trial
and NSCLC Phase IIb, study protocols shall not be required to be included; (ii)
regulatory plans and other elements of obtaining Regulatory Approval(s) in the
Territory in sufficient detail to allow Merck and Endocyte to coordinate
regulatory activities for the Product and the Companion Diagnostic; (iii) the
estimated timing for interim and final data analyses of Clinical Trial results;
and (iv) and the respective roles and responsibilities of each Party in
connection with such activities. Notwithstanding the above, with respect to the
PROC Clinical Trial and the NSCLC Phase IIb, such updates shall include a
description of (i) any changes or modifications to the respective protocols;
(ii) the anticipated start dates and timing for interim and final data analyses
of, and anticipated timelines for filing of applications for Regulatory
Approvals in the Territory; and (iii) the respective roles and responsibilities
of each Party in connection with such activities. For clarity, the Parties
acknowledge that any updates to the Product Development Plan regarding the PROC
Clinical Trial and the NSCLC Phase IIb will provide a level of detail consistent
with the detail contained in Schedule 4.2.

  

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 29

 

 

1.139Endocyte Development Budget. In connection with the Development work to be
performed by Endocyte pursuant to Sections 4.2.2 and 4.2.3, a budget with
year-by-year estimates of the Development Costs expected to be incurred by
Endocyte shall be attached to this Agreement as Schedule 4.5 (together with any
updates thereto, the “Endocyte Development Budget”). Endocyte shall provide to
the JDC for approval updates to such Endocyte Development Budget from
time-to-time but no less than once each Calendar Year (at least [ * ] days prior
to the last day of such Calendar Year). Endocyte shall inform the JDC in the
event that it becomes aware that it will be exceeding the Endocyte Development
Budget by more than [ * ] of the total costs included in such budget.

 

1.140Records/Audit Rights Pertaining to Product Development by Endocyte.
Endocyte shall maintain records, in sufficient detail and in good scientific
manner appropriate for patent and regulatory purposes, which shall fully and
properly reflect all work done and results achieved under this Agreement.
Endocyte shall ensure that Merck’s authorized representatives may, during
regular business hours and upon not less than [ * ] hours prior written notice,
(a) examine and inspect the facilities and systems of Endocyte, its Affiliates
and/or subcontractors used in the performance of the Development activities for
the Product that Endocyte is conducting. (b) subject to Applicable Laws,
examine, inspect and copy all data, documentation and work product relating to
such Development activities to the extent necessary or useful to support the
Development, Manufacture or Commercialization of Product in the Territory, and
(c) examine, inspect and copy all data, documentation and work products relating
to the Development of the Product prior to the Effective Date, including,
without limitation, any case report forms regarding any patient participating in
any clinical study involving Product initiated prior to the Effective Date. The
obligations set forth in this Section 4.6 shall survive for such periods as the
applicable documents, data and work products are required to be retained by all
Applicable Laws in the Territory.

 

1.141Companion Diagnostic Development.

 

1.141.1Companion Diagnostic Development Plan. Development of the Companion
Diagnostic shall be done pursuant to a development plan (the “Companion
Diagnostic Development Plan,” as may be amended in accordance with this
Agreement), the initial version of which, covering Development of the Companion
Diagnostic through receipt of Regulatory Approval in the EU, is attached to this
Agreement as Schedule 4.7 (the “Initial Companion Diagnostic Development Plan”).
Not later than [ * ] days after [ * ] of each Calendar Year, Endocyte shall
submit to the JDC for approval an updated Companion Diagnostic Development Plan
for the pending Calendar Year. Such updates shall contain activities and
timelines for Development of the Companion Diagnostic in countries and in
Indications that are consistent with the Product Development Plans for Product
with a goal of ensuring that the Companion Diagnostic is Developed in parallel
with the Development of the Product. The updates shall also take into account
completion, commencement, changes in or cessation of Development activities not
contemplated by the then-current Companion Diagnostic Development Plan.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 30

 

 

1.141.2Responsibility and Decision-Making. Endocyte shall be responsible for
Development of the Companion Diagnostic and shall have final decision-making
rights regarding any disputes arising out of Development of the Companion
Diagnostic.

 

1.142Development Costs.

 

1.142.1Product Development Costs. Subject to Section 4.5, Development Costs for
Development activities conducted after the Effective Date for the Product in the
Field in the Territory (“Product Development Costs”) shall be paid by the
Parties as follows:

 

(a)Endocyte will pay [ * ] percent ([ * ]%) and Merck will pay [ * ] percent ([
* ]%) of Development Costs incurred in connection with the PROC Clinical Trial
and consistent with the Initial Indications Development Plan and Endocyte
Development Budget (“[ * ]”); and

 

(b)Merck will pay one hundred percent (100%) of all other Product Development
Costs.

 

1.142.2Payment of Product Development Costs. Within [ * ] days following the end
of [ * ] during the Term, each Party (or any Affiliate) that has incurred any [
* ] in that [ * ] shall deliver to the other Party a written report (each, a “[
* ] Report”) setting forth in detail with supporting documentation the [ * ]
incurred by such Party (or its Affiliates) in such [ * ] with respect to the
Product, by activity. The [ * ] Report shall also include any [ * ] incurred by
a Party (or its Affiliates) in any of the preceding [ * ] which were not
previously included and accounted for in a prior [ * ] Reports. Each Party share
pay to the other Party its share (as set forth in Section 4.8.1(a)) of
undisputed [ * ] within [ * ] days of its receipt of the other Party’s [ * ]
Report.

 

1.142.3Companion Diagnostic Development Costs. Endocyte shall be responsible for
one hundred percent (100%) of the Development Costs solely related to the
Development of the Companion Diagnostic in the Field in the Territory, which
shall include all costs associated with (i) Manufacture of the Companion
Diagnostic (including validation and scale-up); provided that Endocyte may
charge Merck for Companion Diagnostic used in connection with Development and
Commercialization of the Product as set forth in this Agreement; (ii) any new
synthesis or formulation of the Companion Diagnostic; (iii) any new studies
required by any Regulatory Authority in connection with the performance of the
Companion Diagnostic (and not related to the safety and/or efficacy of the
Compound and/or Product; and (iv) the registration of the Companion Diagnostic
with any Regulatory Authorities in the Territory.

 

1.143Diagnostic Follow-On Development. Through the JDC, Endocyte will keep Merck
reasonably informed of its Development of any Diagnostic Follow-On and will
provide Merck with reasonable quantities of such Diagnostic Follow-on for use in
the Development of the Product, at [ * ] and shall provide Merck with a
non-exclusive license to market and promote the Diagnostic Follow-on (and
cooperate with Merck in order to enable and facilitate same) in the then-current
Territory, subject to Merck and Endocyte agreeing upon appropriate reasonable
consideration to Endocyte for such license.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 31

 

 

1.144Ownership and Maintenance of Regulatory Approvals.

 

1.144.1Ownership of Regulatory Approvals. Subject to the terms and conditions of
this Agreement, Merck will own all Regulatory Approvals for the Product in the
Territory and Endocyte will own all Regulatory Approvals for the Companion
Diagnostic in the Territory.

 

1.144.2Transfer/Ownership of INDs for the Product.

 

(a)Except as otherwise expressly provided in this Section 4.10, as soon as
reasonably practical after the Effective Date (or such other date as may be
mutually agreed by the Parties), Endocyte shall transfer to Merck all existing
INDs covering the Product. Subject to Section 4.10.4, all further submissions to
any Regulatory Authorities relating to such INDs or any new INDs covering the
Product shall be filed in the name of and owned by Merck.

 

(b)Within [ * ] days after the Effective Date (or such other date as mutually
agreed by the Parties), Endocyte shall transfer to Merck one copy of all
documents and records (including comments on any protocol submissions) that have
been generated by or on behalf of Endocyte with respect to any existing INDs
covering the Product in the Territory, as well as any correspondence between
Endocyte and Regulatory Authorities related to Products.

 

1.144.3Regulatory Interactions/Coordination between the Parties. Except as
otherwise provided in Section 4.10.4, Merck shall oversee, monitor and
coordinate all regulatory actions, communications, meetings and filings with,
and submissions to, Regulatory Authorities in the Territory with respect to the
Product. Endocyte shall oversee, monitor and coordinate all regulatory actions,
communications and filings with, and submissions to, Regulatory Authorities in
the Territory with respect to the Companion Diagnostic. The Parties agree and
acknowledge that they will share information and coordinate through the GRST
with respect to regulatory activities supporting the Companion Diagnostic and
the Product with a goal of ensuring contemporaneous Regulatory Approval of the
Product and the Companion Diagnostic in each country in the Territory and for
each new Indication of the Product for which approval is sought. To the extent
that the Product will be discussed at any meeting with a Regulatory Authority
for the Companion Diagnostic, Endocyte will [ * ]. To the extent that the
Companion Diagnostic will be discussed at any meeting with a Regulatory
Authority for the Product, Merck will [ * ].

 

1.144.4Filing of Regulatory Approval in the EU with EMA. With respect to the
filing for Regulatory Approval with the EMA, the Parties agree that [ * ] for
Regulatory Approval for the Product in PROC based on the Phase IIb Clinical
Trial results (the “EU Marketing Authorization Application”) and that [ * ] such
Regulatory Approval from the EU Commission. In order to facilitate the foregoing
and to minimize any delays [ * ] and any delays in Commercializing the Product
in the European Union, the Parties agree as follows:

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 32

 

 

(a)Endocyte will provide to Merck all communications, correspondence, and other
documents relating to the EU Marketing Authorization Application. In addition,
Endocyte will provide Merck with advance notice of and will [ * ] regulatory
actions, communications, meetings and filings with, and submissions to, the EMA
with respect the Product, including providing Merck with [ * ]. Notwithstanding
the foregoing, Endocyte shall [ * ] of the following prior to including them in
the EU Marketing Authorization Application; provided that Merck provides
Endocyte with its comments (i) in sufficient time to allow approval within
either [ * ] days following receipt of the following; (ii) as mutually agreed by
the Parties; or (iii) as required by the Regulatory Authority:

 

(i)the [ * ];

 

(ii)the EU Risk Management Plan

 

(iii)[ * ] of the application for EU Marketing Authorization Application; and

 

(iv)all [ * ] and [ * ] to which Endocyte [ * ] a Regulatory Authority [ * ] the
EU Marketing Authorization Application with the EMA.

 

(b)Endocyte will coordinate with Merck so that Merck can [ * ] with respect to
the EU Marketing Authorization Application.

 

(c)Merck will provide to Endocyte for inclusion, and Endocyte will include, the
following in the EU Marketing Authorization Application at time of initial
submission or during the procedure (for example, on Day 120):

 

(i)Merck’s [ * ] for the Product, including [ * ] related information, and
Merck's [ * ] for [ * ];

 

(ii)Merck’s [ * ] and related [ * ], as well as information on Merck's [ * ] or
the equivalent thereof;

 

(iii)Merck’s [ * ] at time of file validation or at a later stage of the
procedure and Merck will provide Endocyte with [ * ]; and

 

(iv)Merck’s [ * ] in the EU for inclusion in the [ * ].

 

(d)Endocyte, with reasonable assistance from Merck, will ensure that it obtains
accurate high quality translations of the Product label in all European
languages consistent with Applicable Laws in Europe.

 

(e)Endocyte will initiate the process to [ * ] within [ * ] days of receipt of
the EU Commission Decision for granting Regulatory Approval for the Product.
Endocyte and Merck agree to use Commercially Reasonable Efforts to cooperate to
[ * ] as quickly as possible pursuant to Applicable Laws.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 33

 

 

(f)During the period between [ * ] (“Transition Period”), Endocyte hereby grants
Merck with [ * ]. Endocyte further agrees that it will take any other action
reasonably necessary to effectuate the foregoing, including granting Merck the
necessary [ * ].

 

(g)During the Transition Period, Merck shall have the right, but not the
obligation, to Commercialize the Product in the European Union and, in such an
event, Endocyte shall appoint Merck as its exclusive distributor in the European
Union and take any other action reasonably necessary to allow Merck to
Commercialize the Product in Europe. Other than Commercializing the Product
through Merck as its distributor, Endocyte covenants that it will not
Commercialize the Product in Europe during the Transition Period.

 

(h)Merck and Endocyte shall work cooperatively through the GRST to accomplish
the activities set forth in this Section 4.10.4.

 

1.145Rights of Reference: Sharing of Clinical Data.

 

1.145.1Merck hereby grants to Endocyte a non-exclusive, non-transferable (except
in connection with a permitted assignment of this Agreement, license of the
Companion Diagnostic, sublicense or subcontract) “right of reference” (as
defined in 21 CFR 314.3(b)) with respect to Merck’s clinical trial data and
results related to any Product, solely as necessary for Endocyte or its
Affiliate, licensee or sublicensee or distributor to prepare and submit
submissions to Regulatory Authorities and maintain Regulatory Approvals related
to the Companion Diagnostic. Endocyte hereby grants to Merck a non-exclusive,
non-transferable (except in connection with a permitted assignment of this
Agreement, sublicense of the rights granted to it hereunder, or subcontract)
“right of reference” (as defined in 21 CFR 314.3(b)) with respect to Endocyte’s
clinical sample analytical trial data and results related to the Companion
Diagnostic, solely as necessary for Merck to prepare and submit submissions to
Regulatory Authorities, and to maintain Regulatory Approvals, related to any
Product.

 

1.145.2Merck agrees to make available to Endocyte [ * ] and results of Clinical
Trials for the Product in PROC and NSCLC in which the Companion Diagnostic is
used in the identification of potential patients for, or assessment of, the
Product to the extent necessary for Endocyte to perform any analysis required in
order to further Develop and obtain Regulatory Approval for the Companion
Diagnostic and for no other purpose (“Product [ * ]”). Merck shall provide
Endocyte with the Product [ * ] reasonably promptly, but only after completion
of its own analysis of the Product [ * ] in connection with the Compound and/or
Product. Endocyte shall have the right to use Product [ * ] in connection with
Development and obtaining Regulatory Approval of the Companion Diagnostic in the
Territory. Endocyte agrees to make available to Merck [ * ] and results of all
Clinical Trials conducted with respect to the Companion Diagnostic where used in
the identification of potential patients for or assessment of the Product
(“Companion Diagnostic [ * ]”) reasonably promptly, but only after completion of
its own analysis of the Companion Diagnostic [ * ], and copies of any and all of
its analysis of the Product [ * ]. Merck shall have the right to use the
Companion Diagnostic [ * ] and Endocyte’s analysis of the Product [ * ] in
connection with Development of the Product in the Territory. Notwithstanding the
foregoing, Merck’s obligation to provide Product [ * ] to Endocyte shall expire
after Merck obtains Regulatory Approval of the Product in PROC and NSCLC and,
thereafter, Merck will only provide new Product [ * ] to Endocyte if (a)
required by a Regulatory Authority in connection with the Regulatory Approval of
the Companion Diagnostic, or (b) required in order for Endocyte to comply with
its diligence obligations under Section 7.2.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 34

 

 

1.146Adverse Experience Reporting.

 

1.146.1Endocyte agrees that during the Term it will notify Merck within [ * ]
but not longer than [ * ] calendar days in English of any information of which
Endocyte becomes aware concerning any side effect, injury, toxicity or
sensitivity reaction, or any unexpected incident, and the severity thereof,
whether or not determined to be attributable to any Product (hereinafter
“Adverse Experience”), where such Adverse Experience is (i) serious and
associated with the clinical uses, studies, investigations, tests and marketing
of Product, whether or not determined to be attributable to Product. With
respect to all other adverse experiences (non-serious expected or non-serious
unexpected adverse experiences), Endocyte shall furnish Merck with copies of
such non-serious adverse experiences reported to Endocyte in connection with the
marketing of Product, in English, within [ * ] calendar days after receipt.
“Serious” as used in this Section refers to an experience which results in
death, is immediately life threatening, results in persistent and significant
disability/incapacity or requires in-patient hospitalization, or prolongation of
existing hospitalization, or is a congenital anomaly, cancer or an overdose.
Other important medical events that may jeopardize the patient or may require
intervention to prevent one of the outcomes previously listed should also be
considered serious. “Unexpected” as used in this Section refers to a condition
or development not listed in the current labeling for Product, and includes an
event that may be symptomatically and pathophysiologically related to an event
listed in the labeling, but differs from the event because of increased
frequency or greater severity or specificity.

 

1.146.2Merck agrees that during the time period during which Endocyte is
conducting any Clinical Trials of the Product in accordance with the Product
Development Plan, it will notify Endocyte within [ * ] but not longer than [ * ]
calendar days in English of any Adverse Experience of which Merck becomes aware
concerning any side effect, injury, toxicity or sensitivity reaction, or any
unexpected incident, and the severity thereof, whether or not determined to be
attributable to the Product (hereinafter “Product Adverse Experience”), where
such Product Adverse Experience is (i) serious and associated with the clinical
uses, studies, investigations, tests and marketing of the Product, whether or
not determined to be attributable to the Product. With respect to all other
adverse experiences during such period (non-serious expected or non-serious
unexpected adverse experiences), Merck shall furnish Endocyte with copies of
such non-serious adverse experiences reported to Merck in English, within [ * ]
calendar days after receipt.

 

1.146.3Merck agrees that during the Term it will notify Endocyte within [ * ]
but not longer than [ * ] calendar days in English of any information of which
Merck becomes aware concerning any side effect, injury, toxicity or sensitivity
reaction, or any unexpected incident, and the severity thereof, whether or not
determined to be attributable to the Companion Diagnostic (hereinafter “Adverse
Experience”), where such Adverse Experience is (i) serious and associated with
the clinical uses, studies, investigations, tests and marketing of Companion
Diagnostic, whether or not determined to be attributable to Companion
Diagnostic. With respect to all other adverse experiences (non-serious expected
or non-serious unexpected adverse experiences), Merck shall furnish Endocyte
with copies of such non-serious adverse experiences reported to Merck in
connection with the marketing of Product, in English, within [ * ] calendar days
after receipt.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 35

 

 

1.146.4With respect to Endocyte sponsored Clinical Trials, adverse experience
reports of unexpected and fatal or life-threatening events which are possibly,
probably, definitely related or of unknown relationship to the use of Product
must be forwarded to Merck in English within [ * ] calendar days after receipt
of the information. All other Serious Adverse Experience from Endocyte-sponsored
Clinical Trials must be forwarded to Merck in English within [ * ] calendar
days. In addition, Endocyte shall furnish to Merck copies of the end of study
summary of adverse experiences in English within the time period set forth in
the applicable then-current Product Development Plan. Endocyte will send Serious
Unexpected Suspected Adverse Reactions (SUSARS) on the Companion Diagnostic
arising from Endocyte sponsored Clinical Trials to Merck within [ * ] calendar
days for distribution to Merck investigators of the Companion Diagnostic.

 

1.146.5With respect to Merck sponsored Clinical Trials, adverse experience
reports of unexpected and fatal or life-threatening events which are possibly,
probably, definitely related or of unknown relationship to the use of the
Companion Diagnostic must be forwarded to Endocyte in English within [ * ]
calendar days after receipt of the information. All other Serious Adverse
Experience reports with any relationship to the Companion Diagnostic must be
forwarded in English to Endocyte within [ * ] calendar days. Merck will send
Serious Unexpected Suspected Adverse Reactions (SUSARS) on the Product from
Merck sponsored trials to Endocyte within [ * ] calendar days for distribution
to Endocyte investigators of the Product.

 

1.146.6It is understood and agreed that these adverse experience reporting
requirement provisions are based on the policies and procedures of Merck and
regulatory reporting requirements. Accordingly, in the event of changes to
regulatory requirements for adverse experience reporting, Endocyte agrees to
comply with such revised notification requirements.

