EXHIBIT 10.215

 

Portions of this exhibit marked [*] are requested to be treated confidentially.

 

AGREEMENT

 

THIS AGREEMENT (“Agreement”) is entered into as of July 13, 2005 between Takeda
San Diego, Inc., a Delaware corporation having its principal place of business
at 10410 Science Center Drive, San Diego, CA 92121, (formerly known as Syrrx,
Inc.) (“TSD”), TAKEDA PHARMACEUTICAL COMPANY LIMITED, a corporation organized
under the laws of Japan, having its principal place of business at 1-1
Doshomachi 4-chome, Chuo-ku, Osaka, Japan (hereinafter “TPC”), Development
Partners, LLC, a Delaware limited liability company having its principal place
of business at 3151 South 17th Street, Wilmington, NC 28412 (“PPD”), and
Pharmaceutical Product Development, Inc., a North Carolina corporation having
its principal place of business at 3151 South 17th Street, Wilmington, NC 28412
(“PPD, Inc.”). TSD, TPC, and PPD and PPD, Inc. are sometimes referred to herein
individually as a “Party” and collectively as the “Parties”.

 

WHEREAS, TSD, PPD and PPD, Inc. entered into a Collaboration Agreement (as
defined below);

 

WHEREAS, pursuant to the Collaboration Agreement, PPD acquired the exclusive
worldwide right to co-develop serine protease dipeptidyl peptidase IV inhibitors
with TSD;

 

WHEREAS, Takeda America Holdings, Inc., a New York corporation having its
principal place of business at New York, NY (“Takeda”), acquired TSD effective
March 16, 2005;

 

WHEREAS, the Parties now desire to, among other things, (i) terminate the
Collaboration Agreement, (ii) reallocate ownership and responsibilities for the
future development and commercialization of Products (as defined below) and the
rights related thereto; and (iii) provide for up-front and milestone cash
payments and royalty payments based on Net Sales of Products (as defined below)
to PPD by TSD, all in accordance with the terms and conditions of this
Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and the premises and
conditions set forth herein, the Parties agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

1.1 “Affiliate” means, (a) with respect to TSD, (i) TPC; (ii) Takeda or (iii) a
particular person, corporation, partnership, or other entity that controls, is
controlled by or is under common control with TSD, TPC or Takeda; and (b) with
respect to PPD, (i) PPD, Inc. or (ii) a particular person, corporation,
partnership, or other entity that controls, is controlled by or is under common
control with PPD or PPD, Inc. For the purposes of

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the definition in this Section 1.1, the word “control” (including, with
correlative meaning, the terms “controlled by” or “under the common control
with”) means the actual power, either directly or indirectly through one or more
intermediaries, to direct the management and policies of such entity, whether by
the ownership of at least fifty percent (50%) of the voting stock of such
entity, or by contract or otherwise.

 

1.2 “BLA” means a biologics license application with the FDA as more fully
described at 21 CFR § 601.2, or successor equivalent.

 

1.3 “Collaboration Agreement” means the collaboration agreement entered into
among PPD, PPD, Inc. and TSD (then Syrrx, Inc.) effective as of November 19,
2003 to discover, develop, and commercialize serine protease dipeptidyl
peptidase IV inhibitors as human drug products.

 

1.4 “Collaboration Compound” means any serine protease dipeptidyl peptidase IV
inhibitor [*] that (a) has [*] as measured internally by TSD using a [*] assay
specific for the Target; or (b) has [*] and has not been shown to have [*] the
Target, a list of which has been delivered to PPD by TSD.

 

1.5 “Collaboration Patent Estate” means (a) those Patents set forth in Schedule
1.5 and any continuation, division, continuation-in-part or foreign equivalents
thereof, and (b) any Patents and any continuation, division,
continuation-in-part or foreign equivalents thereof that claim a Collaboration
Compound, regardless of the nature of the claim (i.e. composition of matter,
process, method, etc.).

 

1.6 “Combination Product” means a formulation including two or more active
pharmaceutical ingredients, or a package including two or more different
pharmaceutical products, which includes Compound as one of the active
pharmaceutical ingredients but does not include a Takeda Proprietary Compound as
one of the active pharmaceutical ingredients.

 

1.7 “Compound” means (a) any Collaboration Compound; and (b) any serine protease
dipeptidyl peptidase IV inhibitor discovered by TSD [*] that falls within the
scope of the Collaboration Patent Estate. For sake of clarity, an inhibitor of
the Target is specifically excluded from the definition of a Compound if such
inhibitor (a) has [*] and has been shown to have [*] the Target, or (b) was
Controlled by Takeda or an Affiliate of Takeda other than TSD [*].

 

1.8 “Confidential Information” shall have the meaning set forth in Section 8.1.