 

1.146.7Within [ * ] days after the Effective Date, the Parties (under the
guidance of their respective pharmacovigilance departments, or equivalent
thereof) will execute a pharmacovigilance agreement between the Parties with
respect to the Product and Companion Diagnostic. Such pharmacovigilance
agreement will include safety data exchange procedures governing the
coordination of collection, investigation, reporting, and exchange of
information concerning any adverse experiences, and any product quality and
product complaints involving adverse experiences, arising from or related to the
use of the Product and Companion Diagnostic in the Clinical Trials and
subsequent commercial use, consistent with Applicable Law.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 36

 

 

COMMERCIALIZATION

 

1.147Overview. Merck shall be solely responsible for Commercialization of the
Product in the Field in the Royalty Territory. Merck shall be responsible for
Commercialization of the Product in the Field in the Co-Promotion Territory,
subject to Endocyte’s right to Co-Promote the Product in the Co-Promotion
Territory set forth in this Article 5. Endocyte shall be solely responsible for
Commercialization of the Companion Diagnostic in the Field in the Territory
subject to this Article 5.

 

1.148Commercialization in the Co-Promotion Territory; Endocyte Product
Co-Promotion.

 

1.148.1Overview. Subject to the terms and conditions of this Agreement and as
specifically set forth in this Section 5.2, Endocyte (itself or through its
Affiliate) shall Co-Promote the Product with Merck in the Co-Promotion Territory
commencing on the date of First Commercial Sale of the Product in the
Co-Promotion Territory. Such Co-Promotion shall be conducted pursuant to the
Co-Promotion Agreement, to be entered into by the Parties as set forth in
Section 5.2.1.

 

1.148.2Co-Promotion Territory Commercialization Plan and Budget.

 

(a)[ * ] months prior to the Estimated US Launch, Merck will propose to the JCC
for review and approval a Co-Promotion Territory Commercialization Plan. Not
later than November 15th of each Calendar Year, Merck shall submit to the JCC
for review and approval an updated Co-Promotion Territory Commercialization Plan
for the following Calendar Year, which the JCC shall approve no later than
December 31 of such Calendar Year. For clarity, Merck shall have final
decision-making authority regarding any disputes in the JCC with respect to the
Co-Promotion Territory Commercialization Plan.

 

(b)The Co-Promotion Territory Commercialization Plan will also include an
estimated Joint Commercialization Budget detailing the estimated Allowable
Expenses for the Product in the Co-Promotion Territory for such Calendar Year.
In the event that the actual Allowable Expenses incurred by the Parties exceed
[ * ] percent ([ * ]%) of the estimated budget for Allowable Expenses in any
given Calendar Quarter (such excess amount, the “Allowable Expense Overage
Amount”) and such excess occurs in a Calendar Quarter in which Endocyte is
required to make a payment to Merck pursuant to Section 9.4.8 for its share of
losses resulting from the calculation of US Adjusted Net Sales, Endocyte shall
have the right to require Merck to defer the inclusion of the Allowable Expense
Overage Amount in the US Adjusted Net Sales for such Calendar Quarter and
instead defer its inclusion in the calculation of US Adjusted Net Sales for the
subsequent Calendar Quarter, provided that if that succeeding Calendar Quarter
is also one in which Endocyte is required to make a payment to Merck pursuant to
Section 9.4.8 for its share of losses resulting from the calculation of US
Adjusted Net Sales, Endocyte may continue to defer the inclusion of all
Allowable Expense Overage Amounts into succeeding Calendar Quarters until such
time as there is a positive US Adjusted Net Sales in such Calendar Quarter.
Notwithstanding the foregoing, Merck shall have the right to offset against any
milestone payments owed pursuant to Article 9 any Allowable Expense Overage
Amount then owed to Merck under this Section 5.2.2(b).

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 37

 

 

1.148.3Endocyte Sales Force Size; Launch Readiness. The Endocyte sales force
shall be of sufficient size and level of experience necessary to Co-Promote the
Product (either on a primary-detail-equivalent or sales FTE basis, or other
method of determining appropriate level of effort as determined by Merck) with
Merck in the Co-Promotion Territory as set forth in the Co-Promotion Territory
Commercialization Plan and in the Co-Promotion Agreement. The JCC shall meet
[ * ] months prior to the Estimated US Launch (the “Launch Readiness Meeting”),
during which meeting Endocyte shall present to the JCC the number of sales
representatives it has hired and the level of experience of such sales
representatives that are ready for training for U.S. launch of the Product.
Unless the Parties agree to an alternative commercial ramp up strategy, in the
event that Endocyte has not hired [ * ] percent ([ * ]%) or more of its sales
representatives required under the Co-Promotion Territory Commercialization
Plan, and reflecting the Endocyte Promotional Share as may have been adjusted
pursuant to Section 5.2.5 (the “Committed Sales FTEs”) by such Launch Readiness
Meeting (such difference between the actual sales representatives hired by
Endocyte (“Equivalent Sales FTEs”) then hired by such Party and its Committed
Sales FTEs, the “Sales Force Shortfall”), Merck shall have the right (but not
the obligation) to supplement for such Sales Force Shortfall by providing its
sales representatives, up to the number of such Sales Force Shortfall (the
“Replaced Sales FTEs”), to promote the Product in the Co-Promotion Territory.
Unless otherwise agreed by the Parties, in such event of Merck fielding the
Replaced Sales FTEs, the [ * ], provided that Endocyte shall have the right to
[ * ] to an [ * ] in accordance with Section 5.2.5. In the event of Merck [ * ],
Endocyte shall [ * ] until such time, if any, as Merck [ * ].

 

1.148.4No Competing Products. Endocyte’s sales force that is Co-Promoting the
Product with Merck may not Detail any Competing Product. For purposes of this
Section 5.2.4, “Competing Product” shall mean any pharmaceutical product
containing or comprising a [ * ] and that has at least one Indication that is
the same as the Product’s Indications.

 

1.148.5Endocyte Opt-Out. Notwithstanding Section 5.2.6, no later than [ * ]
months in advance of the Estimated US Launch, Endocyte shall have the right to
elect to opt-out entirely of its right to Co-Promote the Product in the
Co-Promotion Territory (“Opt-Out”). In addition, no later than [ * ] months in
advance of the Estimated US Launch, Endocyte shall have the right to elect to
reduce the Endocyte Promotional Share from fifty percent (50%) to some lesser
amount, but in no event lower than [ * ] (the “Opt-Down”). In the case of both
the Opt-Out and the Opt-Down, Endocyte will provide Merck with written notice of
its Opt-Out or Opt-Down. In the event Endocyte elects to Opt-Down, it shall have
the right to increase its level of Co-Promotion to an amount no higher than
fifty percent (50%), no earlier than [ * ] but only in the event and to the
extent that the Co-Promotion Territory Commercialization Plan provides for
[ * ]. In such an event, the Parties will coordinate as set forth in Section
5.2.3 with respect to the [ * ]. In addition, the Co-Promotion Agreement shall
provide that Endocyte shall have the right to terminate its Co-Promotion of the
Product, without cause, on sufficient written notice. In the event of an Opt-Out
or Opt-Down or such termination, Endocyte shall continue to participate in the
US Adjusted Net Sales as set forth in Section 9.4.8, provided, however, that in
such a case, Merck shall deduct from Endocyte’s share of such US Adjusted Net
Sales an amount equal to [ * ] had Endocyte not exercised its Opt-Out, Opt-Down
or termination right. For clarity, Endocyte is not entitled to Opt-Out or
Opt-Down on an Indication-by-Indication basis.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 38

 

 

1.148.6Endocyte’s Contribution. The Endocyte sales force shall initially
constitute fifty percent (50%) of the overall number of sales representatives
needed to promote the Product in the Co-Promotion Territory upon First
Commercial Sale of the Product in the Co-Promotion Territory, as determined by
Merck and in accordance with the Co-Promotion Territory Commercialization Plan
(such level of contribution, as may be adjusted pursuant to Section 5.2.5 or
otherwise adjusted under this Section 5.2, the “Endocyte Promotional Share”).

 

1.148.7Change in Promotion. In the event that Merck’s commercialization model
with respect to oncology generally changes such that it will no longer be
fielding a specialty sales force to detail and promote products to physician
audiences in the Co-Promotion Territory, then Endocyte shall no longer have the
right to Co-Promote the Product under this Agreement or the Co-Promotion
Agreement, provided that Merck shall use good faith efforts to discuss ways in
which Endocyte may continue to participate in such then-current
commercialization model for the Product at the same level at which it was then
Co-Promoting the Product.

 

1.148.8Co-Promotion Agreement. The Parties shall negotiate in good faith a
Co-Promotion agreement to cover Co-Promotion of the Product in the Co-Promotion
Territory by Endocyte and Merck based upon the terms and conditions specified in
this Section 5.2 and in Schedule 5.2 and including any other customary and
appropriate terms and conditions (the “Co-Promotion Agreement”). The Parties
shall negotiate the Co-Promotion Agreement in good faith with the objective of
entering into such Co-Promotion Agreement at least [ * ] months prior to the
Estimated US Launch Date In the event the Parties fail to execute and deliver
the Co-Promotion Agreement within such [ * ] month period, the [ * ] of Merck
(or the equivalent position) and the [ * ] (or his designee) shall meet to
resolve any outstanding issues in the Co-Promotion Agreement in good faith. For
the avoidance of doubt, the inability of the Parties to execute and deliver the
Co-Promotion Agreement by such time period shall not cause Endocyte to lose its
Co-Promotion rights, and the Parties in the absence of such executed
Co-Promotion Agreement shall operate under this Section 5.2.

 

1.148.9Co-Promotion Costs. Except as set forth in Section 5.2.3 and Section
5.2.5, each Party will bear the Selling Expenses related to its own field sales
force in the Co-Promotion of the Product and neither shall be able to deduct its
Selling Expenses as an Allowable Expense in determining US Adjusted Net Sales.

 

1.148.10Other Commercialization Activities. At all times, Merck shall be the
responsible Party for all aspects of the Commercialization of the Product in the
Co-Promotion Territory other than Co-Promotion. Merck shall book all sales of
Products in the Co-Promotion Territory.

 

1.149ROW Product Commercialization Plan. [ * ] months prior to the estimated
date of First Commercial Sale of the Product in the Territory outside of the
United Sates (“Estimated ROW Launch”), Merck will submit to the JCC a ROW
commercialization plan for the Product (“ROW Commercialization Plan”). The ROW
Commercialization Plan will provide an overview of Merck’s plans for
Commercializing the Product in Territories outside the United States in
sufficient detail to allow Endocyte to plan and prepare to support its own
Commercialization efforts and activities with respect to the Companion
Diagnostic (which shall be set forth in the Companion Diagnostic
Commercialization Plan). Not later than [ * ] of each Calendar Year, Merck shall
submit to the JCC an updated Co-Promotion Territory Commercialization Plan for
the pending Calendar Year. Merck and Endocyte shall coordinate the
Commercialization of the Product and the Companion Diagnostic in the Territory
through the JCC and the Country/Regional Teams.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 39

 

 

1.150Commercialization of the Companion Diagnostic.

 

1.150.1Companion Diagnostic Commercialization Plan. An initial commercialization
plan for the Companion Diagnostic in the Territory, which includes marketing and
promotional plans for the Companion Diagnostic, is attached to this Agreement as
Schedule 5.4 (together with any updates thereto, the “Companion Diagnostic
Commercialization Plan”). The Companion Diagnostic Commercialization Plans that
follow the initial commercialization plan will include the activities to be
performed by each Party and the deliverables related thereto, including the
following (as such items become available to Endocyte):

 

(a)[ * ].

 

Not later than [ * ] of each Calendar Year, Endocyte shall submit to the JCC for
approval an updated Companion Diagnostic Commercialization Plan for the pending
Calendar Year.

 

1.150.2Pricing of the Companion Diagnostic. The price charged by Endocyte for
the Companion Diagnostic in the Territory will be determined by Endocyte in its
sole discretion[ * ].

 

1.150.3Endocyte Distributors of Companion Diagnostic. To the extent that
Endocyte is using or plans to use Third party distributors to Commercialize the
Companion Diagnostic in the Territory, Endocyte shall grant appropriate
authority to the Third Party distributor and to Merck in order to allow such
Third Party distributor and Merck to coordinate and communicate directly.

 

MANUFACTURING

 

1.151Overview. Merck will be responsible for Manufacture of the Compound and
Product in the Field in the Territory, including all Development and Commercial
supply, except for Manufacture of supplies necessary for the Development of the
Product in the PROC Clinical Trials in accordance with the Initial Indications
Development Plan and to support the NSCLC Phase IIb, for which Endocyte shall be
responsible for Manufacture of clinical supplies of Product. As soon as
practical after the Effective Date, Endocyte will transfer to Merck all Compound
and Product in its possession of Endocyte at Endocyte’s Costs of Goods Sold
under Schedule 1.117, except that Endocyte may retain Compound and Product
necessary for the PROC Clinical Trial and the NSCLC Phase IIb and a reasonable
amount of Compound and Product for use in furtherance of Endocyte’s obligations
hereunder or for use in non-clinical testing to support its efforts to prosecute
the Endocyte Licensed Patent Rights. Endocyte shall, if requested by Merck,
reasonably cooperate in the transfer or assignment of any existing Third Party
Manufacturing agreements to Merck, including all those listed on Schedule 6.1.
Endocyte will be responsible (itself or through one or more contract
manufacturers) for Manufacture of the Companion Diagnostic, including all
supplies required for Development of the Product and all Commercial Supply,
subject to this Article 6. Merck shall Manufacture and supply to Endocyte those
quantities of Compound and Product necessary for Endocyte’s pre-clinical
Development of the Companion Diagnostic under the Companion Diagnostic
Development Plan, at a price equal to Merck’s Cost of Goods Sold, which Compound
and Product Endocyte may use solely for internal research purposes only.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 40

 

 

1.152Transfer of Product Manufacturing Technology.

 

1.152.1Transfer. As soon as reasonably practicable after the Effective Date (but
in any event no later than [ * ] days after the Effective Date), Endocyte shall
transfer or cause to be transferred to Merck or a Third Party manufacturer
designated by Merck all Endocyte Existing Know-How Controlled by Endocyte as of
the Effective Date to enable Merck or such Third Party Manufacturer (as
appropriate) to replicate the process employed by or on behalf of Endocyte to
Manufacture Compound and Product.

 

1.152.2Use. Merck and/or its Third Party manufacturer shall use any information
transferred pursuant to Section 6.2.1 in accordance with the license granted in
Section 2.1.1 and solely for the purpose of manufacturing Compound or Product
under this Agreement and for no other purpose.

 

1.152.3Support. During the [ * ] month period following the Effective Date (or
for a reasonable extension of such time if requested by Merck), Endocyte will
make employees and consultants of it and its Affiliates available to Merck for
consultation as reasonably required by the Merck to ensure an orderly transition
of Endocyte’s Manufacturing technology and operations. Thereafter, Endocyte
shall provide any support reasonably requested by Merck in connection with
Manufacture of Compound or Product.

 

1.153Manufacture and Supply of Companion Diagnostic.

 

1.153.1Companion Diagnostic Manufacture Plan. An initial Manufacture and supply
plan for the US and EU and distribution plan for the EU, which includes
Endocyte’s plans for ensuring timely and sufficient supply of the Companion
Diagnostic and any components thereof, is attached to this Agreement as Schedule
6.3.1 (the “Initial Companion Diagnostic Manufacture Plan”) (the Initial
Companion Diagnostic Manufacture Plan together with any amendments thereto,
shall be referred to herein as the “Companion Diagnostic Manufacture Plan”). The
Companion Diagnostic Manufacture Plan shall include, at a minimum, an overall
Manufacture and supply strategy for, initially, the US and EU and a distribution
strategy for, initially, the EU, and in later iterations, other countries where
Merck seeks Product Approval for the Product, as communicated by Merck and in
conformance with Merck’s ROW Commercialization Plan, including plans for
ensuring appropriate capacity at Manufacturing sites for the Companion
Diagnostic and any components thereof and risk mitigation plans for the
Companion Diagnostic and any components thereof. Not later than [ * ] of each
Calendar Year, Endocyte shall submit to the JCC for approval an updated
Companion Diagnostic Commercialization Plan for the pending Calendar Year.

 

1.153.2Companion Diagnostic Manufacturing Costs. Endocyte shall be solely
responsible for the costs of Manufacture of the Companion Diagnostic, including
scale-up and validation costs. Merck shall pay Endocyte for the cost (calculated
in the manner set forth in the definition of Cost of Goods Sold under Schedule
1.117) of any Companion Diagnostic Manufactured and supplied by Endocyte to
Merck for use in Development of Compound or Product as set forth in the Clinical
Supply Agreement.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 41

 

 

1.153.3Companion Diagnostic Audits. Merck shall have the right to reasonably
request that Endocyte conduct an audit of any Third Party Manufacturer of the
Companion Diagnostic or any component thereof, at Merck’s cost and expense.
Merck shall be entitled to accompany Endocyte on any such audit. In addition,
Endocyte shall inform Merck with reasonably sufficient advance notice in the
event that it is planning to conduct an audit of any Third Party Manufacturer of
the Companion Diagnostic or any component thereof. Merck shall be entitled to
accompany Endocyte on any such audit, but shall not have the right to direct
such audit.

 

1.153.4Companion Diagnostic Safety Stock. Endocyte shall maintain, at its own
cost and expense, safety stock of the Companion Diagnostic and any material
components thereof to cover at least [ * ] months of forecast commercial supply
requirements for the Companion Diagnostic. Endocyte shall rotate this stock to
keep the expiry dating of the Companion Diagnostic at no less than [ * ] percent
([ * ]%) of expiry dating. Additionally, in the event that Endocyte is depleting
safety stock as a result of inability to fulfill orders, Endocyte will promptly
notify Merck of such action.

 

1.153.5Back Up Supply. Endocyte shall establish a back-up supply for Companion
Diagnostic within [ * ] of the Effective Date. Endocyte may opt to grant Merck
the right to be the back up supply manufacturer and shall provide technical
assistance and Endocyte Know-How necessary or reasonably useful to enable Merck
to exercise its right to Manufacture. In the event that Endocyte grants Merck
the back-up Manufacturing rights for Companion Diagnostic, Merck shall only
exercise such rights for the purposes of supporting the Product.

 

1.153.6Clinical Supply. Endocyte shall Manufacture and supply Merck with its
requirements of the Companion Diagnostic for use in the Development of the
Compound or Product in accordance with the clinical supply agreement which the
Parties shall negotiate in good faith and execute no later than June 30, 2012
(the “Clinical Supply Agreement”).

 

1.153.7Supply Failure/[ * ].

 

(a)During the Term, on a monthly basis, (i) Merck will provide to Endocyte
rolling forecasts of the anticipated market demand for the Product in each
Companion Diagnostic Supply Region (“Forecasted Product Demand”); and (ii)
Endocyte will provide Merck with a report in reasonable detail summarizing the
percent of Orders for the Companion Diagnostic received from its Customers in
the Territory that it was able to fulfill during such month.

 

(b)In the event that Endocyte is unable to fulfill [ * ] percent ([ * ]%) of the
Orders in aggregate, across the Territory, for [ * ] in a period of at least
[ * ], then Merck and Endocyte shall immediately meet to discuss the reasons for
Endocyte’s inability to fulfill the Orders, and to agree upon a plan to (i)
identify whether the failure is related to the Manufacture of the Companion
Diagnostic or is related to Endocyte’s activities in distributing Companion
Diagnostic to Customers; (ii) remedy the failure and (iii) to ensure that the
commercial market for the Product is not impacted.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 42

 

 

(c)Thereafter, in the event that Endocyte again fails to fulfill [ * ] percent
([ * ]%) of the Orders for [ * ] in an additional [ * ] period (a “Supply
Failure”), then the following shall apply:

 

(i)In the event that the Supply Failure results from or is related to the
Manufacture of the Companion Diagnostic by Endocyte or its Third Party
Manufacturers (“Manufacture Supply Failure”), then Merck shall [ * ] so that
Endocyte can continue to, [ * ], distribute Companion Diagnostic to Customers;

 

(ii)In the event that Supply Failure results from or is related to Endocyte’s
activities in distributing Companion Diagnostic to Customers (“Distribution
Failure”) then Merck shall [ * ]; or

 

(iii)In the event that the reason for the Supply Failure relates to or arises
out of both a Manufacture Supply Failure and a Distribution Failure, Merck shall
have the rights under both Section 6.3.7(c)(i) and (ii).

 

(d)In such an event Endocyte will cooperate with Merck in good faith to [ * ].
Notwithstanding the foregoing, Merck shall not have the right to [ * ] where the
inability of Endocyte to fulfill Orders from Customers is caused by force
majeure as defined under Section 14.1, or by any failure on the part of Merck to
inform or provide information to Endocyte with respect to the Regulatory
Approval or Pricing Approval timing or anticipated launch of the Product, or the
Forecasted Product Demand.

 

(e)“Companion Diagnostic Supply Region” means each of (i) the United States,
Mexico and Canada; (ii) Central America and Latin America, (iii) Mid-Europe I;
(iv) Mid-Europe II; (iv) Middle East; (v) Africa; (vi) China, Japan and Korea;
(vii) Other Asian countries; and (vii) Australia and Oceania.

 

(f)“Orders” means orders for the Companion Diagnostic received by Endocyte from
Customers which are both (i) within the forecasts agreed upon by such Customer
and Endocyte, or such other reasonable quantity parameters as may be applicable
and agreed upon by such Customer and Endocyte, if any, and (ii) not, in the
aggregate, greater than one hundred [ * ] percent ([ * ]%) of the Forecasted
Product Demand but only for a period of [ * ] after First Commercial Sale of a
Product or of a Product in a new Indication by Merck in a Companion Diagnostic
Supply Region.

 

(g)“Customer” means any Third Party distributor, or nuclear medicine or imaging
facility, or pharmacy which places orders for the Companion Diagnostic directly
with Endocyte.

 

DILIGENCE.

 

1.154Product Diligence. Merck will use Commercially Reasonable Efforts to
Develop the Product in [ * ]. In addition, Merck will use Commercially
Reasonable Efforts to Develop and Commercialize the Product in each of the
Initial Indications, each of the Additional Indications and [ * ], and any other
Indications which Merck may pursue pursuant to Article 4 [ * ] in the Field in
the Territory.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 43

 

 

1.155Companion Diagnostic Diligence. Endocyte will use Commercially Reasonable
Efforts to Develop and Commercialize the Companion Diagnostic in the Field in
the Territory. Without limiting the foregoing, such efforts shall include
Developing and Commercializing the Companion Diagnostic in each country in the
Territory in which Merck is Developing and Commercializing Compound or Product
(including any new Indications of the Product) and in accordance with [ * ]. In
the event that Endocyte anticipates that it will be unable to have the Companion
Diagnostic available for Development or Commercial use in sufficient time for
Merck’s requirements and timeline for the Product in a given country and/or
regulatory jurisdiction, it shall so notify Merck, and Endocyte shall have the
right to [ * ] and Endocyte shall [ * ] with respect to the applicable countries
or regulatory jurisdictions. In the event that Endocyte breaches its diligence
obligations set forth in this Section 7.2, Merck shall have the right to [ * ],
but only with respect to the country(ies) or regulatory jurisdiction(s) to which
such breach relates, and Endocyte shall [ * ] with respect to the applicable
countries or regulatory jurisdictions. In addition, in the event of such breach,
(a) where such breach relates to a country and/or regulatory jurisdiction in the
Royalty Territory, Endocyte shall [ * ] for such country and/or regulatory
jurisdiction; and (b) where such breach relates to the Co-Promotion Territory,
[ * ]. Such remedy shall be Endocyte’s sole liability, and Merck’s sole and
exclusive remedy, for Endocyte’s breach of its diligence obligations under this
Section 7.2, and such a breach shall not give rise to any rights under Section
13.4.

 

CONFIDENTIALITY AND PUBLICATION.

 

1.156Nondisclosure Obligation. All Information disclosed by one Party to the
other Party hereunder (the disclosing Party’s “Confidential Information”) shall
be maintained in confidence by the receiving Party and shall not be disclosed to
any Third Party or used for any purpose except as set forth herein without the
prior written consent of the disclosing Party, except to the extent that such
Information:

 

1.156.1is 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 business records;

 

1.156.2is in the public domain by use and/or publication before its receipt from
the disclosing Party, or thereafter enters the public domain through no fault of
the receiving Party;

 

1.156.3is subsequently disclosed to the receiving Party by a Third Party who may
lawfully do so and is not under an obligation of confidentiality to the
disclosing Party;

 

1.156.4is developed by the receiving Party independently of Information received
from the disclosing Party, as documented by the receiving Party’s business
records; or

 

1.156.5is disclosed to governmental or other regulatory agencies in order to
obtain patents or to gain or maintain approval to conduct clinical trials or to
market Product, but such disclosure may be only to the extent reasonably
necessary to obtain patents or authorizations.

 

Notwithstanding the foregoing exceptions Section 8.1.1 through 8.1.5, all
Program Know-How [ * ]. The Program Know-How [ * ].

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 44

 

 

Any combination of features or disclosures shall not be deemed to fall within
the foregoing exclusions merely because individual features are published or
available to the general public or in the rightful possession of the receiving
Party unless the combination itself and principle of operation are published or
available to the general public or in the rightful possession of the receiving
Party.

 

1.157Authorized Disclosures. Each Party may disclose the other Party’s
Confidential Information to the extent reasonably:

 

1.157.1deemed necessary by the receiving Party to be disclosed to such Party’s
Related Parties or Affiliates, agent(s), consultant(s), and/or other Third
Parties for the Development, Manufacturing and/or Commercialization of Compound,
Product or the Companion Diagnostic or Diagnostic Follow-On (or for such
entities to determine their interest in performing such activities) in
accordance with this Agreement on the condition that such Third Parties agree to
be bound by confidentiality and non-use obligations that substantially are no
less stringent than those confidentiality and non-use provisions contained in
this Agreement; or

 

1.157.2deemed necessary by counsel to the receiving Party to be disclosed to
such Party’s attorneys, independent accountants or financial advisors for the
sole purpose of enabling such attorneys, independent accountants or financial
advisors to provide advice to the receiving Party, on the condition that such
attorneys, independent accountants and financial advisors agree to be bound by
the confidentiality and non-use obligations contained in this Agreement;
provided, however, that the term of confidentiality for such attorneys,
independent accountants and financial advisors shall be no less than ten (10)
years; or

 

1.157.3deemed necessary by the receiving Party to be disclosed to any bona fide
potential or actual investor, investment banker, acquirer, merger partner, or
other potential or actual financial partner; provided that in connection with
such disclosure, the disclosing Party shall inform each disclosee of the
confidential nature of such Confidential Information and cause each disclosee to
treat such Confidential Information as confidential.

 

If a Party is required by judicial or administrative process to disclose
Confidential Information that is subject to the non-disclosure provisions of
Section 8.1, such Party shall promptly inform the other Party of the disclosure
that is being sought in order to provide the other Party an opportunity to
challenge or limit the disclosure obligations. Confidential Information that is
disclosed by judicial or administrative process shall remain otherwise subject
to the confidentiality and non-use provisions of this Section 8.1, and the Party
disclosing Confidential Information pursuant to law or court order shall take
all steps reasonably necessary, including without limitation obtaining an order
of confidentiality, to ensure the continued confidential treatment of such
Confidential Information.

 

1.158Endocyte Know-How. Endocyte agrees to [ * ], it being understood that
Endocyte shall at all times have the right to disclose, license, or otherwise
transfer to any Third Party any Endocyte Existing Know-How [ * ] for use in the
development, manufacture or commercialization of products or compounds other
than the Compound or Product.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 45

 

 

1.159Publication. Merck and Endocyte each acknowledge the other Party’s interest
in publishing the results of its activities under this Agreement in order to
obtain recognition within the scientific community and to advance the state of
scientific knowledge. Each Party also recognizes the mutual interest in
obtaining valid patent protection and in protecting business interests and trade
secrets. Consequently, except for disclosures otherwise permitted pursuant to
this Article 8, either Party, its employees, Related Parties, Affiliates, or
consultants wishing to make a publication or presentation of its activities
under the Initial Indications Development Plan or any other Product Development
Plan in which the Companion Diagnostic is used to identify or assess patients,
shall deliver to the other Party a copy of the proposed written publication or
an outline of an oral disclosure at least [ * ] days prior to submission for
publication or presentation. The reviewing Party shall have the right (a) to
propose modifications to the publication or presentation to prevent the
disclosure of such Party’s Confidential Information or (b) to request a
reasonable delay in publication or presentation in order to protect patentable
information. If the reviewing Party requests a delay in publication for purposes
of protecting patentable information, the publishing Party shall delay
submission or presentation for a period of [ * ] days to enable filing of patent
applications protecting each Party’s rights in such information. Upon expiration
of such [ * ], the publishing Party shall be free to proceed with the
publication or presentation. If the reviewing Party requests modifications to
the publication or presentation for purposes of protecting its Confidential
Information, the publishing Party shall edit such publication to prevent
disclosure of such Confidential Information prior to submission of the
publication or presentation. Otherwise, Merck, its employees, Related Parties,
or consultants shall be permitted to make a publication or presentation of its
activities under this Agreement subject to the review process set forth in this
Section 8.4 and Endocyte, its employees, Affiliates, or consultants shall be
permitted to make a publication or presentation of its activities under this
Agreement subject to the review process set forth in this Section 8.4.

 

1.160Publicity/Use of Names.

 

1.160.1The Parties agree that the material terms of this Agreement are the
Confidential Information of both Parties, subject to the special authorized
disclosure provisions set forth in Section 8.2 and this Section 8.5. The Parties
have agreed to make a joint press release of the execution of this Agreement
substantially in the form attached hereto as Schedule 8.5. After the release of
such joint press release, no disclosure of the existence, or the terms, of this
Agreement may be made by either Party without following the procedure set forth
in Section 8.5.2 or 8.5.3, as applicable, and no Party shall use the name,
trademark, trade name or logo of the other Party, its Affiliates or their
respective employee(s) in any publicity, promotion, news release or disclosure
relating to this Agreement or its subject matter, without the prior express
written permission of the other Party, except as may be required by law or as
otherwise expressly provided in this Agreement.

 

1.160.2After the release of the initial joint press release, if either Party or
its Affiliates desires to make a press release or other similar public
announcement concerning the existence and material terms of this Agreement or,
in the case of Endocyte, any activities under this Agreement relating to either
the Product or the Companion Diagnostic, such Party shall give reasonable prior
advance notice of the proposed text of such announcement to the other Party for
its prior review and approval (except as otherwise provided herein), such
approval not to be unreasonably withheld; provided, however, in the case of a
press release or governmental filing required by Applicable Law, such Party
shall provide the other Party with such advance notice as it reasonably can and
shall not be required to obtain approval therefor. Merck shall be entitled to
make a press release or other similar public announcement concerning any
activities under this Agreement without the prior consent of Endocyte, provided
that Merck agrees to provide Endocyte with reasonable prior notice of the text
of such announcement. A Party commenting on any proposed press release shall
provide its comments, if any, within [ * ] business days after receiving the
press release for review. Notwithstanding the above, Endocyte shall have the
right to make a press release (a) regarding the start and completion of the PROC
Clinical Trials, (b) regarding any material change to the PROC Protocol, (c)
regarding any material change to the supply of Doxil prior to date Regulatory
Approval is obtained in the EU, or (d) announcing the achievement of each
milestone under this Agreement after it is achieved and the amount thereof, in
each case (a) and (d) subject only to the review procedure set forth in the
preceding sentence. In relation to Merck’s review of such an announcement, Merck
may make specific, reasonable comments on such proposed press release within the
prescribed time for commentary, but shall not withhold its consent to disclosure
of the information that the relevant milestone or Product Approval has been
achieved and triggered a payment hereunder. Neither Party shall be required to
seek the permission of the other Party to repeat any information regarding the
terms of this Agreement that have already been publicly disclosed by such Party,
or by the other Party, in accordance with this Section 8.5.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 46

 

 

1.160.3The Parties acknowledge that either or both Parties may be obligated to
file a copy of this Agreement with the SEC or other Government Authorities. Each
Party shall be entitled to make such a required filing, provided that it
requests confidential treatment of at least the commercial terms and sensitive
technical terms hereof and thereof to the extent such confidential treatment is
reasonably available to such Party. In the event of any such filing, each Party
will provide the other Party with a copy of the Agreement marked to show
provisions for which such Party intends to seek confidential treatment and shall
reasonably consider and incorporate the other Party’s comments thereon to the
extent consistent with the legal requirements governing redaction of information
from material agreements that must be publicly filed.

 

PAYMENTS; ROYALTIES AND REPORTS

 

1.161License Fee. In consideration for the licenses granted herein under the
Endocyte Patent Rights and Endocyte Know-How, Merck shall pay to Endocyte a
one-time, non-refundable, non-creditable payment of One Hundred Twenty Million
US Dollars (US $120,000,000) [ * ] the Effective Date.

 

1.162Milestone Payments. Merck shall pay to Endocyte the following one-time,
non-refundable, creditable (only as expressly provided in this Agreement)
milestone payments in connection with the achievement of the applicable
milestone by any Product (for clarity, there shall be no milestone payments due
in connection with the Companion Diagnostic):

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 47

 

 

PRODUCT DEVELOPMENT MILESTONES:   AMOUNT: [ * ]   $ [ * ] [ * ]   $  [ * ] [ * ]
  $ [ * ] [ * ]   $  [ * ] [ * ]   $  [ * ] [ * ]   $  [ * ] [ * ]   $  [ * ]
[ * ]   $  [ * ] [ * ]   $  [ * ] [ * ]   $  [ * ] [ * ]   $  [ * ] [ * ]   $ 
[ * ] [ * ]   $  [ * ] [ * ]   $  [ * ] [ * ]   $  [ * ] [ * ]   $  [ * ] [ * ]
  $  [ * ] [ * ]   $  [ * ] [ * ]   $  [ * ] [ * ]   $  [ * ] [ * ]   $  [ * ]
[ * ]   $  [ * ] [ * ]   $  [ * ] [ * ]   $  [ * ] [ * ]   $  [ * ]

 

* In the event that [ * ] solely for purposes of determining whether the above
milestones have been satisfied.

 

For purposes of the above milestones, in the event that the Phase III Clinical
Trial is conducted as a part of a Phase II/III Clinical Trial, the milestone
shall be met upon Commencement of the Phase III Clinical Trial portion of such
Phase II/III Clinical Trial. Merck shall notify Endocyte in writing within [ * ]
days following the achievement of each milestone, and shall make the appropriate
milestone payment within [ * ] days after the achievement of such milestone. The
milestone payment shall be payable only upon the initial achievement of such
milestone and no amounts shall be due hereunder for subsequent or repeated
achievement of such milestone.

 

1.163Sales Milestones. Merck shall make each of the one-time, non-refundable,
non-creditable milestone payments indicated below to Endocyte when aggregate
annual Net Sales of all Products in the Territory calculated on a rolling
Calendar Quarter basis first reach the corresponding US Dollar values (for
clarity, there shall be no milestone payments due in connection with sales of
the Companion Diagnostic):

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 48

 

 

SALES-BASED MILESTONE   AMOUNT Total annual worldwide Net Sales of all Products
greater than $[ * ]   $ [ * ] Total annual worldwide Net Sales of all Products
greater than $[ * ]   $  [ * ] Total annual worldwide Net Sales of all Products
greater than $[ * ]   $  [ * ] Total annual worldwide Net Sales of all Products
greater than $[ * ]   $  [ * ] Total annual worldwide Net Sales of all Products
greater than $[ * ]   $  [ * ]

 

Merck shall notify Endocyte in writing within [ * ] days following the end of
the Calendar Quarter in which the milestone is achieved, and shall make the
appropriate milestone payment within [ * ] days after the end of such Calendar
Quarter.

 

1.164Royalties.

 

1.164.1Royalties Payable By Merck. During the Royalty Term, Merck shall pay
Endocyte non-refundable, non-creditable royalties, calculated on a
Product-by-Product, country-by-country basis, on the annual Net Sales of
Products in the Royalty Territory as follows (for clarity, no royalties shall be
payable for sales of the Companion Diagnostic):

 

Annual Net Sales of a Product in the Royalty Territory   Royalty Rate   For that
portion of annual worldwide Net Sales of Product less than or equal to $[ * ] in
any Calendar Year   [ * ] % For that portion of annual worldwide Net Sales of
Product greater than $[ * ] but less than or equal to $[ * ] in any Calendar
Year   [ * ] % For that portion of annual worldwide Net Sales of Product greater
than $[ * ] but less than or equal to $[ * ] in any Calendar Year   [ * ] % For
that portion of annual worldwide Net Sales of Product greater than $[ * ] in any
Calendar Year   [ * ] %

 

1.164.2Royalty Term. Royalties on each Product at the rates set forth above or
in Section 9.4.3 shall be payable by Merck commencing on the First Commercial
Sale and continuing on a country-by-country basis until the expiration of the
later of: (i) [ * ] (the “Royalty Term”). For clarity, a Valid Patent Claim that
does not [ * ] shall not be used to measure the Royalty Term.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 49

 

  

1.164.3Know-How Royalty. Notwithstanding the provisions of Section 9.4.1, in
countries in the Royalty Territory where the sale of Product by Merck or its
Related Parties would not, absent the licenses granted in this Agreement and any
sublicenses thereof, infringe a Valid Patent Claim corresponding to such Product
in such country, Merck shall pay royalties at royalty rates that shall be set at
[ * ] percent ([ * ]%) of the applicable royalty rate determined according to
Section 9.4.1 for the Royalty Term. Such royalties shall be calculated after
first calculating royalties under Section 9.4.1.

 

1.164.4Conditions. All royalties are subject to the following conditions:

 

(a)that only one royalty shall be due with respect to the same unit of Product;

 

(b)that no royalties shall be due upon the sale or other transfer among Merck or
its Related Parties, but in such cases the royalty shall be due and calculated
upon Merck’s or its Related Party’s Net Sales to the first independent Third
Party;

 

(c)no royalties shall accrue on the sale or other disposition of Product by
Merck or its Related Parties for use in a Clinical Trial; and

 

(d)no royalties shall accrue on the disposition of Product in reasonable
quantities by Merck or its Related Parties as samples (promotion or otherwise)
or as donations (for example, to non-profit institutions or government agencies
for a non-commercial purpose).

 

1.164.5Compulsory Licenses. If a compulsory license is granted to a Third Party
with respect to Product in any country in the Royalty Territory with a royalty
rate lower than the royalty rate provided by Section 9.4.1, then the royalty
rate to be paid by Merck on Net Sales in that country under Section 9.4.1 shall
be [ * ].

 

1.164.6Third Party Licenses. In the event that Merck determines in good faith
that one or more patent licenses from other Third Parties are required by Merck
or its Related Parties in order to exercise the licenses granted to Merck
pursuant to Section 2.1 with respect to the [ * ] (hereinafter “Third Party
Licenses”), and Merck enters into such Third Party Licenses, the Parties shall
be responsible for the consideration actually paid under such Third Party
Licenses as follows:

 

(a)Endocyte shall be one hundred percent (100%) responsible for Third Party
Licenses that were entered into by Endocyte prior to or on the Effective Date;

 

(b)with respect to Third Party Licenses entered into after the Effective Date of
this Agreement (whether by Endocyte or by Merck),

 

(i)in the event that such Third Party License is required by Merck or its
Related Parties in order to exercise the licenses granted to Merck pursuant to
Section 2.1 in the Royalty Territory, Merck shall be entitled to off-set [ * ]
percent ([ * ]%) of the [ * ] Merck pays to the Third Party for sales of a
particular Product in a country against any [ * ] due to Endocyte for sales of
such Product in such country; provided that in no event shall such reductions
reduce the royalty owed to Endocyte for such sales of the Product below [ * ]
percent ([ * ]%) of the total royalties due to Endocyte under this Section 9.4
for Net Sales of such Product during the applicable royalty period, or

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 50

 

 

(ii)in the event that such Third Party License is required by Merck or its
Related Parties in order to exercise the licenses granted to Merck pursuant to
Section 2.1 in the Co-Promotion Territory, [ * ] of the consideration actually
paid under such Third Party License, which shall be accounted for in the US
Adjusted Net Sales as set forth in Schedule 1.117.