 

1.9 “Control” means, with respect to an item of Information, Material or
Intellectual Property right that a Party owns or has a license to, that the
Party has the ability to disclose, assign and/or grant a license or sublicense
as provided for by this Agreement under such Information, Material or
Intellectual Property right without violating the terms of any agreement or
other arrangement with any Third Party.

 

1.10 “CTM” means a Product that is in a finished pharmaceutical dosage form that
is (a) suitable for administration and dosing to humans in clinical trials, but
(b) not suitable for commercial sale (for example, without limitation, not in
packaged form such as blister packs or other containers and not including
external packaging and package inserts).

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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1.11 “Development Plan” means the 322 Development Plan and such other
development plans that TSD or its Affiliates may prepare in the future (for
other Compounds), by which TSD or its Affiliates intend to achieve Regulatory
Approval of a Product, including, but not limited to, a description of the CMC,
preclinical, clinical, and regulatory activities, with estimated timelines
necessary to achieve such approval in the Field in the Territory.

 

1.12 “322 Development Plan” means the Development Plan for SYR110322 as shown in
Schedule 1.12.

 

1.13 “Diligent Efforts” means the carrying out by TSD, its Affiliate or its
licensees or subcontractors of obligations or tasks in a sustained manner
consistent with the commercially reasonable efforts TSD and its Affiliates
devote to a research, development or marketing project for a pharmaceutical
product or products of similar market potential, profit potential or strategic
value resulting from its own research efforts, based on conditions then
prevailing. Diligent Efforts includes, but is not limited to the requirement
that TSD and its Affiliates use commercially reasonable efforts to carry out its
obligations in accordance with timelines set forth in a Development Plan by: (a)
promptly assigning responsibility for such obligations to specific employee(s)
who are held accountable for progress and monitor such progress on an on-going
basis, (b) setting and consistently seeking to achieve specific and meaningful
objectives for carrying out such obligations, and (c) consistently making and
implementing decisions and allocating resources designed to advance progress
with respect to such objectives. The Parties understand and agree that delays
outside the control of TSD may occur with regard to the clinical development of
Compounds and that the occurrence of such delays, in and of themselves, shall
not be grounds for PPD to claim that a material breach of this Agreement has
occurred so long as TSD used Diligent Efforts to avoid the occurrence of such
delays, and is using Diligent Efforts to reduce the impact of such delays
following their occurrence.

 

1.14 “Drug Substance” means a Compound together with any formulation
ingredients, that is suitable for administration and dosing to animals, other
than humans.

 

1.15 “Effective Date” means the last date on which the Parties executed this
Agreement.

 

1.16 “EMEA” means the European Medicine Agency.

 

1.17 “EU” means the European Union established under the Maastricht Treaty on
February 7, 1992, as amended from time to time.

 

1.18 “FDA” means the United States Food and Drug Administration, or a successor
federal agency thereto.

 

1.19 “Field” means all treatments of humans using a Product.

 

1.20 “Finished Product” means a Product in a finished pharmaceutical dosage form
that is suitable for commercial sale (for example, without limitation, in
packaged form such as blister packs or other containers and including external
packaging and package inserts).

 

1.21 “First Commercial Sale” means the first sale of a Product by TSD, its
Affiliates or its licensees for use, consumption or resale of such Product in a
country

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where Regulatory Approval of such Product has been obtained by TSD, its
Affiliates or its licensees. Sale of a Product by TSD to an Affiliate of TSD or
a licensee of TSD shall not constitute a First Commercial Sale unless such
Affiliate or such licensee is the end user of the Product.

 

1.22 “Good Clinical Practices” or “GCP” means current Good Clinical Practices as
specified in the United States Code of Federal Regulations, at the time of
testing, and all FDA and ICH guidelines, including the ICH Consolidated
Guidelines on Good Clinical Practices.

 

1.23 “Good Laboratory Practices” or “GLP” means current Good Laboratory
Practices as specified in the United States Code of Federal Regulations at 21
CFR §58 at the time of testing and all applicable ICH guidelines.

 

1.24 “Good Manufacturing Practices” or “GMP” means current Good Manufacturing
Practices and standards as provided for (and as amended from time to time) in
European Community Directive 91/356/EEC (Principles and Guidelines of Good
Manufacturing Practice for Medicinal Products) and in the Current Good
Manufacturing Practice Regulations of the United States Code of Federal
Regulations Title 21 (21 CFR §§210-211) in relation to the production of
pharmaceutical intermediates and active pharmaceutical ingredients, as
interpreted by ICH Harmonized Tripartite Guideline, Good Manufacturing Practice
Guide for Active Pharmaceutical Ingredients, and subject to any arrangements,
additions or clarifications agreed from time to time between the Parties.