 

1.164.7Reports; Payment of Royalty. During the term of this Agreement following
the First Commercial Sale of a Product, Merck shall furnish to Endocyte a
quarterly written report for each Calendar Quarter showing, on a
country-by-country and Product-by-Product basis, the gross sales and calculation
of Net Sales, showing the aggregate deductions from gross sales (as such term is
defined by Merck in its standard practices) under the definition of Net Sales,
of all Products subject to royalty payments sold by Merck and its Related
Parties in the Royalty Territory during the reporting period and the royalties
payable under this Agreement. Reports shall be due on the [ * ] day following
the close of each Calendar Quarter. Royalties shown to have accrued by each
royalty report shall be due and payable on the date such royalty report is due.
Merck shall keep complete and accurate records in sufficient detail to enable
the royalties payable hereunder to be determined.

 

1.164.8Sharing of US Adjusted Net Sales. Endocyte shall receive an amount equal
to fifty percent (50%) of all US Adjusted Net Sales arising from the Net Sales
of Product in the Co-Promotion Territory. Within [ * ] days after the end of
each Calendar Quarter, each Party shall submit to the other Party a statement
setting forth the Allowable Expenses it incurred in such calendar quarter.
Commencing with the First Commercial Sale of any Product in the U.S., in each
Calendar Quarter Merck shall notify Endocyte of any loss incurred for the US
Adjusted Net Sales within [ * ] days after the end of such Calendar Quarter and
(a) if the Allowable Expenses incurred by Endocyte for such Calendar Quarter are
less than its share of such negative US Adjusted Net Sales, Endocyte shall pay
the difference between the Allowable Expenses incurred by Endocyte and fifty
percent (50%) of such losses to Merck within [ * ] days after the end of such
Calendar Quarter, except for that portion that Endocyte has the right to defer
pursuant to Section 5.2.2(b) (the “Quarterly Deferred Costs”, and the aggregate
of all Quarterly Deferred Costs, the “Total Deferred Costs”), and (b) if the
Allowable Expenses incurred by Endocyte for such Calendar Quarter exceed its
share of negative US Adjusted Net Sales, Merck shall pay the difference between
the Allowable Expenses incurred by Endocyte and fifty percent (50%) of such
losses to Endocyte within [ * ] days after the end of such Calendar Quarter. For
each Calendar Quarter in which US Adjusted Net Sales is positive, Merck shall
pay Endocyte fifty percent (50%) of such profits plus the Allowable Expenses
incurred by Endocyte in such Calendar Quarter, less deduction for any Total
Deferred Costs as set forth above and in Section 5.2.2(b) that Merck has not
credited to milestone payments under Section 9.2, to Endocyte within [ * ] days
after the end of such Calendar Quarter. Sharing of US Adjusted Net Sales shall
extend under this Agreement for so long as the Product is sold in the
Co-Promotion Territory, whether by Merck, its Affiliates, sublicensees or
successors in interest.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 51

 

 

1.165Record-Keeping and Audit.

 

1.165.1Each Party and its Affiliates shall maintain complete and accurate books
and records of account, in accordance with generally accepted accounting
principles, of all transactions and other business activities under this
Agreement, sufficient to confirm the accuracy of all reports furnished by a
Party to the other Party under this Agreement, and all payments by a Party to
the other Party under this Agreement. Upon reasonable written notice to a Party,
but no more often than once per Calendar Year, such Party shall permit an
independent certified public accountant of national standing designated by the
other Party and reasonably acceptable to the audited Party to audit such books
and records of account of such Party from the previous [ * ] months during
regular business hours in order to confirm the accuracy and completeness of all
such reports and all such payments. The accounting firm shall disclose to the
Party requesting the audit only whether the audited reports are correct or
incorrect and the specific details concerning any discrepancies. No other
information shall be provided to the Party requesting the audit.

 

1.165.2The Party requesting an audit shall bear all costs and expenses incurred
in connection with any such audit; provided, however, that if any such audit
correctly identifies any underpayments by the audited Party hereunder or
overpayments by the auditing Party that are the fault of the audited Party
hereunder in excess of [ * ] percent ([ * ]%) of the amount actually payable by
such Party to the Party requesting the audit hereunder, or [ * ], whichever is
greater, then, in addition to paying the full amount of such underpayment or
overpayment plus interest (as set forth in Section 9.8) from the original due
date, the audited Party shall reimburse the other Party for all reasonable costs
and expenses incurred by such Party in connection with that audit, in each case
within [ * ] days after the accounting firm’s report.

 

1.165.3The audited Party shall not be required to maintain books and records for
more than [ * ] years following the end of any Calendar Year.

 

1.165.4The Party requesting an audit shall treat all financial information
subject to review under this Section 9.5 in accordance with the confidentiality
and non-use provisions of this Agreement, and shall cause its accounting firm to
enter into an acceptable confidentiality agreement with the audited Party
obligating it to retain all such information in confidence pursuant to such
confidentiality agreement.

 

1.166Payment Exchange Rate. All payments to be made under this Agreement shall
be made in United States dollars and may be paid by check made to the order of
Endocyte or Merck, as the case may be, or bank wire transfer in immediately
available funds to such bank account in the United States as may be designated
in writing by Endocyte or Merck from time to time. In the case of sales outside
the United States, the rate of exchange to be used in computing the monthly
amount of currency equivalent in United States dollars due Endocyte shall be
made at the monthly rate of exchange utilized by Merck in its worldwide
accounting system, prevailing on the third to the last business day of the month
preceding the month in which such sales are recorded by Merck.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 52

 

 

1.167Tax.

 

1.167.1Income Tax Withholding. Endocyte shall be liable for all income and other
taxes (including interest) (“Taxes”) imposed upon any payments made by Merck to
Endocyte under this Article 9 (“Agreement Payments”). If applicable laws, rules
or regulations require the withholding of Taxes, Merck shall make such
withholding payments and shall subtract the amount thereof from the Agreement
Payments. Merck shall submit to Endocyte appropriate proof of payment of the
withheld Taxes as well as the official receipts within a reasonable period of
time. Merck shall provide Endocyte reasonable assistance in order to allow
Endocyte to obtain the benefit of any present or future treaty against double
taxation which may apply to the Agreement Payments.

 

1.167.2If Merck is required to make a payment to Endocyte subject to a deduction
or withholding of Tax, and if such deduction or withholding of Tax obligation
arises as a result of any action by Merck, including an assignment of this
Agreement, or any failure on the part of Merck to comply with Applicable Laws,
that has the effect of modifying the Tax treatment or increasing the Tax of
Endocyte (a “Merck Withholding Tax Action”), then the payment by Merck (in
respect of which such deduction or withholding of Tax is required to be made)
shall be increased by the amount necessary (the “Additional Tax”) to ensure that
Endocyte receives an amount equal to the amount that it would have received had
no such Merck Withholding Tax Action occurred. The Additional Tax, along with
any other Tax deducted and withheld from the payment made by Merck, shall be
timely remitted to the proper Governmental Authority for the account of Endocyte
in accordance with Applicable Laws.

 

1.167.3VAT. All prices are exclusive of sales, use, GST, VAT, excise, and other
taxes, duties or charges of a similar nature imposed by any federal, state,
provincial, or local government, or other taxing authority. If any sales, use,
GST, VAT, excise, and other taxes, duties or charges of a similar nature will be
chargeable, the paying Party shall pay, or upon receipt of invoice from the
receiving Party shall reimburse, these in addition to the sums otherwise
payable, at the rate in force at the due time for payment or such other time as
is stipulated under the relevant legislation.

 

1.168Late Payments. If a Party does not receive payment of any sum due to it on
or before the due date therefor, simple interest shall thereafter accrue on the
sum due to such Party from the due date until the date of payment at a per-annum
rate of [ * ] or the maximum rate allowable by applicable law, whichever is
less.

 

REPRESENTATIONS AND WARRANTIES

 

1.169Representations And Warranties of Each Party. Each Party represents and
warrants to the other Party that as of the Effective Date:

 

1.169.1it has the full right, power and authority to enter into this Agreement
and to perform its obligations hereunder; and

 

1.169.2this Agreement has been duly executed by it and is legally binding upon
it, enforceable in accordance with its terms, and does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a party
or by which it may be bound, nor violate any material law or regulation of any
court, governmental body or administrative or other agency having jurisdiction
over it.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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1.170Endocyte Representations and Warranties. Endocyte represents and warrants
to Merck that as of the Execution Date:

 

1.170.1to the best of Endocyte’s knowledge, the Endocyte Licensed Patent Rights
in existence as of the Execution Date are not invalid or unenforceable, in whole
or in part;

 

1.170.2it has not previously assigned, transferred, conveyed or otherwise
encumbered its right, title and interest in Endocyte Patent Rights or Endocyte
Know-How in a manner that would prevent it from granting the licenses under the
Endocyte Patent Rights and Endocyte Know-How as purported to be granted to Merck
in this Agreement;

 

1.170.3to the best of Endocyte’s knowledge, it is the sole and exclusive owner
of the Endocyte Patent Rights and Endocyte Know-How (except for Endocyte Patent
Rights (including those Patent Rights listed on Schedule 1.36(f)) and Endocyte
Know-How that are licensed to Endocyte from Purdue under the Purdue Agreement),
all of which are (and shall be, in the case of Endocyte Program Patent Rights
and Endocyte Program Know-How) free and clear of any liens, charges and
encumbrances, and no other Person, including any corporation or other private
entity, or governmental entity or subdivision thereof, has any claim of
ownership whatsoever with respect to the Endocyte Patent Rights and Endocyte
Know-How;

 

1.170.4to the best of Endocyte’s knowledge, the exercise of the license granted
to Merck under the Endocyte Patent Rights and Endocyte Know-How, including
without limitation the development, manufacture, use, sale and import of
Compound and Products, does not infringe any valid and enforceable intellectual
property rights owned or possessed by any Third Party;

 

1.170.5there are no claims, judgments or settlements against or owed by Endocyte
and, to the best of Endocyte’s knowledge, no pending or threatened claims or
litigation, relating to the Endocyte Patent Rights and Endocyte Know-How;

 

1.170.6Endocyte has disclosed to Merck [ * ]; and

 

1.170.7Endocyte has disclosed to Merck the existence of any [ * ] of the
Endocyte Patent Rights and Endocyte Know-How as contemplated in this Agreement
as of the Execution Date.

 

1.171Disclaimer of Warranty. Except as expressly set forth in this Agreement,
each Party expressly disclaims, waives, releases, and renounces any
representation or warranty of any kind, express or implied either in fact or by
operation of law, by statute or otherwise, whether written or oral, or arising
from course of performance, course of dealing or usage of trade, including,
without limitation, any representation or warranty with respect to
non-infringement, value, adequacy, freedom from fault, quality, efficiency,
suitability, characteristics or usefulness, or merchantability or fitness for a
particular purpose.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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1.172Limitation of Liability. NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM
THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN
CONNECTION WITH THIS AGREEMENT, EACH PARTY’S PERFORMANCE OR LACK OF PERFORMANCE
HEREUNDER, OR ANY LICENSE GRANTED HEREUNDER, EXCEPT FOR DAMAGES ARISING FROM A
BREACH OF ARTICLE 8; PROVIDED THAT THE FOREGOING SHALL NOT LIMIT EITHER PARTY’S
INDEMNIFICATION OBLIGATIONS HEREUNDER OR DAMAGES AVAILABLE FOR BREACHES OF
CONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 8.

 

IP Ownership/PATENT/trademark PROVISIONS.

 

1.173Ownership of Program IP. All rights, title and interest in or to any and
all Program IP shall be determined in accordance with the following terms and
conditions:

 

1.173.1Merck shall own all Program Know-How [ * ], and Endocyte shall own all
Program Know-How [ * ]. [ * ].

 

1.173.2As between the Parties, Merck shall own all Inventions made solely by one
or more employees, agents or consultants of Merck, its Related Parties, or its
subcontractors, and all Program Patent Rights claiming or covering such
Inventions. As between the Parties, Endocyte shall own all Inventions made
solely by one or more employees, agents or consultants of Endocyte, its
Affiliates or its subcontractors, and all Program Patent Rights claiming or
covering such Inventions. Endocyte and Merck shall jointly own all Inventions
made by one or more employees, agents or consultants of Endocyte or its
Affiliates or subcontractors, together with one or more employees, agents or
consultants of Merck or its Related Parties or its subcontractors, and all
Program Patent Rights claiming or covering such Inventions. Inventorship shall
be determined in accordance with U.S. patent laws.

 

1.173.3In the event of a dispute regarding ownership, within [ * ] days of
either Party raising such dispute in writing, the Parties shall establish a
procedure to resolve such dispute, which may include engaging independent Third
Party patent attorneys jointly selected by the Parties to resolve such dispute,
whose decision will be final and binding on the Parties. In the event the
Parties cannot agree on such procedure within an additional [ * ] days, then
such dispute shall be resolved as provided under Section 14.6. The Parties
acknowledge that the ownership rights set out in this Section 11.1 are subject
to the terms and conditions of this Agreement (including the license granted by
Endocyte to Merck), and subject thereto and to the Parties’ other intellectual
property rights, each Party shall be free to use and exploit (which shall
include the right to grant licenses under and assign its interest in) any
jointly owned Program Patent Rights and Inventions, without any requirement to
obtain the consent of or duty of accounting to the other Party during the term
and after expiry or termination of this Agreement.

 

1.173.4To the extent that a Party utilizes Third Party contractors to perform
any of its activities under this Agreement, such Party shall ensure that such
Third Party contractors are obligated to assign rights to any Program Patent
Rights and/or Program Know-How made by such Third Party contractors to the Party
engaging such Third Party so that such rights can be conveyed in accordance with
the terms and conditions of this Section 11.1.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 55

 

 

1.174Filing, Prosecution and Maintenance of Patents.

 

1.174.1Endocyte shall have the sole right to Prosecute in the Territory, except
as otherwise provided in this Section 11.2 and Section 11.3, the Endocyte
Licensed Patent Rights and Endocyte Program Patent Rights. With respect to Merck
Program Patent Rights and Joint Program Patent Rights, Merck shall have the
first right to Prosecute. In each case, the Prosecuting Party shall give the
non-Prosecuting Party an opportunity to review the text of the application
before filing, shall consult with the non-Prosecuting Party with respect
thereto, and shall supply the non-Prosecuting Party with a copy of the
application as filed, together with notice of its filing date and serial number.
Endocyte shall keep Merck advised of the status of the actual and prospective
patent filings for Endocyte Patent Rights and shall provide Merck advance copies
of any papers related to and the opportunity to comment on the Prosecution of
Endocyte Licensed Patent Rights and Endocyte Program Patent Rights. Endocyte
shall promptly give notice to Merck of the grant, lapse, revocation, surrender,
invalidation or abandonment of any Endocyte Licensed Patent Rights or Endocyte
Program Patent Rights licensed to Merck for which Endocyte is responsible for
Prosecution. With respect to all Prosecutions under this Section 11.2.1, those
Patent Rights that Endocyte is Prosecuting shall be referred to as "Endocyte
Prosecution Patent Rights" and those Patent Rights that Merck is Prosecuting
shall be referred to as "Merck Prosecution Patent Rights." For clarity, Endocyte
shall have the right to file continuation or divisional patent applications (or
foreign equivalent, if applicable) with respect to any Endocyte Product Specific
Patent Right. Such patent application shall be deemed an Endocyte Genus Patent
Right if such patent application (a) does not specifically claim a Compound or
the use, formulation or manufacture thereof, or patient selection method for
therapy with a Compound, and (b) claims or covers a Compound, Product or
Companion Diagnostic, or the manufacture, formulation or use of a Compound,
Product or Companion Diagnostic.

 

1.174.2Upon Merck’s reasonable request and Endocyte’s consent, which shall not
be unreasonably withheld or delayed, at any time during the pendency of a [ * ]
Patent, [ * ] Patent or [ * ] Patent, Endocyte shall, where allowed by
Applicable Laws, file a continuation or divisional patent application (or
foreign equivalent, if applicable) that (a) claims priority to any such [ * ]
Patent, [ * ] Patent or [ * ] Patent and (b) claims a Compound or a Product
containing a Compound (but no other compound or product), which patent
application shall be deemed an Endocyte Product-Specific Patent Right.

 

1.174.3Endocyte may, in its sole discretion, give Merck an opportunity to review
advance copies and to make comments on any paper related to the Prosecution of
Endocyte Priority Patents prior to their submission made in connection with such
Prosecution, and will consider in good faith Merck’s reasonable requests for
information with respect to the Prosecution of the Endocyte Priority Patents.

 

1.174.4Endocyte shall give notice to Merck of any decision to cease Prosecution
of any Endocyte Prosecution Patent Rights on a country by country basis in the
Territory at least [ * ] days before any deadline for taking action to avoid
abandonment (or other loss of rights) and, in such case, shall permit Merck, in
its sole discretion, to continue Prosecution of such Endocyte Prosecution Patent
Rights. If Merck elects to continue Prosecution, Endocyte shall execute such
documents and perform such acts as may be reasonably necessary to effect an
assignment of such Endocyte Prosecution Patent Rights to Merck in a timely
manner to allow Merck to continue such Prosecution, at Merck’s sole expense
(which expenses shall not be included as Allowable Expenses). Any Patent Rights
so assigned shall no longer be considered Endocyte Patent Rights.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 56

 

 

1.174.5Merck shall give notice to Endocyte of any decision to cease Prosecution
of any Joint Program Patent Rights on a country by country basis in the
Territory at least [ * ] days before any deadline for taking action to avoid
abandonment (or other loss of rights) and, in such case, shall permit Endocyte,
in its sole discretion, to continue Prosecution of such Joint Program Patent
Rights. If Endocyte elects to continue Prosecution, Merck shall execute such
documents and perform such acts as may be reasonably necessary to effect an
assignment of Merck’s interest in such Joint Program Patent Rights to Endocyte
in a timely manner to allow Endocyte to continue such Prosecution, at Endocyte’s
sole expense (which expenses shall not be included as Allowable Expenses). Any
Patent Rights so assigned shall no longer be considered Joint Program Patent
Rights and shall not be considered Endocyte Program Patent Rights.

 

1.174.6With respect to any Endocyte Product-Specific Patent Rights and Endocyte
Program Patent Rights, [ * ] shall [ * ] and [ * ] and [ * ] after the Effective
Date in connection with [ * ]; provided that [ * ] shall have the right to [ * ]
and [ * ] for [ * ] in the Co-Promotion Territory as [ * ]. [ * ] shall provide
[ * ] with written [ * ] within [ * ] days of the end of each Calendar Quarter
containing, in [ * ], all [ * ] and [ * ] in connection with [ * ] of Endocyte
Product-Specific Patent Rights and Endocyte Program Patent Rights for the
previous Calendar Quarter. [ * ]. Notwithstanding anything to contrary above, in
the event that [ * ] or its Affiliates [ * ] any of the Endocyte Program Patent
Rights for [ * ], [ * ] shall only be required to [ * ] of the [ * ]. By way of
example, if [ * ] an [ * ] under the Endocyte Program Patent Rights [ * ], [ * ]
shall [ * ] to [ * ] for [ * ] of the [ * ] for those Endocyte Program Patent
Rights that are subject [ * ]. [ * ] shall give notice to [ * ] of any desire to
[ * ] related to [ * ] of any Endocyte Product-Specific Patent Right or Endocyte
Program Patent Right, including in any individual countries in the Territory.
Upon such notice, Endocyte's obligations to keep Merck advised of the status of
the actual and prospective patent filings and provide Merck advance copies of
any papers related to and the opportunity to comment on the Prosecution of such
Endocyte Product-Specific Patent Right or Endocyte Program Patent Right shall
cease, and such Endocyte Product-Specific Patent Right or Endocyte Program
Patent Right shall no longer be included in the licenses under Sections 2.1.1
and 2.2.1.