 

1.25 “HSR Act” means Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended.

 

1.26 “IND” means an Investigational New Drug Application for a Product filed
with the FDA necessary to commence human clinical trials in conformance with
applicable laws and regulations.

 

1.27 “Information” means information, results and data of any type whatsoever,
in any tangible or intangible form whatsoever, including without limitation,
databases, inventions, practices, methods, techniques, specifications,
formulations, formulae, knowledge, know-how, skill, experience, test data
including pharmacological, biological, chemical, biochemical, toxicological and
clinical test data, analytical and quality control data, stability data, studies
and procedures, and patent and other legal information or descriptions.

 

1.28 “Intellectual Property” means (a) all Regulatory Documentation, all
Regulatory Filings and all Regulatory Approvals; and (b) any and all inventions,
developments, results, know-how and other Information (including physical,
chemical or biological materials) made, conceived or reduced to practice by PPD
or its Affiliates before the Effective Date or during the Term of this
Agreement, whether alone or jointly with TSD and its Affiliates or a Third Party
that (i) relates to the composition of matter, manufacture or use of a Compound,
or (ii) is incorporated into any Product or its use, or (iii) is necessary for
the discovery, identification, manufacture, development, or commercial use or
sale of any Product.

 

1.29 “Joint Development Committee” or “JDC” means a committee composed as set
forth in Section 4.5 and having the duties set forth in Section 4.6.

 

1.30 “MAA” means Marketing Authorization Application submitted to the EMEA.

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1.31 “Marketing Authorization” means any Regulatory Approval required to market
and sell a Product in any country.

 

1.32 “Marketing Plan” means an annual marketing plan prepared by TSD, its
Affiliates or licensees or subcontractors, that includes, but is not limited to,
a prospective description of TSD’s commercial objectives for the upcoming year
with respect to a Product throughout the Territory and the strategy by which TSD
intends to achieve such objectives.

 

1.33 “Material” means any tangible material that comprises, consists of, or
incorporates a Collaboration Compound and any precursor, prodrug, metabolite,
ionized form (e.g., salt), solvate (e.g., hydrate), stereoisomer (e.g.,
enantiomer, diastereomer, mixture of isomers), resonant form, or tautomer
thereof.

 

1.34 “NDA” means a New Drug Application submitted and filed with the FDA
necessary for approval of a Product in conformance with applicable laws and
regulations.

 

1.35 “Net Sales” means the total gross amount billed or invoiced in United
States dollars (or converted into US dollars in accordance with this Agreement)
by TSD, its Affiliates, or licensees for sales of Products to a Third Party
less, to the extent included within the amount invoiced to and paid by the
customer, deductions for: (a) transportation charges, and other charges, such as
insurance, relating thereto, (b) sales and excise taxes, customs and any other
taxes, all to the extent imposed upon the sale of the Products and paid by the
selling party and not refundable in accordance with applicable law (but not
including taxes assessed against the income derived from such sale), (c) rebates
or allowances actually granted or allowed to group purchasing organizations,
managed health care organizations and to governments, including their agencies,
or to trade customers, in each case that are not Affiliates or licensees of TSD,
(d) quantity discounts, cash discounts or chargebacks actually granted, allowed
or incurred in the ordinary course of business in connection with the sale of
the Products, and (e) allowances or credits to customers, not in excess of the
selling price of the Products, on account of governmental requirements,
rejection, outdating recalls or return of the Products. Such amounts shall be
determined from the books and records of TSD maintained in accordance with GAAP
or another generally accepted accounting method agreed by the Parties,
consistently applied. In the event a Product is sold as part of a Combination
Product or a Takeda Combination Product, Net Sales for purposes of determining
royalty and milestone payments hereunder, shall be as follows:

 

(i) Net Sales in United States of Combination Products and Takeda Combination
Products [*]: As long as [*], Net Sales of a Combination Product or a Takeda
Combination Product, as the case may be, for purposes of determining royalty and
milestone payments hereunder, shall be [*]% of Net Sales of such Combination
Product or Takeda Combination Product, as the case may be. For sake of clarity,
[*] shall not, in and of themselves, cause a Combination Product or a Takeda
Combination Product to be [*] pursuant to this Subsection 1.35(i).

 

(ii) Net Sales in United States of Takeda Combination Products Not Subject to
Section 1.35(i) [*]: In regard to Takeda Combination Products that are not
subject to Section 1.35(i), for the [*] period commencing on [*], Net

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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Sales of such Takeda Combination Product for purposes of determining royalty and
milestone payments hereunder, shall be [*]% of Net Sales of such Takeda
Combination Product. For sake of clarity, [*] shall not, in and of themselves,
cause a Takeda Combination Product to be [*] pursuant to this Subsection
1.35(ii).