 

1.174.7Endocyte shall bear all costs and expenses incurred in connection with
the Prosecution of the Endocyte Genus Patent Rights, which costs and expenses
shall not be included in Allowable Expenses. Merck shall bear all costs and
expenses incurred in connection with the prosecution of the Merck Prosecution
Patent Rights; provided that Merck shall have the right to include any such
costs and expenses for Prosecution of the Joint Program Patent Rights (but not
the Merck Program Patent Rights) in the Co-Promotion Territory as Allowable
Expenses.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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1.175Interference, Opposition, Post-grant Review, Reexamination, Supplemental
Examination and Reissue.

 

1.175.1Endocyte shall, within [ * ] days of learning of any request for, or
filing or declaration of, any interference, opposition, post-grant review,
reexamination, supplemental examination or reissue relating to Endocyte
Prosecution Patent Rights, inform Merck of such event. If such proceeding
relates to an Endocyte Product-Specific Patent Right or Endocyte Program Patent
Right, Merck and Endocyte shall thereafter consult and cooperate fully to
determine a course of action with respect to such proceeding, and Merck shall
have the right to review and approve any submission to be made in connection
with such proceeding. If such proceeding relates to an Endocyte Genus Patent
Right, Endocyte agrees to give Merck an opportunity to review advance copies and
to make comments on any paper related to such proceeding prior to its
submission.

 

1.175.2Endocyte shall not initiate any interference, reexamination, supplemental
examination or reissue proceeding relating to Endocyte Product-Specific Patent
Rights or Endocyte Program Patent Rights without the prior written consent of
Merck, which consent shall not be unreasonably withheld or delayed.

 

1.175.3In connection with any interference, opposition, post-grant review,
reexamination, supplemental examination or reissue proceeding relating to
Endocyte Product-Specific Patent Rights or Endocyte Program Patent Rights, Merck
and Endocyte will cooperate fully and will provide each other with any
information or assistance that either may reasonably request. Endocyte shall
keep Merck 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. Endocyte shall not settle any such proceeding in a manner that would
adversely affect the scope, exclusivity or duration of any Endocyte
Product-Specific Patent Right or Endocyte Program Patent Right without Merck's
prior written consent, which shall not be unreasonably withheld or delayed.

 

1.175.4Merck shall, within [ * ] days of learning of any request for, or filing
or declaration of, any interference, opposition, post-grant review,
reexamination, supplemental examination or reissue relating to Joint Program
Patent Rights, inform Endocyte of such event. In connection with any such
interference, opposition, post-grant review, reexamination, supplemental
examination or reissue proceeding, Merck and Endocyte will cooperate fully and
will provide each other with any information or assistance that either may
reasonably request. Merck shall keep Endocyte 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.

 

1.175.5Merck shall not initiate any interference, reexamination, supplemental
examination or reissue proceeding relating to Joint Program Patent Rights
without the prior written consent of Endocyte, which consent shall not be
unreasonably withheld or delayed.

 

1.175.6Merck shall bear the expense of any interference, opposition, post-grant
review, reexamination, supplemental examination or reissue proceeding relating
to Endocyte Product-Specific Patent Rights, Endocyte Program Patent Rights and
Merck Prosecution Patent Rights, and shall have the right to include such
expenses with respect to Endocyte Product-Specific Patent Rights, Endocyte
Program Patent Rights and Joint Program Patent Rights in the Co-Promotion
Territory as Allowable Expenses. Endocyte shall bear the expense of any
interference, opposition, post-grant review, reexamination, supplemental
examination or reissue proceeding relating to Endocyte Genus Patent Rights,
which expenses shall not be included as Allowable Expenses.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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1.176Enforcement and Defense.

 

1.176.1Each Party shall give the other Party notice of (i) any infringement of
Endocyte Patent Rights (other than Companion Diagnostic Patents) on account of a
Third Party’s manufacture, use or sale of a Product in the Field (a “Product
Patent Infringement”), (ii) any misappropriation or misuse of Endocyte Know-How
related to a Compound or Product (a "Product Know-How Misappropriation"), and
(iii) any infringement of Endocyte Patent Rights or misappropriation or misuse
of Endocyte Know-How that is not a Product Patent Infringement or Product
Know-How Misappropriation, in each case (i)-(iii) that may come to such Party’s
attention. In the case of a Product Patent Infringement or Product Know-How
Misappropriation, Merck and Endocyte shall promptly thereafter consult and
cooperate fully to determine a course of action, including but not limited to
the commencement of legal action by either or both Merck and Endocyte, to
terminate such Product Patent Infringement or Product Know-How Misappropriation.

 

1.176.2Merck, upon notice to Endocyte, shall have the first right to initiate
and prosecute a legal action at its own expense and in the name of Endocyte and
Merck, or to control the defense of any declaratory judgment action, in each
case to the extent relating to any Product Patent Infringement or Product
Know-How Misappropriation; provided that with respect to a Product Patent
Infringement of the Endocyte Genus Patent Rights (other than Companion
Diagnostic Patents): (a) the consultation under the last sentence of Section
11.4.1 shall include a determination of the strategy for such legal action, and
Merck shall not take any action with respect to such legal action that is
inconsistent with the strategy agreed by the Parties, (b) Merck shall keep
Endocyte regularly informed of developments in such legal action, consider in
good faith Endocyte’s reasonable comments on such legal action, and seek
Endocyte’s consent to any important aspects of such action, including filing
material papers to the competent court, which consent shall not be unreasonably
withheld or delayed, and (c) Merck shall not settle any such action in a manner
that would adversely affect the scope, exclusivity or duration of any Endocyte
Genus Patent Rights without Endocyte’s prior written consent, which shall not be
unreasonably withheld or delayed. Merck shall promptly notify Endocyte if it
elects not to exercise such first right, and upon such notice, or if Merck does
not commence such enforcement or defense (or take action to settle or otherwise
secure the abatement of such Product Patent Infringement or Product Know-How
Misappropriation) within [ * ] days after notice under Section 11.4.1 (or [ * ]
days after notice under Section 11.4.9), Endocyte shall thereafter have the
right to either initiate and prosecute such action or to control the defense of
such declaratory judgment action in the name of Endocyte and, if necessary,
Merck.

 

1.176.3Endocyte shall have the sole right, but no obligation, to initiate and
prosecute a legal action at its own expense and in the name of Endocyte and
Merck with respect to the Endocyte Genus Patent Rights or Endocyte Know-How
wherein the infringement or misappropriation is not a Product Patent
Infringement or Product Know-How Misappropriation, respectively, and to control
the defense of any declaratory judgment action with respect to the Endocyte
Genus Patent Rights that does not relate to a Product Patent Infringement. For
clarity, Endocyte shall have the sole right, but not obligation, to initiate and
prosecute a legal action, at its own expense and in its own name, against any
infringement of the Companion Diagnostic Patents, and to control the defense of
any declaratory judgment with respect to the Companion Diagnostic Patents.

 

1.176.4Each Party shall have the right to be represented by counsel of its own
choice in any action that such Party brings under Section 11.4.2.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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1.176.5In the event that Merck elects not to (or fails to within the applicable
time period) initiate and prosecute an action with respect to a Product Patent
Infringement or Product Know-How Misappropriation as provided in Section 11.4.1,
and Endocyte elects to do so, the costs of any agreed-upon course of action to
terminate the infringement or misappropriation or misuse, including without
limitation the costs of any legal action commenced or the defense of any
declaratory judgment, shall be shared equally by Endocyte and Merck, subject to
Section 11.4.7.

 

1.176.6For any action to terminate any Product Patent Infringement or Product
Know-How Misappropriation, in the event that Merck is unable to initiate or
prosecute such action solely in its own name, Endocyte will join such action
voluntarily and will execute and cause its Affiliates to execute all documents
necessary for Merck to initiate litigation to prosecute and maintain such
action. In connection with any action under this Section 11.4.6, Merck and
Endocyte will cooperate fully and will provide each other with any information
or assistance that either may reasonably request. Each Party shall keep the
other informed of developments in any such action or proceeding, including, to
the extent permissible by law, consultation on and approval of any settlement,
the status of any settlement negotiations and the terms of any offer related
thereto.

 

1.176.7The Party bringing an action under Section 11.4.2 shall bear all costs
and expenses it incurs in connection therewith; provided that (a) with respect
to enforcement or defense of Endocyte Patent Rights under Section 11.4.2 in the
Co-Promotion Territory, such costs and expenses will be included as Allowable
Expenses; (b) Merck shall bear all costs and expenses incurred by Endocyte in
connection with actions that Endocyte joins pursuant to the first sentence of
Section 11.4.6, which costs and expenses will be included as Allowable Expenses
to the extent related to enforcement or defense of Endocyte Patent Rights in the
Co-Promotion Territory; and (c) costs shared by Endocyte and Merck under Section
11.4.5 will be included as Allowable Expenses to the extent related to
enforcement or defense of Endocyte Patent Rights in the Co-Promotion Territory.
Except as provided above, each Party shall bear all costs and expenses it incurs
in connection with its representation in any action brought by the other Party
that it voluntarily joins, and such costs and expenses shall not be included in
Allowable Expenses.

 

1.176.8Any recovery obtained by either or both Merck and Endocyte in connection
with or as a result of any action contemplated by this Section, whether by
settlement or otherwise, shall be shared in order as follows:

 

(a)With respect to the enforcement or defense of Patent Rights in the Royalty
Territory:

 

(i)the Party which initiated and prosecuted the action shall recoup all of its
costs and expenses incurred in connection with the action;

 

(ii)the other Party shall then, to the extent possible, recover its costs and
expenses incurred in connection with the action; and

 

(iii)the amount of any recovery remaining shall then be allocated [ * ] percent
([ * ]%) to the Party that initiated and prosecuted (or defended) the action and
[ * ] percent ([ * ]%) to the other Party:

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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(b)With respect to the enforcement or defense of Patent Rights in the
Co-Promotion Territory, such recovery shall be deemed Net Sales for purposes of
determining the US Adjusted Net Sales.

 

1.176.9Each Party shall inform the other Party of any certification regarding
any Endocyte Patent Rights it has received pursuant to either 21 U.S.C.
§§355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) or its successor provisions or any
similar provisions in a country in the Territory other than the United States in
connection with an application for Product Approval naming a Product or Compound
as the reference listed drug, and shall provide the other Party with a copy of
such certification within [ * ] days of receipt. Endocyte’s and Merck’s rights
with respect to the initiation and prosecution of any legal action as a result
of such certification or any recovery obtained as a result of such legal action
shall be as defined in Sections 11.4.1 through 11.4.8; provided, however, that
Merck shall exercise its first right to initiate and prosecute any action and
shall inform Endocyte of such decision within [ * ] days of receipt of the
certification, after which time Endocyte shall have the right to initiate and
prosecute such action if Merck has not then done so. Regardless of which Party
has the right to initiate and prosecute such action, both Parties shall, as soon
as practicable after receiving notice of such certification, convene and consult
with each other regarding the appropriate course of conduct for such action. The
non-initiating Party shall have the right to be kept fully informed and
participate in decisions regarding the appropriate course of conduct for such
action, and the right to join and participate in such action as and to the
extent provided in Sections 11.4.1 through 11.4.6.

 

1.177Orange Book Listing.  Upon Endocyte’s receipt of a notice of allowance (or
equivalent) of an applicable Endocyte Patent Right, Endocyte shall promptly
provide Merck with all information reasonably required by Merck to list such
Endocyte Patent Right for a Product in the Orange Book maintained by the FDA or
similar or equivalent patent listing source, if any, in other countries in the
Territory (collectively, “Orange Book and Equivalents”). Merck shall, as and to
the extent consistent with Applicable Laws, timely file all appropriate
information with the Regulatory Authorities in applicable countries, including
the U.S., to list all Endocyte Patent Rights and Merck Program Patent Rights
applicable to Products in the Orange Book and Equivalents, and Merck shall use
Commercially Reasonable Efforts to obtain and maintain such listings for
Products.

 

1.178Cooperation and Patent Term Restoration.

 

1.178.1Each Party acknowledges that this Agreement is a “joint research
agreement” as defined in 35 U.S.C. §103(c)(3). The Parties agree to cooperate
and to take reasonable actions to maximize the protections available under the
safe harbor provisions of 35 U.S.C. 103(c) for US patents and patent
applications; provided that neither Party shall invoke the CREATE Act (including
filing a terminal disclaimer) in the course of Prosecution under Section 11.2
without first obtaining the prior written consent of the other Party, which
consent shall not be unreasonably withheld or delayed. If a Party has a duty to
disclose Confidential Information of the other Party under 37 C.R.F. § 1.56,
such Party shall notify the other Party prior to making any such disclosure.
Unless otherwise agreed by the other Party, a Party may disclose Confidential
Information of the other Party to the USPTO only in accordance with the USPTO’s
rules for submitting confidential information as set forth in M.P.E.P. §724.02
and as amended.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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1.178.2The Parties shall consult with and cooperate with each other, including
by providing necessary information and assistance as the other Party may
reasonably request, in obtaining patent term restoration or supplemental
protection certificates or their equivalents in any country in the Territory
where applicable to Endocyte Patent Rights and to Products. Merck shall have the
right with respect to a Product and on a country-by-country basis to select the
patent or patents that will be the subjects to such a patent term restoration or
supplemental protection certificates or equivalents, taking into account
Endocyte’s reasonable comments, and Endocyte agrees to abide by such election in
good faith; provided that Merck shall not have the right to select any Endocyte
Genus Patent Right without Endocyte’s prior written consent, which shall not be
unreasonably withheld. It shall not be unreasonable for Endocyte to withhold its
consent if (a) [ * ] and (b) the Endocyte Genus Patent Right selected by Merck
[ * ].

 

1.179Patents Licensed from Third Parties. Each Party’s rights under this Article
11 with respect to any patent application or patent licensed to the other Party
by a Third Party shall be subject to the rights of such Third Party to
prosecute, defend and enforce such patent application or patent.

 

1.180Patent Marking. Merck shall, and shall require its Related Parties to, mark
Products sold by it hereunder (in a reasonable manner consistent with industry
custom and practice) with appropriate patent numbers or indicia to the extent
required by Applicable Laws.

 

1.181Product Trademarks.

 

1.181.1Endocyte Product Trademarks. Immediately upon execution of this
agreement, Endocyte shall transfer all right, title and interest in the Endocyte
Product Trademarks worldwide except for in the United States. With respect to
Endocyte Product Trademarks in the United States, Endocyte shall use the
Endocyte Product Trademarks in connection with the PROC Clinical Trial and,
following such use, Endocyte shall obtain trademark registrations in the United
States based upon this use. As soon as Endocyte has obtained such trademark
registrations in the United States, Endocyte shall transfer all of its right,
title and interest in the Endocyte Product Trademarks in the United States to
Merck. In consideration for such assignment, Merck shall reimburse all of
Endocyte’s reasonable and documented internal and external expenses in
connection with the Endocyte Product Trademarks, whether incurred before, on or
after the Execution Date, including, without limitation, expenses in connection
with trademark office filings, expenses in connection with obtaining approval
from the Name Review Group of the EMA (the “NRG”), and costs for market research
and other research conducted by Addison Whitney. Endocyte shall invoice Merck
for such expenses following assignment of the Endocyte Product Trademarks to
Merck, and Merck shall pay such invoice within [ * ] days after receipt thereof.

 

1.181.2New Product Trademarks. Merck shall have the right, in its sole
discretion, to determine the Product-related trademarks to be used in connection
with Commercializing the Product worldwide; provided that any such
Product-related trademark is not the same as or confusingly similar to any
Companion Diagnostic Trademark. Merck shall own all right, title, and interest
in and to all Product Trademarks developed for the Product after the Effective
Date. Merck shall be solely responsible, at its expense, for filing,
prosecuting, maintaining, defending and enforcing the Product Trademarks;
provided that all expenses incurred by Merck in connection with the Product
Trademarks (other than the Endocyte Product Trademarks) in the Co-Promotion
Territory shall (to the extent falling with the definition of Patent and
Trademark Expenses) be included as Allowable Expenses. Endocyte shall reasonably
cooperate with Merck, at Merck’s expense, to obtain approval from the NRG for
two Product Trademarks (other than the Endocyte Product Trademarks).

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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1.181.3Companion Diagnostic Trademarks. Endocyte shall have the right, in its
sole discretion, to determine the Companion Diagnostic-related trademarks to be
used in connection with commercializing the Companion Diagnostic worldwide.
Endocyte shall own all right, title, and interest in and to all Companion
Diagnostic Trademarks. Endocyte shall be solely responsible, at its expense, for
filing, prosecuting, maintaining, defending and enforcing the Companion
Diagnostic Trademarks.

 

Indemnification/insurance

 

1.182Indemnification By Merck. Merck shall indemnify, defend and hold Endocyte,
its Affiliates and their respective agents, employees, officers and directors
(each an "Endocyte Indemnitee") harmless from and against any and all Third
Party claims, suits, actions, demands, liabilities, expenses and/or loss,
including reasonable legal expense and attorneys’ fees (collectively, "Losses")
to which any Endocyte Indemnitee may become subject as a result of any claim,
demand, action or other proceeding by any person or entity other than a Party or
its Affiliates to the extent such Losses arise directly or indirectly out of (i)
the research, Development, Manufacture, use, sale or other disposition of any
Compound and/or Product by Merck, except to the extent such Losses constitute US
Products Liability Losses, which shall be shared by the Parties in accordance
with Schedule 1.117 (US Adjusted Net Sales); (ii) Merck’s failure to comply with
Applicable Laws; (iii) Merck’s breach of any covenant, representation, warranty
or other agreement made by Merck in this Agreement, or (iv) the gross negligence
or willful misconduct of any of the Merck Indemnitees; except, in each case, to
the extent such Losses result from the material breach by Endocyte, its
Affiliates, sublicensees or subcontractors of any covenant, representation,
warranty or other agreement made by Endocyte in this Agreement or the negligence
or willful misconduct of any Endocyte Indemnitee or otherwise are Losses as to
which Endocyte indemnifies Merck under Section 12.2.

 

1.183Indemnification by Endocyte. Endocyte shall indemnify, defend and hold
Merck, its Related Parties and their respective agents, employees, officers and
directors (each a "Merck Indemnitee") harmless from and against any and all
Losses, to which any Merck Indemnitee may become subject as a result of any
claim, demand, action or other proceeding by any person or entity other than a
Party or its Affiliates to the extent such Losses arise directly or indirectly
out of (i)  the research, Development, Manufacture, use, sale or other
disposition of the Companion Diagnostic by Endocyte, except to the extent such
Losses constitute US Products Liability Losses, which shall be shared by the
Parties in accordance with Schedule 1.117 (US Adjusted Net Sales); (ii)
Endocyte’s breach of any of its representations and warranties set forth in
Article 10 of this Agreement; (iii) Endocyte’s failure to comply with Applicable
Laws; (iv) Endocyte’s use of any Compound and/or Product Manufactured by or on
behalf of Endocyte; or (v) the gross negligence or willful misconduct of any of
the Endocyte Indemnitees; except, in each case, to the extent such Losses result
from the material breach by Merck, its Related Party or subcontractors of any
covenant, representation, warranty or other agreement made by Merck in this
Agreement or the negligence or willful misconduct of any Merck Indemnitee or
otherwise are Losses as to which Merck indemnifies Endocyte under Section 12.1.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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1.184Notice of Indemnification Obligation and Defense. Any Party entitled to
indemnification under Section 12.1 or 12.2 shall give notice to the indemnifying
Party of any Losses that may be subject to indemnification, promptly after
learning of such Losses, but the omission to so notify the indemnifying Party
promptly will not relieve the indemnifying Party from any liability under
Section 12.1 or 12.2 except to the extent that the indemnifying Party shall have
been prejudiced as a result of the failure or delay in providing such notice.
The indemnifying Party shall assume the defense of such Losses with counsel
reasonably satisfactory to the indemnified Party. If such defense is assumed by
the indemnifying Party, the indemnifying Party will not be subject to any
liability for any settlement of such Losses made by the indemnified Party
without its consent (but such consent will not be unreasonably withheld or
delayed), and will not be obligated to pay the fees and expenses of any separate
counsel retained by the indemnified Party with respect to such Losses. The
indemnified Party shall provide the indemnifying Party with all information in
its possession and all assistance reasonably necessary to enable the
indemnifying Party to carry on the defense of any such Losses.

 

1.185Insurance.

 

1.185.1Endocyte hereby represents that it has insurance covering product
liability and general liability, and that it has and will maintain such coverage
for the Term and for a period of two (2) years after the expiration of this
Agreement or the earlier termination thereof. Such insurance is in an amount
which is reasonable and customary in the global medical device and diagnostics
industry for companies of comparable size and activities and is sufficient to
cover its obligations under this Agreement. If requested by Merck, Endocyte will
provide Merck with certificates of insurance demonstrating such coverage.

 

1.185.2Merck hereby represents that it is self-insured for product liability and
general liability, and that it has and will maintain such coverage for the Term
and for a period of two (2) years after the expiration of this Agreement or the
earlier termination thereof. Such self-insurance is in an amount which is
reasonable and customary in the global pharmaceutical industry for companies of
comparable size and activities and is sufficient to cover its obligations under
this Agreement.

 

Article 2 TERM AND TERMINATION

 

2.1HSR Act. To the extent required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (“HSR Act”), each Party will (i) file or
cause to be filed, as promptly as practicable after the date hereof, with the
United States Federal Trade Commission (“FTC”) and the United States Department
of Justice (“DOJ”), all reports and other documents required to be filed by such
Party under the HSR Act concerning the transactions contemplated hereby and (ii)
promptly comply with or cause to be complied with any requests by the FTC or DOJ
for additional information concerning such transactions, in each case so that
the waiting period applicable to this Agreement and the transactions
contemplated hereby under the HSR Act will expire as soon as practicable after
the date hereof. Each Party agrees to request, and to cooperate with the other
Party in requesting, early termination of any applicable waiting period under
the HSR Act. Each Party shall be responsible for its own costs, expenses, and
filing fees in connection with the filings. This Agreement is effective on the
earlier of: (i) the date after which the waiting period pursuant to the HSR Act
has expired, (ii) the date on which the transaction contemplated in this
Agreement has been approved by the FTC and DOJ, and (iii) if the Parties agree
that no filing is required under the HSR Act, the Execution Date (“Effective
Date”), except that the following provisions shall be effective on the Execution
Date: Section 13.1 and Articles 1, 8 and 10.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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2.2Term And Expiration. This Agreement shall be effective as of the Effective
Date and unless terminated earlier pursuant to Sections 13.3 or 13.4, this
Agreement shall continue in full force and effect until expiration of all
payment (including sharing of US Adjusted Net Sales) obligations hereunder (the
“Term”). Upon expiration of this Agreement, Merck's licenses pursuant to Section
2.1.1 and 2.2.1 shall become fully paid-up, perpetual licenses and Endocyte’s
covenant in Section 2.2.2 shall continue until such time as Merck is no longer
selling Product.

 

2.3Termination By Merck. Notwithstanding anything contained herein to the
contrary, Merck shall have the right to terminate this Agreement at any time in
its sole discretion by giving [ * ] days’ advance written notice to Endocyte.

 

2.4Termination for Cause.

 

2.4.1Cause for Termination. This Agreement may be terminated at any time during
the term of this Agreement:

 

(a)upon written notice by either Party if the other Party is in breach of its
material obligations hereunder by causes and reasons within its control and has
not cured such breach within [ * ] days (after notice requesting cure of the
breach; provided, however, in the event of a good faith dispute with respect to
the existence of a material breach, the [ * ] day cure period shall be tolled
until such time as the dispute is resolved pursuant to Section 14.6; provided,
however, that Merck shall not have the right to terminate this Agreement for
Endocyte’s material breach of Section 7.2, the exclusive remedy for which shall
be as set forth in such section; or

 

(b)by either Party upon the filing or institution of bankruptcy, reorganization,
liquidation or receivership proceedings, or upon an assignment of a substantial
portion of the assets for the benefit of creditors by the other Party; provided,
however, that in the case of any involuntary bankruptcy proceeding such right to
terminate shall only become effective if the Party consents to the involuntary
bankruptcy or such proceeding is not dismissed within [ * ] days after the
filing thereof ("Insolvency Events"); or

 

(c)upon written notice by Endocyte if Merck or any of its Related Parties
(directly or indirectly, individually or in association with any other person or
entity) Challenges any Endocyte Patent Right anywhere in the world, except to
the extent such Challenge is made in defense of a suit or other action by
Endocyte or its Affiliates asserting an Endocyte Patent Right against Merck or
its Related Parties.

 

2.4.2Effect of Termination.

 

(a)If Merck terminates this Agreement under Section 13.4.1, the rights and
obligations of the Parties hereunder shall terminate as of the effective date of
such termination and:

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 65

 

 

(i)No later than [ * ] days after the effective date of such termination, each
Party shall return or cause to be returned to the other Party all Information in
tangible form received from the other Party and all copies thereof; provided,
however, that each Party may retain any Information reasonably necessary for
such Party’s continued practice under any license(s) which do not terminate
pursuant to this Section, and may keep one copy of Information received from the
other Party in its confidential files for record purposes.

 

(ii)Endocyte shall, within [ * ] days after the effective date of such
termination return or cause to be returned to Merck all Products, Compounds, and
all substances or compositions delivered or provided by Merck, as well as any
other material provided by Merck in any medium.

 

(iii)Each Party shall pay all amounts then due and owing as of the termination
effective date.

 

(iv)Endocyte shall transfer to Merck, to the extent not previously provided, a
copy of any Program Data and provide access to Endocyte Know-How in its
possession or under its control relating to the Compound or Product.

 

(v)Upon Merck’s request, Endocyte will transfer to Merck any ongoing Clinical
Trials that Endocyte, its Affiliates or sublicensees are conducting with respect
to the Compound and/or Product.

 

(vi)With respect to [ * ], Endocyte agrees as follows:

 

(A)Endocyte will provide to Merck at Merck’s request, a copy of all data
developed by Endocyte and Endocyte Know-How in Endocyte’s possession or under
its Control relating to [ * ], including without limitation all information
contained in Endocyte’s regulatory and/or safety databases, all in the format
then currently maintained by Endocyte.

 

(B)Endocyte will provide to Merck [ * ] held by Endocyte or its Affiliates to
the extent necessary [ * ] clause (D) below, and, if such [ * ] Endocyte or its
Affiliates as of the date of termination, Endocyte shall inform Merck of the
status of any such [ * ] and provide to Merck a [ * ] prepared by Endocyte or
its Affiliates; provided that Merck [ * ] by or on behalf of Merck and its
Related Parties and Merck’s indemnification obligation under Section 12.1 shall
apply with respect to [ * ].

 

(C)if Endocyte is as of such time and as between the Parties, exclusively
responsible for the [ * ], Endocyte shall, at Merck's request, provide
reasonable [ * ]. In addition, Endocyte shall use reasonable commercial efforts
to facilitate the [ * ]. If any such [ * ].

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 66

 

 

(D)Effective only in event of such termination, Endocyte hereby grants to Merck
[ * ].

 

(E)Endocyte shall grant to Merck a [ * ] Endocyte or its Affiliates.

 

(vii)Effective only in the event of such termination, Endocyte hereby grants to
Merck an exclusive (even as to Endocyte), sublicensable, royalty bearing license
in the Field in the Territory under Endocyte Patent Rights, Endocyte Know-How,
and Product Trademarks to make, have made, use, offer to sell, sell, import and
otherwise Develop and Commercialize Compound and Product; subject to Merck
continuing to make all payments owed to Endocyte under Article 9, except that
(i) [ * ].

 

(viii)except as set forth in this Section 13.4.2(a) and for the surviving
provisions set forth in Section 13.5, the rights and obligations of the Parties
hereunder shall terminate.

 

(b)If Endocyte terminates this Agreement under Section 13.4.1 or Merck
terminates this Agreement under Section 13.3, the rights and obligations of the
Parties hereunder shall terminate as of the effective date of such termination
and:

 

(i)Merck’s licenses pursuant to Sections 2.1.1, 2.2.1, and 2.1.3 shall terminate
as of such termination effective date.

 

(ii)No later than [ * ] days after the effective date of such termination, each
Party shall return or cause to be returned to the other Party all Information in
tangible form received from the other Party and all copies thereof; provided,
however, that each Party may retain any Information reasonably necessary for
such Party’s continued practice under any license(s) which do not terminate
pursuant to this Section, and may keep one copy of Information received from the
other Party in its confidential files for record purposes.

 

(iii)Each Party shall pay all amounts then due and owing as of the termination
effective date.

 

(iv)Merck will provide to Endocyte at Endocyte’s request, a copy of all data
developed by Merck and provide access to Merck Program Know-How in Merck’s
possession or under its control relating to any Compound or Products reasonably
necessary for Endocyte’s continued Development, Manufacture and/or
Commercialization of the Compounds and Products, including without limitation
all information contained in Merck’s regulatory and/or safety databases, all in
the format then currently maintained by Merck.

 

(v)Merck will assign and transfer to Endocyte, or to an Affiliate or Third Party
designated by Endocyte, at Endocyte’s request, all Regulatory Approvals,
including Product Approvals, and Regulatory Filings, for Compound and/or Product
held by Merck, its Affiliates or its Related Parties and, if such Product
Approvals have not been obtained by Merck or its Related Parties as of the date
of termination, Merck shall inform Endocyte of the status of any such Product
Approvals or Regulatory Filings in progress and provide to Endocyte any such
Product Approvals in progress prepared by Merck or its Related Parties, [ * ].

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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(vi)If, as between the Parties, Merck is responsible for the Manufacture of the
Compound or Product, Merck shall, at Endocyte's request, provide reasonable
technical assistance and transfer all Merck Know-How necessary to Manufacture
such Compound and Product to Endocyte or its designee. In addition, Merck shall
use reasonable commercial efforts to facilitate the execution by any Third Party
Manufacturers any Manufacturing agreements with Endocyte relating to Compounds
or Products. If any such Third Party contract manufacturer does not enter into
such contracts, then Merck shall reasonably cooperate with Endocyte to negotiate
for the continuation of supply from such Third Party, and Merck shall supply
such Compounds or Products, as applicable, to Endocyte for a reasonable period
(not to exceed [ * ] months) until Endocyte establishes an alternate, validated
source of supply for the Products. The cost to Endocyte for such supply shall be
at [ * ].

 

(vii)Effective only in the event of such termination, Merck hereby grants to
Endocyte an exclusive, worldwide, [ * ] license, with the right to sublicense
through multiple tiers, under Merck Program Patent Rights and Merck Know-How
existing at the time of termination to use, Develop, Manufacture, or
Commercialize the Compound and/or Product. Endocyte’s license under this Section
13.4.2(b)(vii) shall be limited solely to the right to develop, make, have made,
use, import, export, commercialize, offer to sell and sell such Compound and/or
Product in the Field; provided, however, that if there are any [ * ].

 

(viii)Merck and its Affiliates, sublicensees and distributors shall be entitled,
during the [ * ] period immediately following the effective date of termination,
to finish any work-in-progress and to sell any Products or Compound remaining in
inventory, in accordance with the terms of this Agreement; provided, however,
that Endocyte shall have the right to purchase from Merck any Products or
Compound remaining in inventory as of the effective date of termination (that
are not then committed to be supplied to any Third Party or Related Party, in
the ordinary course of business), at a price equal to [ * ].

 

(ix)Merck shall assign to Endocyte all right, title and interest in and to the
trademarks owned by Merck and used in connection with the Products, excluding
any such trademarks that include, in whole or part, any corporate name or logo
of Merck or its Related Parties.

 

(x)except as set forth in this Section 13.4.2(b) and for the surviving
provisions set forth in Section 13.5, the rights and obligations of the Parties
hereunder shall terminate.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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(c)All rights and licenses now or hereafter granted by Endocyte to Merck or by
Merck to Endocyte pursuant to this Agreement, including the licenses granted to
Merck in Sections 2.1.1 and 2.2.1, are, for purposes of Section 365(n) of the
Bankruptcy Code, licenses of rights to "intellectual property" as defined in the
Bankruptcy Code. Upon the occurrence of any Insolvency Event with respect to a
party, the other party, as licensee of certain rights under this Agreement,
shall retain and may fully exercise all of its rights and elections under the
Bankruptcy Code. Further, each Party agrees and acknowledges that all payments
by Merck to Endocyte hereunder, other than the royalty payments under Section
9.4.1, do not constitute royalties within the meaning of Section 365(n) of the
Bankruptcy Code or relate to licenses of intellectual property hereunder.
Endocyte and Merck acknowledge and agree that "embodiments" of intellectual
property within the meaning of Section 365(n) of the Bankruptcy Code include,
without limitation, laboratory notebooks, product samples and inventory,
research studies and data, and Regulatory Approvals. Each party shall, during
the term of this Agreement, create and maintain current copies or, if not
amenable to copying, detailed descriptions or other appropriate embodiments, to
the extent feasible, of all such intellectual property. Each party (in any
capacity, including debtor-in-possession) and its successors and assigns
(including a trustee) shall:

 

(i)as the other party may elect in a written request, immediately upon such
request (A) perform all of the obligations provided in this Agreement to be
performed by such party including, where applicable, providing to the other
party portions of such intellectual property (including embodiments thereof)
held by such party and/or such successors and assigns or otherwise available to
them; or (B) provide to the other party all such intellectual property
(including all embodiments thereof) held by such party and/or such successors
and assigns or otherwise available to them; and

 

(ii)not interfere with the other party’s rights under this Agreement, or any
supplemental agreement, to such intellectual property (including such
embodiments), including any right to obtain such intellectual property (or such
embodiments) from another entity.

 

(d)If (i) a case under the Bankruptcy Code is commenced by or against a party,
(ii) this Agreement is rejected as provided in the Bankruptcy Code, and (iii)
the other party elects to retain its rights hereunder as provided in Section
365(n) of the Bankruptcy Code, then such party (in any capacity, including
debtor-in-possession) and its successors and assigns (including any trustee)
shall provide to the other party all such intellectual property (including all
embodiments thereof) held by such party and such successors and assigns, or
otherwise available to them, immediately upon the other party’s written request.
Whenever a party or any of its successors or assigns provides to the other party
any of the intellectual property licensed hereunder (or any embodiment thereof)
pursuant to this Section 13.4.2(d), the other party shall have the right to
perform such party’s obligations hereunder with respect to such intellectual
property, but neither such provision nor such performance by the other party
shall release such party from liability resulting from rejection of this
Agreement or the failure to perform such obligations.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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(e)All rights, powers and remedies of a party provided herein are in addition to
and not in substitution for any and all other rights, powers and remedies now or
hereafter existing at law or in equity (including the Bankruptcy Code) in the
event of the commencement of a case under the Bankruptcy Code with respect to
the other party. The parties agree that they intend the following rights to
extend to the maximum extent permitted by law, and to be enforceable under
Bankruptcy Code Section 365(n):

 

(i)the right of access to any intellectual property (including all embodiments
thereof) of the other party, or any Third Party with whom such party contracts
to perform an obligation of such party under this Agreement, and, in the case of
the Third Party, which is necessary for the manufacture, use, sale, import or
export of Products; and

 

(ii)the right to contract directly with any Third Party to complete the
contracted work.

 

The foregoing provisions of Section 13.4.2 are without prejudice to any rights
the parties may have arising under the Code or other applicable law.

 

2.5Effect of Expiration or Termination; Survival. Expiration or termination of
this Agreement shall not relieve the Parties of any obligation accruing prior to
such expiration or termination. Any expiration or 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 expiration or termination,
including without limitation the obligation to pay royalties for Product(s) or
Compound sold prior to such expiration or termination. The provisions of Article
8 shall survive the expiration or termination of this Agreement and shall
continue in effect for [ * ] years. In addition, the provisions of Article 1,
Article 12, this Article 13 (to the extent applicable given the expiration or
termination event) and Sections 3.8 (unless already expired), 10.3 and 10.4, and
11.1 shall survive any expiration or termination of this Agreement.

 

MISCELLANEOUS

 

2.6Force Majeure. Neither Party shall be held liable to the other Party nor be
deemed to have defaulted under or breached this Agreement for failure or delay
in performing any obligation under this Agreement to the extent such failure or
delay is caused by or results from causes beyond the reasonable control of the
affected Party, potentially including, embargoes, war, acts of war (whether war
be declared or not), acts of terrorism, insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, fire, floods, or other acts of
God, or acts, omissions or delays in acting by any governmental authority or the
other Party. The affected Party shall notify the other Party of such force
majeure circumstances as soon as reasonably practical, and shall promptly
undertake all reasonable efforts necessary to cure such force majeure
circumstances.

 

2.7Assignment/Change of Control. Except as provided in this Section 14.2, 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.

 

2.7.1Merck may, without consent of Endocyte, assign this Agreement and its
rights and obligations hereunder in whole or in part to an Affiliate of Merck or
in connection with a Change of Control. Endocyte may assign this Agreement in
whole or in part to any Affiliate of Endocyte or in connection with a Change of
Control. Any attempted assignment not in accordance with this Section 14.2 shall
be void. Any permitted assignee shall assume all assigned obligations of its
assignor under this Agreement.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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2.7.2In the event that there is an Endocyte Change of Control, then Endocyte
shall provide written notice to Merck at least [ * ] days prior to the closing
of such Change of Control and Merck shall have the one-time right, at Merck’s
election, upon written notice at any time during the [ * ] months after such
Change of Control to implement some or all of the following revisions to this
Agreement:

 

(a)Merck may require Endocyte to transfer immediately to Merck any ongoing
Development activities that are being conducted by Endocyte in connection with
Development of the Product;

 

(b)Terminate Endocyte’s Co-Promotion rights under Section 5.2; provided,
however, that if the Change of Control occurs after First Commercial Sales in
the Co-Promotion Territory, such termination would be subject to reasonable (in
no event less than [ * ] months) wind-down of Endocyte’s Co-Promotion
activities; provided that Merck shall reimburse Endocyte or its
successor-in-interest for any reasonable and documented actual costs associated
with any wind-down of Endocyte’s Co-Promotion activities;

 

(c)Terminate and/or restrict Endocyte’s [ * ] or any other [ * ] under this
Agreement or the Co-Promotion Agreement, including any rights Endocyte may have
in [ * ] with respect thereto;

 

(d)Merck may limit its obligations to provide Endocyte with any Information
regarding the Development, Manufacture or Commercialization of Products in the
Territory, including [ * ] to periodic high level summary reports that may only
be shared at a senior level within Endocyte or such Change of Control Group, and
which Information shall remain subject to Article 8 and the restriction of
Sensitive Information as set forth in Section 14.2.2(f).

 

(e)Merck may terminate, without penalty Endocyte’s license under Section 2.1.2
to perform any activities under this Agreement;

 

(f)Merck shall have the right to require Endocyte, including the Change of
Control party, to adopt reasonable procedures to be agreed upon in writing with
Merck to prevent the disclosure of all Information of Merck (collectively
“Sensitive Information”) beyond Endocyte personnel having access to and
knowledge of Sensitive Information prior to the Change of Control and to control
the dissemination of Sensitive Information disclosed after the Change of
Control. The purposes of such procedures shall be to strictly limit such
disclosures to only those personnel having a need to know Sensitive Information
in order for Endocyte to perform its obligations or enforce its rights under
this Agreement and to prohibit the use of Sensitive Information for competitive
reasons against Merck and its Related Parties and Compounds or Products,
including without limitation, the use of Sensitive Information for the
Development or Commercialization of competing products.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 71

 

 

In addition, in the event of such Endocyte Change of Control, with respect to
the obligations of Endocyte [ * ], within [ * ] days following the consummation
of such Change of Control, Endocyte, or its successor-in-interest, shall be
required to elect in writing either to:

 

(i)grant to Merck [ * ], pursuant to, and as if the provisions of Section
13.4.2(a)(vi) applied to such circumstance, in which event Endocyte and its
successor-in-interest shall [ * ]; or

 

(ii)assume the obligations of Endocyte under this Agreement [ * ], provided,
however, that in the event that Merck [ * ], Endocyte or such
successor-in-interest shall [ * ], pursuant to, and as if the provisions of
Section 13.4.2(a)(vi) applied to such circumstance. In the event that Endocyte
or its successor-in-interest disputes under Section 14.6 [ * ], Merck shall
[ * ] Endocyte or its successor-in-interest [ * ] Endocyte or its
successor-in-interest and reasonably documented and demonstrated by Endocyte or
its successor-in-interest in connection with [ * ].

 

2.8Severability. If any one or more of the provisions contained in this
Agreement is held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, unless the absence
of the invalidated provision(s) adversely affects the substantive rights of the
Parties. The Parties shall in such an instance use their best efforts to replace
the invalid, illegal or unenforceable provision(s) with valid, legal and
enforceable provision(s) which, insofar as practical, implement the purposes of
this Agreement.

 

2.9Notices. All notices which are required or permitted hereunder shall be in
writing and sufficient if delivered personally, sent by facsimile (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:

 

if to Endocyte, to:

Endocyte, Inc.

3000 Kent Ave. Suite A1-100

West Lafayette, IN 47906

Attention: Chief Executive Officer and Head of Business Development

Facsimile No.: (765) 463-9271

    and:

Faegre, Baker, Daniels

600 E. 96th Street, Suite 600

Indianapolis, Indiana 46240-3789

Attention: Daniel L. Boeglin

Facsimile No.: (317) 569-4800

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 72

 

 

With a copy to:

Cooley LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, California 94304-1130

Attention: Barbara A. Kosacz

Facsimile: (650) 849-7400

    if to Merck, to:

Merck Sharp & Dohme Corp.

One Merck Drive

P.O. Box 100, WS3A-65

Whitehouse Station, NJ 08889-0100

Attention: Office of Secretary

Facsimile No.: (908)735-1246

    and

Merck Sharp & Dohme Corp.

One Merck Drive

Attention: Chief Licensing Officer

P.O. Box 100, WS2A-30

Whitehouse Station, NJ 08889-0100

Facsimile: (908)735-1214

 

or to such other address(es) as the Party to whom notice is to be given may have
furnished to the other Party in writing in accordance herewith. Any such notice
shall be deemed to have been given: (a) when delivered if personally delivered
or sent by facsimile on a business day (or if delivered or sent on a
non-business day, then on the next business day); (b) on the business day after
dispatch if sent by nationally-recognized overnight courier; or (c) on the fifth
(5th) business day following the date of mailing, if sent by mail.

 

2.10Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the patent laws of the
United States without reference to any rules of conflict of laws or renvoi.

 

2.11Dispute Resolution.

 

2.11.1The Parties shall negotiate in good faith and use reasonable efforts to
settle any dispute, controversy or claim arising from or related to this
Agreement or the breach thereof. If the Parties do not fully settle, and a Party
wishes to pursue the matter, each such dispute, controversy or claim that is not
an “Excluded Claim” shall be finally resolved by binding arbitration in
accordance with the Commercial Arbitration Rules and Supplementary Procedures
for Large Complex Disputes of the American Arbitration Association (“AAA”), and
judgment on the arbitration award may be entered in any court having
jurisdiction thereof.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 73

 

 

2.11.2The arbitration shall be conducted by a panel of three persons experienced
in the pharmaceutical business. Within [ * ] days after initiation of
arbitration, each Party shall select one person to act as arbitrator and the two
Party-selected arbitrators shall select a third arbitrator within [ * ] days of
their appointment. If the arbitrators selected by the Parties are unable or fail
to agree upon the third arbitrator, the third arbitrator shall be appointed by
the AAA. The Parties shall not be obligated to select arbitrators from the AAA
panel of arbitrators. The place of arbitration shall be New York, New York, and
all proceedings and communications shall be in English.

 

2.11.3Either Party may apply to the arbitrators for interim injunctive relief
until the arbitration award is rendered or the controversy is otherwise
resolved. Either Party also may, without waiving any remedy under this
Agreement, seek from any court having jurisdiction any injunctive or provisional
relief necessary to protect the rights or property of that Party pending the
arbitration award. The arbitrators shall have no authority to award punitive or
any other type of damages not measured by a Party’s compensatory damages. Each
Party shall bear its own costs and expenses and attorneys’ fees and an equal
share of the arbitrators’ fees and any administrative fees of arbitration.

 

2.11.4Except to the extent necessary to confirm an award or as may be required
by law, neither a Party nor an arbitrator may disclose the existence, content,
or results of an arbitration without the prior written consent of both Parties.
In no event shall an arbitration be initiated after the date when commencement
of a legal or equitable proceeding based on the dispute, controversy or claim
would be barred by the applicable New York statute of limitations.

 

2.11.5The Parties agree that, in the event of a good faith dispute over the
nature or quality of performance under this Agreement, neither Party may
terminate this Agreement until final resolution of the dispute through
arbitration or other judicial determination. The Parties further agree that any
payments made pursuant to this Agreement pending resolution of the dispute shall
be refunded if an arbitrator or court determines that such payments are not due.

 

2.11.6As used in this Section, the term “Excluded Claim” shall mean a dispute,
controversy or claim that concerns (a) the validity or infringement of a patent,
trademark or copyright; (b) any antitrust, anti-monopoly or competition law or
regulation, whether or not statutory; (c) any disclosure in violation of Article
8, mis-use of or mis-appropriation of Information of the disclosing Party.

 

2.12Entire Agreement; Amendments. This Agreement, together with the Schedules
and Exhibits hereto, contains the entire understanding of the Parties with
respect to the subject matter hereof. Any other express or implied agreements
and understandings, negotiations, writings and commitments, either oral or
written, in respect to the subject matter hereof are superseded by the terms of
this Agreement. The Schedules and Exhibits to this Agreement are incorporated
herein by reference and shall be deemed a part of this Agreement. This Agreement
may be amended, or any term hereof modified, only by a written instrument duly
executed by authorized representative(s) of both Parties hereto.

 

2.13Headings. The captions to the several Articles, Sections and subsections
hereof are not a part of this Agreement, but are merely for convenience to
assist in locating and reading the several Articles and Sections hereof.

 

2.14Independent Contractors. It is expressly agreed that Endocyte and Merck
shall be independent contractors and that the relationship between the two
Parties shall not constitute a partnership, joint venture or agency. Neither
Endocyte nor Merck shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other Party, without the prior written consent of the other
Party.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

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2.15Waiver. The waiver by either Party hereto of any right hereunder, or of any
failure of the other Party to perform, or of any breach by the other Party,
shall not be deemed a waiver of any other right hereunder or of any other breach
by or failure of such other Party whether of a similar nature or otherwise.

 

2.16Cumulative Remedies. No remedy referred to in this Agreement is intended to
be exclusive, but each shall be cumulative and in addition to any other remedy
referred to in this Agreement or otherwise available under law.

 

2.17Waiver of Rule of Construction. Each Party has had the opportunity to
consult with counsel in connection with the review, drafting and negotiation of
this Agreement. Accordingly, the rule of construction that any ambiguity in this
Agreement shall be construed against the drafting Party shall not apply.

 

2.18Certain Conventions. Any reference in this Agreement to an Article, Section,
subsection, paragraph, clause, Schedule or Exhibit shall be deemed to be a
reference to an Article, Section, subsection, paragraph, clause, Schedule or
Exhibit, of or to, as the case may be, this Agreement, unless otherwise
indicated. Unless the context of this Agreement otherwise requires, (a) words of
any gender include each other gender, (b) words such as “herein”, “hereof”, and
“hereunder” refer to this Agreement as a whole and not merely to the particular
provision in which such words appear, (c) words using the singular shall include
the plural, and vice versa, (d) whenever any provision of this Agreement uses
the term "including" (or "includes"), such term shall be deemed to mean
"including without limitation" (or "includes without limitations"), and (e)
references to any Articles or Sections include Sections and subsections that are
part of the references Article or section (e.g., a section numbered "Section
2.2.1" would be part of "Section 2.2.", and references to "Article 2" or
"Section 2.2." would refer to material contained in the subsection described as
"Section 2.2.2").

 

2.19Business Day Requirements. In the event that any notice or other action or
omission is required to be taken by a Party under this Agreement on a day that
is not a business day then such notice or other action or omission shall be
deemed to required to be taken on the next occurring business day.

 

2.20Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

2.21Extension to Affiliates. Merck shall have the right to extend the rights,
licenses, immunities and obligations granted in this Agreement to one or more of
its Affiliates (so long as it remains an Affiliate). All applicable terms and
provisions of this Agreement shall apply to any such Affiliate to which this
Agreement has been extended to the same extent as such terms and provisions
apply to such Party. Merck shall remain fully liable for any acts or omissions
of its Affiliates.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. 

 

Page 75

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Execution
Date.

 

Merck Sharp & Dohme Research GmbH   ENDOCYTE, INC.       BY: /s/ Christoph
Brombacher   BY: /s/ P. Ron Ellis       NAME: Christoph Brombacher   NAME: P.
Ron Ellis       TITLE: Director   TITLE: CEO/President

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 76

 

 

SCHEDULE 1.6

 

[ * ] and [ * ] STRUCTURES

 

[ * ]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 77

 

  

SCHEDULE 1.18

 

Companion Diagnostic Trademark

 

[ * ]

 

[ * ]

 

[ * ]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 78

 

 

SCHEDULE 1.28

 

EC20 STRUCTURE

 

[pg80.jpg]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 79

 

 

SCHEDULE 1.29

 

STRUCTURE OF EC145

 

[pg81.jpg]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 80

 

SCHEDULE 1.36

 

ENDOCYTE LICENSED PATENT RIGHTS

 

Schedule 1.36(a) – [ * ] Patents

 

BT Matter+   Country   Title   App No   Filed   Patent No.   Issued   Status
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]    
      [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]
  [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
[ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]           [ * ]

+ "BT" : Barnes & Thornburg LLP (Indianapolis, IN)

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 81

 

 

Schedule 1.36(b) – [ * ] Patents

 

BT Matter+   Country   Title   App No   Filed   Patent No.   Issued   Status
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]          
[ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]    
      [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]
  [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
        [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]  
[ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]           [ * ]

+ "BT" : Barnes & Thornburg LLP (Indianapolis, IN)

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 82

 

 

Schedule 1.36(c) – [ * ] Patents

 

BT Matter+   Country   Title   App No   Filed   Patent No.   Issued   Status
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]          
[ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]    
      [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]
  [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
        [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ]

+ "BT" : Barnes & Thornburg LLP (Indianapolis, IN)

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 83

 

 

Schedule 1.36(d) – Misc. Patent

 

BT Matter+   Country   Title   App No   Filed   Patent No.   Issued   Status
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ]

+ "BT" : Barnes & Thornburg LLP (Indianapolis, IN)

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 84

 

 

Schedule 1.36(e) – Compound/Product Specific Patents

 

BT Matter+   Country   Title   App No   Filed   Patent No.   Issued   Status
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]          
[ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]    
      [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]
  [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
        [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]  
[ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ]
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]          
[ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ]
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ]
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]           [ * ]

+ "BT" : Barnes & Thornburg LLP (Indianapolis, IN)

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 85

 

 

Schedule 1.36(f) – [ * ] Patents

 

A. [ * ] 

 

BT Matter+

  Country   Title   App No   Filed   Patent No.   Issued   Status [ * ]   [ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]

 

B. [ * ]

 

[ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]

+ "BT" : Barnes & Thornburg LLP (Indianapolis, IN)

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 86

 

 

Schedule 1.36(g) – [ * ] Patents

 

BT Matter+

  Country   Title   App No   Filed   Patent No.   Issued   Status [ * ]   [ * ]
  [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]          
[ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
[ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]  
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
[ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]  
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]       [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ] [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ]
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 87

 

 

[ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]  
[ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]          
[ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ]           [ * ]

+ "BT" : Barnes & Thornburg LLP (Indianapolis, IN)

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

Page 88

 

 

SCHEDULE 1.99

 

PRODUCT TRADEMARKS

 

[ * ]

 

[ * ]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

SCHEDULE 1.117

 

US ADJUSTED NET SALES

 

It is the intent of the Parties that the profits or losses resulting from the
commercialization of Product in the United States be allocated 50/50 between
Endocyte and Merck. This Schedule is intended to set forth a methodology for
calculating US Adjusted Net Sales for such Product.

 

"US Adjusted Net Sales" shall, with respect to each Product and as incurred in a
given Calendar Quarter for such Product, mean the sum equal to (i) Net Sales, if
any, for such Product for such Calendar Quarter less (ii) Allowable Expenses for
such Product incurred in such Calendar Quarter.

 

The following definitions shall be utilized in calculating Allowable Expenses in
each Calendar Quarter.

 

"Allowable Expenses" shall, with respect to such Product, mean those expenses
incurred for such Product which are generally consistent with Merck’s Product
Commercialization Plan and estimated budget and are specifically attributable to
such Product in the U.S., and shall, with respect to such Product, consist of
Cost of Goods Sold, Direct Marketing Expenses, Distribution Expenses, Indirect
Marketing Expenses, License Fees, Patent and Trademark Expenses, Post-Approval
Product Development Expenses, and US Products Liability Losses.

 

"Cost of Goods Sold" shall, with respect to each Product, mean Merck's
Manufacturing Costs attributable to the Manufacture of such Product for sale in
the U.S. and/or the cost of Product Manufactured by Third Parties, as and to the
extent actually Manufactured by Third Parties. Merck's "Manufacturing Costs"
shall consist of "US GAAP Standard Cost” and "Product Specific Manufacturing
Variances" as defined below:

 

"US GAAP Standard Cost", as used herein, includes, if, applicable, without
limitation, the following, with respect to such Product:

 

(i)   Materials (e.g. bulk chemicals, packaging components, auxiliary
manufacturing materials, including related freight, customs and duties)

 

(ii)  Direct labor

 

(iii) Factory overhead expenses including a reasonable allocation of the
following type of expenses:

 

(a)  Labor related (e.g., indirect hourly, salaried personnel, employee
benefits, OT)

 

(b)  Utilities (e.g., electricity, water, steam, heat)

 

(c)  Maintenance and installation (e.g., maintain and repair existing equipment)

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

(d)  Product quality control

 

(e)  Other plant services, either on or off-site (e.g., waste treatment, waste
incineration)

 

(f)   On-going stability program costs

 

(g)  Supplies

 

(h)  Shipping (other than shipping costs to the extent they are included in Net
Sales or in other US GAAP Standard Cost components).

 

[ * ].

 

The US GAAP Standard Cost will be established each Calendar Year for the
upcoming year according to the forecast for requirements for such Product.

 

"Product Specific Manufacturing Variances and Discards" shall mean all
deviations from the US GAAP Standard Cost established prior to the beginning of
each Calendar Year, which shall include, but are not limited to, purchase price,
volume, yield, other variances and discards. At the end of the year there will
be a true-up calculated to account for any difference between actual resulting
costs and the planned US GAAP Standard Costs.

 

"Direct Marketing Expenses" means all reasonable out-of-pocket costs including,
without limitation, costs of outsourcing any of the following functions incurred
by the Parties, and all internal costs on an FTE basis at a mutually agreed upon
FTE rate (to be determined prior to launch) for those individuals dedicated or
allocated to such Product that are directly attributable to the following
functions for the sale, promotion and marketing of a Product:

 

[ * ].

 

Direct Marketing Expenses shall not include any Selling Expenses.

 

"Distribution Expenses" shall, with respect to each Product, mean costs incurred
in connection with the distribution of such Product to purchasers to the extent
not captured in the definition of Net Sales.

 

"Indirect Marketing Expenses" shall, with respect to each Product, mean all
[ * ].

 

"License Fees" means all upfront payments, milestone payments, license fees,
royalties or other payments, payable to any Third Party by either Party under
any Third Party license agreement for such Product to the extent such payments
are attributable to the manufacture, use or sale of such Product for the U.S.
and such Third Party license agreement was entered into after the Effective
Date. If the rights under any Third Party license agreement are also
attributable to products other than such Product or sales of Products for the
ROW, then only an equitable portion of any amounts payable under it shall be
allocated to such Product as License Fees.

 

"Patent and Trademark Expenses" shall, with respect to each Product, mean the
fees and expenses of outside counsel and payments to Third Parties incurred in
connection with the preparation, filing, prosecution and maintenance of (i)
Endocyte Patent Rights, Merck Program Patent Rights, and any Joint Patent
Rights, in each case, in the U.S. and any other Patent Rights in Merck and/or
its Affiliate's Control (in each case, to the extent they claim or cover the
manufacture, use or sale of Product in the U.S.) including the costs of patent
interference and opposition proceedings; and (ii) any trademark applications or
registered trademarks used in connection with the commercialization of such
Product in the U.S. including the costs of any trademark oppositions or
infringement actions.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

"Post-Approval Product Development Expenses" shall, with respect to each
Product, mean all Development Costs incurred with respect to such Product after
Regulatory Approval has been obtained (i.e., Phase IV Clinical Trials) for such
Product in a specific Indication and shall exclude administrative expenses and
costs that are included within Costs of Goods Sold. For clarity, in the event
that Development Costs are incurred with respect to a new Indication for the
same Product, such costs will constitute “Development Costs” and shall be shared
by the Parties as set forth in Section 4.8.1.

 

“US Products Liability Losses” shall mean all Losses to which Merck or Endocyte
may become subject as a result of any claim, demand, action or other proceeding
by any person or entity other than a Party or its Affiliates to the extent such
Losses arise directly or indirectly out of the Commercialization any Compound
and/or Product in the Co-Promotion Territory.

 

In calculating the US Adjusted Net Sales the following principles shall apply:

 

1.          There shall be no double counting of any costs or expenses or of any
revenues, and to the extent a cost or expense has been included in one category
or sub-category, it shall not be included in another; similarly, to the extent
any revenue has been taken into account in one category or sub-category it shall
not be taken into account in another.

 

2.          When allocating costs and expenses under the Agreement, each Party
shall utilize the same policies and principles as it utilizes consistently
within its group and business units when making internal cost allocations.

 

3.          To the extent an item of income or revenue is received by a Party or
a cost or expense is incurred in a given Calendar Quarter by a Party, and can be
demonstrated to be necessary and specifically and directly identifiable,
attributable and allocable to the commercialization or development of each
Product and is not otherwise accounted for in the calculation of US Adjusted Net
Sales, such Party shall credit such income or revenue and shall be permitted to
charge such cost or expense to the US Adjusted Net Sales.

 

4.          To the extent any cost set forth in this Schedule has applicability
to both the US and ROW, a portion of such costs will be allocated by Merck to
the U.S. in good faith.

 

5.          All costs and expenses shall be determined, and all calculations
shall be made, in accordance with GAAP, as applicable.

 

If either Party in good faith believes that the methodology set forth herein
does not accurately reflect the US Adjusted Net Sales for a Product, upon
request of such Party the Parties shall in good faith discuss such concerns and,
if the Parties agree upon mutually acceptable revisions to the methodologies set
forth herein they shall amend this Schedule as appropriate.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

SCHEDULE 2.7

 

AFFILIATES/THIRD PARTIES TO BE USED BY ENDOCYTE FOR PRODUCT DEVELOPMENT WORK

 

Vendor Name   Address   Responsibilities [ * ]       [ * ] [ * ]   [ * ]   [ * ]
[ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ] [ * ]   [ * ]
  [ * ] [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ] [ * ]
  [ * ]   [ * ] [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ] [ * ]   [ * ]  
[ * ]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

SCHEDULE 4.2

INITIAL INDICATIONS DEVELOPMENT PLAN

 

[ * ]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

SCHEDULE 4.3

FURTHER DEVELOPMENT PLAN

 

[ * ]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

SCHEDULE 4.5

 

ENDOCYTE DEVELOPMENT BUDGET

 

Proceed (FV-06)   2011   2012   2013   2014 [ * ]   [ * ]             [ * ]  
[ * ]             [ * ]       [ * ]         [ * ]       [ * ]         [ * ]    
  [ * ]   [ * ]   [ * ] [ * ]   [ * ]                               [ * ]      
[ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ]              
  [ * ]                

 

FV07-NSCLS IIb   2011   2012   2013   2014 [ * ]   [ * ]             [ * ]  
[ * ]             [ * ]       [ * ]   [ * ]   [ * ] [ * ]       [ * ]   [ * ]  
[ * ] [ * ]   [ * ]   [ * ]   [ * ]   [ * ] [ * ] [ * ]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

SCHEDULE 4.7

 

INITIAL COMPANION DIAGNOSTIC DEVELOPMENT PLAN

 

Activity   Responsible
Party/CRO   Start Date   End Date [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]  
[ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

SCHEDULE 5.2

 

CO-PROMOTION TERMS AND CONDITIONS

 

This Schedule sets forth material terms and conditions that, together with the
terms of Section 5.2 of the Agreement, shall be incorporated into a Co-Promotion
Agreement to be negotiated and entered into by the Parties for the Product in
the Co-Promotion Territory ("Co-Promoted Products").

 

1.          Co-Promotion Rights and Obligations.

 

(a)          Endocyte and Merck shall use an integrated sales force to promote
and Detail each Co-Promoted Product. Each Party shall be responsible for
ensuring that its representatives sell each Co-Promoted Product in a manner
consistent with the Co-Promotion Territory Commercialization Plan for such
Co-Promoted Product. Notwithstanding the foregoing, in performing their
respective sales effort obligations hereunder, each of the Parties agrees to
[ * ].

 

(b) Merck will review the Co-Promotion Territory Commercialization Plan with the
Co-Promotion Team (as defined below) to ensure effective coordination of each
Party’s Co-Promotion efforts. Prior to launch of the Co-Promoted Product, and
thereafter on an annual basis, the JCC shall agree upon and set forth in the
Co-Promotion Territory Commercialization Plan the following: [ * ].

 

(c)          Endocyte and Merck shall establish a team comprised of equal
numbers of members from each Party to coordinate the Parties respective
Co-Promotion activities under the Co-Promotion Territory Commercialization Plan
(the "Co-Promotion Team"). Both Parties will use their reasonable efforts to
build consensus, but if the Co-Promotion Team does not reach agreement on any
particular matter for a period of 30 days, then it shall be referred to the JCC,
and if still not resolved, [ * ].

 

(d)          Endocyte shall annually [ * ].

 

2.          Commercialization Efforts. Endocyte and Merck each shall use
Commercially Reasonable Efforts to execute its obligations under the
Co-Promotion Territory Commercialization Plan, in accordance with all Applicable
Laws, and to cooperate with Merck in carrying out such Product Commercialization
Plan.

 

3.          Sales Effort Audit Rights. Endocyte and Merck each shall maintain
written records of sales effort performed by its sales representatives for a
period of [ * ] years from the date of performance. Merck shall have the right
to inspect such records of Endocyte to verify Endocyte's sales effort reports
provided to Merck under the Agreement. Endocyte shall make its records available
for inspection by appropriate representatives of Merck during regular business
hours at such place or places where such records are customarily kept, upon
reasonable notice from Merck, solely to verify the accuracy of such statements.
Such inspection right shall not be exercised more than once in any Calendar Year
and shall not entitle Merck to review any sales related information with respect
to products that are other than any Co-Promoted Product(s). All information
concerning such statements, and all information learned in the course of any
audit or inspection, shall be confidential information of Endocyte. Merck shall
be responsible for its own expenses for such inspections, except that in the
event there is any [ * ], Endocyte shall pay the costs of such inspection.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

4.          Promotional Materials and Standards. In Co-Promoting a Co-Promoted
Product, the Parties shall maintain and adhere strictly to the approved labeling
of the Co-Promoted Product, the approved marketing materials for the Co-Promoted
Product, the Agreement and the commercialization plan for such Co-Promoted
Product. Only marketing materials and programs developed by Merck's marketing
team and approved via the Merck medical-legal review process in accordance with
FDA regulations for the Co-Promoted Product in the United States shall be used
in the Co-Promotion Territory. All promotional materials used by the Parties and
all promotional activities relating to the Co-Promoted Product shall comply with
applicable laws and the Code of International Federation Pharmaceutical
Manufacturer Association ("IFPMA") as well as FDA regulations regarding
pharmaceutical marketing practices in the united states In addition, each Party
shall insure that its representatives Detail Co-Promoted Product in a fair and
balanced manner consistent with all applicable legal, regulatory, professional
and policy requirements including, but not limited to, all applicable Merck
policies and Corporate Integrity Agreement. Merck and Endocyte representatives
shall not engage in any pre-marketing activities for each Co-Promoted Product
prohibited by Applicable Law and shall not promote any Co-Promoted Product for
off-label uses. The Co-Promoted Product shall be Co-Promoted under a single
Product Trademark designated by Merck with Merck recording all sales of the
Co-Promoted Product.

 

5.          Sales Efforts in the United States. As part of each Co-Promotion
Territory Commercialization Plan, Merck shall determine the targeted level of
sales of the applicable Co-Promoted Product for the Calendar Year covered by the
Co-Promotion Territory Commercialization Plan. The Co-Promotion Territory
Commercialization Plan shall include the overall level of effort and the
allocation between the Parties of such effort to the defined target audience.
The Co-Promoted Product shall [ * ]. Endocyte may not utilize any Third Party
contracted sales representatives without the express written consent of Merck.

 

6.          Performance Criteria/Detailing Shortfall. The Parties shall agree on
criteria for measuring Endocyte's performance under the Co-Promotion Agreement,
which shall be consistent with Merck’s standards for measuring the performance
of Merck’s sales representatives promoting the Co-Promoted Product. The
Co-Promotion Agreement shall include remedies for failure by Endocyte to meet
such criteria, including the [ * ].

 

7.          Term and Termination. Endocyte shall Co-Promote the Product with
Merck in the Co-Promotion Territory commencing on the date of First Commercial
Sale of the Product in the Co-Promotion Territory and ending on [ * ].
Notwithstanding the foregoing, (a) Endocyte shall have the right to terminate
for convenience upon [ * ] written notice to Merck; and (b) Merck shall have the
right to terminate the Co-Promotion Agreement and Endocyte’s rights to
Co-Promote:

 

(i)          at any time if the Agreement is terminated, in whole, or with
respect to the Co-Promoted Product;

 

(iii)        in the event of violation of any requirements set forth in
Paragraph 4 above by Endocyte in support of the Co-Promoted Products.

 

(iv)        in the event of an uncured material breach by Endocyte (other than
as provided in clause (iii)) or Endocyte's bankruptcy subject to mutually agreed
language therefore in the definitive Co-Promotion Agreement.

 

8.          Training Program. Merck shall (a) develop a training program for the
promotion of each Co-Promoted Product for the United States and (b) train all
representatives of both Parties to be used for the Co-Promotion of Co-Promoted
Products in the United States, prior to commencement of Co-Promotion Endocyte
agrees to utilize such training programs on an ongoing basis to assure a
consistent, focused promotional strategy and all such training shall be carried
out at a time that is mutually acceptable to Endocyte and Merck and consistent
with the commercialization plan for each Co-Promoted Product. No representative
of Endocyte may support a Co-Promotion Product unless such representative
successfully completes the training program described in this Paragraph 7. For
the Co-Promotion Product-specific training, the internal costs and the
out-of-pocket costs of such training programs (including, without limitation,
the out-of-pocket costs of the development, production, printing of such
training materials) for a Product shall be included as a Direct Marketing
Expense under the Agreement. If subsequent training is to be provided by Merck,
the costs of such subsequent training will be as agreed to by the Parties but
any logistical costs (travel and lodging of the representative, if required)
will be borne by Endocyte.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

9.          Recruitment. The Parties shall agree on the profile to be used for
recruitment of representatives that is consistent with Merck’s standard business
practices. All Endocyte representatives shall have been recruited by Endocyte at
Endocyte’s sole expense. To the extent requested by Endocyte, Merck shall
provide Endocyte with assistance in defining the desired profile of the Endocyte
representatives.

 

10.         Sales Information Integration. Each Party will strive to establish a
transparent and compatible sales reporting system for Co-Promoted Products to
facilitate call planning and representatives activities

 

11.         Miscellaneous. The Co-Promote Agreement shall contain other
customary and appropriate provisions, including without limitation provisions
for confidentiality, termination and, to the extent not already addressed in the
Agreement, indemnification.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

SCHEDULE 5.4

 

INITIAL COMPANION DIAGNOSTIC COMMERCIALIZATION PLAN

 

See Attachment

 

[ * ]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

SCHEDULE 6.1

 

THIRD PARTY MANUFACTURING AGREEMENTS

 

Compound   Description   Vendor   Agreements in place [ * ]   [ * ]   [ * ]  
[ * ] [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]
  [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ] [ * ]   [ * ]   [ * ]   [ * ]
[ * ]   [ * ]   [ * ]   [ * ]

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

SCHEDULE 6.3.1

 

INITIAL COMPANION DIAGNOSTIC MANUFACTURING PLAN

 

Activity   CMO   Start Date   End Date [ * ]   [ * ]       [ * ] [ * ]   [ * ]  
    [ * ] [ * ]   [ * ]       [ * ] [ * ]   [ * ]       [ * ] [ * ]   [ * ]    
  [ * ] [ * ]   [ * ]       [ * ] [ * ]   [ * ]   [ * ]     [ * ]   [ * ]  
[ * ]    

  

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

Schedule 8.5

 

[pg109a.jpg]

 

[pg109b.jpg]

News Release

     

 

  Media Contacts: Investor Relations Contacts:       Merck Ian R. McConnell Alex
Kelly   (973) 901-5722 (908) 423-5185       Endocyte Tony Russo Stephanie Ascher
  (212) 845-4251 (212) 362-1200         Martina Schwarzkopf     (212) 845-4292  

 

Merck and Endocyte Enter Exclusive Worldwide Agreement to Develop and
Commercialize Phase III Cancer Candidate Vintafolide (EC145)

 

WHITEHOUSE STATION N.J., and WEST LAFAYETTE, Ind., April 16, 2012 – Merck, known
as MSD outside the United States and Canada, (NYSE: MRK) and Endocyte Inc.
(NASDAQ: ECYT), today announced that they have entered into an agreement to
develop and commercialize Endocyte's novel investigational therapeutic candidate
vintafolide (EC145). Vintafolide is currently being evaluated in a Phase III
clinical trial for platinum-resistant ovarian cancer, (PROCEED trial) and a
Phase II trial for non-small cell lung cancer (NSCLC); both studies are also
using Endocyte's investigational companion diagnostic agent, etarfolatide
(EC20).

 

"Vintafolide is a promising and innovative late-stage cancer drug candidate. In
addition to pursuing the lead indication of platinum-resistant ovarian cancer,
Merck plans to further evaluate its potential for treatment of multiple other
cancer types," said Peter S. Kim, executive vice president and president Merck
Research Laboratories. "This agreement underscores our strategy of building a
portfolio of oncology therapeutics that employ a companion diagnostic to
facilitate selection of those patients most likely to respond to treatment."

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

Under the agreement, Merck, through a subsidiary, will gain worldwide rights to
develop and commercialize vintafolide. Endocyte will receive a $120 million
upfront payment and is eligible for milestone payments of up to $880 million
based on the successful achievement of development, regulatory and
commercialization goals for vintafolide for a total of six cancer indications.
In addition, if vintafolide receives regulatory approval, Endocyte will receive
an equal share of the profit in the United States (U.S.) as well as a double
digit percentage royalty on sales of the product in the rest of the world.
Endocyte has retained the right to co-promote vintafolide with Merck in the U.S.
and Merck has the exclusive right to promote vintafolide in the rest of world.
Endocyte will be responsible for the majority of funding and completion of the
PROCEED trial. Merck will be responsible for all other development activities
and costs and have all decision rights for vintafolide. Endocyte remains
responsible for the development, manufacture and commercialization worldwide of
etarfolatide, a non-invasive companion diagnostic imaging agent that is used to
identify folate receptor positive tumor cells.

 

"Following a rigorous selection process we believe Merck represents the ideal
strategic partner to achieve the full potential of vintafolide, accelerating our
development in numerous cancers,” said Ron Ellis, Endocyte’s president and chief
executive officer. "The agreement also positions us well to build our own
commercial infrastructure for vintafolide in the U.S. and for etarfolatide
worldwide."

 

Endocyte has completed three single arm studies of vintafolide in patients with
advanced platinum resistant ovarian cancer, non-small cell lung cancer and solid
tumors. In a randomized Phase II clinical trial (PRECEDENT) comparing
vintafolide plus pegylated liposomal doxorubicin (PLD) versus PLD alone in women
with platinum-resistant ovarian cancer, vintafolide demonstrated a statistically
significant delay in disease progression or death in the overall population,
with the largest improvement observed in patients with all tumors imaged as
positive for folate receptor expression utilizing etarfolatide. Vintafolide in
combination showed limited additional toxicity versus standard therapy with PLD
alone. Common adverse events observed with this combination were neutropenia,
fatigue, mouth sores, and redness/swelling/pain on the hands and feet.

 

In March 2012, Endocyte announced that the European Union had granted orphan
drug status to vintafolide, and that the company planned to file a marketing
authorization application in the third quarter of 2012.

 

Closing of the transaction is contingent upon obtaining Hart-Scott Rodino
clearance from the Federal Trade Commission.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

Conference Call

 

Endocyte will host a conference call and webcast at 8:30am ET today to discuss
the agreement. To listen to the conference call, please dial 877-845-0711 or
760-298-5081. A replay of the call will be available beginning at 11:30am ET
today. To access the replay, please dial 855-859-2056 or 404-537-3406 and
reference the conference ID 72307636. The webcast can be accessed through
Endocyte's website at www.endocyte.com.

 

About Vintafolide (EC145)

 

Vintafolide is a proprietary, injectable, conjugate consisting of folate
(vitamin B9) linked to a potent vinca alkaloid chemotherapy agent,
desacetylvinblastine monohydrazide (DAVLBH). Vintafolide is designed to
preferentially target the chemotherapy agent to fast growing cancer cells that
actively take up folate via the folate receptor. The folate receptor is
expressed in a wide variety of cancers including ovarian, NSCLC, breast, colon
and kidney.

 

About Etarfolatide (EC20)

 

Etarfolatide is a folate-targeted molecular imaging agent that is being
developed as a non-invasive method to identify tumors that over-express folate
receptors. These tumors are the molecular target of Endocyte's folate-targeted
therapeutic compounds such as vintafolide. To date, etarfolatide has been
administered to over 550 patients.

 

About the PROCEED Trial

 

The PROCEED trial is a Phase III randomized, double-blind clinical trial
evaluating vintalofide in combination with PLD compared to PLD plus placebo for
the treatment of folate-receptor positive platinum-resistant ovarian cancer. The
primary endpoint of the trial is progression-free survival as measured by RECIST
(Response Evaluation Criteria In Solid Tumor) criteria in patients with
folate-receptor positive tumors assessed by etarfolatide imaging. Overall
survival is a secondary endpoint. The trial anticipates recruiting more than 400
patients at approximately150 sites in the U.S., Canada, Europe, and Asia. For
further information regarding the PROCEED trial please visit
http://www.clinicaltrials.gov.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

About Merck

 

Today's Merck is a global healthcare leader working to help the world be well.
Merck is known as MSD outside the United States and Canada. Through our
prescription medicines, vaccines, biologic therapies, and consumer care and
animal health products, we work with customers and operate in more than 140
countries to deliver innovative health solutions. We also demonstrate our
commitment to increasing access to healthcare through far-reaching policies,
programs and partnerships. For more information, visit www.merck.com and connect
with us on Twitter, Facebook and YouTube.

 

About Endocyte

 

Endocyte is a biopharmaceutical company developing targeted therapies for the
treatment of cancer and inflammatory diseases. Endocyte uses its proprietary
technology to create novel Small Molecule Drug Conjugates (SMDCs) and companion
imaging diagnostics for personalized targeted therapies. The company's SMDCs
actively target receptors that are over-expressed on diseased cells, relative to
healthy cells. This targeted approach is designed to enable the treatment of
patients with highly active drugs at greater doses, delivered more frequently,
and over longer periods of time than would be possible with the untargeted drug
alone. The companion imaging diagnostics are designed to identify patients whose
disease over-expresses the target of the therapy and who are therefore more
likely to benefit from treatment.

 

Merck Forward-Looking Statement

 

This news release includes “forward-looking statements” within the meaning of
the safe harbor provisions of the United States Private Securities Litigation
Reform Act of 1995. Such statements may include, but are not limited to,
statements about the benefits of the merger between Merck and Schering-Plough,
including future financial and operating results, the combined company’s plans,
objectives, expectations and intentions and other statements that are not
historical facts. Such statements are based upon the current beliefs and
expectations of Merck’s management and are subject to significant risks and
uncertainties. Actual results may differ from those set forth in the
forward-looking statements.

 

The following factors, among others, could cause actual results to differ from
those set forth in the forward-looking statements: the possibility that all of
the expected synergies from the merger of Merck and Schering-Plough will not be
realized, or will not be realized within the expected time period; the impact of
pharmaceutical industry regulation and health care legislation in the United
States and internationally; Merck’s ability to accurately predict future market
conditions; dependence on the effectiveness of Merck’s patents and other
protections for innovative products; and the exposure to litigation and/or
regulatory actions.

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

 

Merck undertakes no obligation to publicly update any forward-looking statement,
whether as a result of new information, future events or otherwise. Additional
factors that could cause results to differ materially from those described in
the forward-looking statements can be found in Merck’s 2011 Annual Report on
Form 10-K and the company’s other filings with the Securities and Exchange
Commission (SEC) available at the SEC’s Internet site (www.sec.gov).

 

Endocyte Forward-Looking Statement 

 

Certain of the statements made in this press release are forward looking, such
as those, among others, relating to the company’s expectations for seeking
regulatory approval and commercial launch of its products, including any
conditional marketing authorization from the EMA, initiation of future clinical
trials, and expectations for the receipt of milestones, royalties or other
profits from the partnership. Actual results or developments may differ
materially from those projected or implied in these forward-looking statements.
Factors that may cause such a difference include risks that the company may
experience delays in the completion of its clinical trials (whether caused by
competition, adverse events, patient enrollment rates, unavailability of Doxil,
regulatory issues or other factors); risks that data from its clinical trials
may not be indicative of subsequent clinical trial results; risks related to the
safety and efficacy of the company’s product candidates, the goals of its
development activities, estimates of the potential markets for its product
candidates, estimates of the capacity of manufacturing and other facilities
required to support its product candidates, projected cash needs, and expected
financial results. More information about the risks and uncertainties faced by
Endocyte, Inc. is contained in the company’s periodic reports filed with the
Securities and Exchange Commission. Endocyte, Inc. disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.

 

# # #

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.