 

(iii) Net Sales in United States of Combination Products or Takeda Combination
Products Not Subject to Sections 1.35(i-ii) [*]: In regard to Combination
Products and Takeda Combination Products that are not subject to Sections
1.35(i-ii), for the [*] period commencing on [*], Net Sales of such Combination
Product or Takeda Combination Product, as the case may be, for purposes of
determining royalty and milestone payments hereunder, shall be [*]% of Net Sales
of such Combination Product or Takeda Combination Product, as the case may be.
For sake of clarity, [*] shall not, in and of themselves, cause a Combination
Product or a Takeda Combination Product to be [*] pursuant to this Subsection
1.35(iii).

 

(iv) Net Sales in United States of Takeda Combination Products Not Subject to
Sections 1.35(i-iii) [*]: In regard to Takeda Combination Products that are not
subject to Sections 1.35(i-iii), for the period commencing on [*], Net Sales of
a Takeda Combination Product for purposes of determining royalty and milestone
payments hereunder, shall be [*]% of Net Sales of such Takeda Combination
Product.

 

(v) Net Sales in United States of Combination Products Not Subject to Section
1.35(i) or Section 1.35(iii) [*]: In regard to Combination Products that are not
subject to Section 1.35(i) or Section 1.35(iii), for the period commencing on
[*], Net Sales of such Combination Product for purposes of determining royalty
and milestone payments hereunder, shall be [*]% of Net Sales of such Combination
Product.

 

(vi) Net Sales outside of United States of Takeda Combination Products and
Combination Products: Net Sales outside of the United States for Takeda
Combination Products and Combination Products, for the purpose of determining
royalty and milestone payments hereunder, shall be determined on a country by
country basis by multiplying the actual Net Sales of the Takeda Combination
Product or Combination Product by the fraction [*], where A is [*] and B is [*].
Where available in a given country, the [*] or [*] for the other product(s) in
the given country will be used as [*]. In the event that such [*] cannot be
determined for either the Product or other product(s) in the Combination Product
or the Takeda Combination Product, Net Sales for purposes of determining royalty
payments hereunder shall be calculated by multiplying the Net Sales of the
Combination Product or Takeda Combination Product by the fraction [*], where C
is [*] and D is [*], determined in accordance with GAAP or another generally
accepted accounting method agreed by the parties, consistently applied. PPD
shall have the right to inspection to verify the accuracy of the calculation of
the Net Sales in accordance with Section 6.5.

 

A sale of Product shall be deemed to have occurred upon the invoicing of such
Product to a Third Party; or if not invoiced, then when delivered, shipped, or
paid for, whichever

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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first occurs, provided that there shall be no double counting of sales if a sale
is deemed to have occurred when Product is delivered to a Third Party. For
purposes of clarification, a sale of a Product shall be deemed to be made in a
particular country when the Product sold is intended for use by consumers in
such country. In the case of a sale or other disposal of a Product for value
other than in an arm’s-length transaction exclusively for money, such as barter
or counter-trade, the amount of such sale shall be calculated using the fair
market value of such Product (if higher than the stated sales price) in the
country of disposition.

 

1.36 “Party” or “Parties” shall have the meaning set forth in the first
paragraph of this Agreement.

 

1.37 “Patent” means (a) an unexpired letters patent (including inventor’s
certificates) issued anywhere in the world which has not been held invalid or
unenforceable by a court of competent jurisdiction from which no appeal can be
taken or has been taken within the required time period, including without
limitation any substitution, extension, registration, confirmation, reissue,
re-examination, renewal or any like filing thereof, or (b) a pending application
for a letters patent pending anywhere in the world, including without limitation
any continuation, division or continuation-in-part thereof and any provisional
applications.

 

1.38 “Permitted Seller” means TSD and any Affiliate, licensee or sublicensee
having the right to sell Product, including without limitation, TPC and any
permitted licensee of TPC.

 

1.39 “Phase II Trial” means a clinical trial of a Product on patients, including
possibly pharmacokinetic and dose ranging studies, the principal purposes of
which are to make a preliminary determination that such Product is safe for its
intended use and to obtain sufficient information about such Product’s efficacy
to permit the design of further clinical trials, and generally consistent with
21 CFR §312.21(b).

 

1.40 “Phase III Trial” means that portion of the clinical development program
that provides for the pivotal human clinical trials of a Product, which trial(s)
is/are designed to (a) establish that such Product is safe and efficacious for
its intended use; (b) define warnings, precautions and adverse reactions that
are associated with the Product in the dosage range to be prescribed; (c) be a
pivotal study for submission of a NDA; and (d) be generally consistent with 21
CFR §312.21(c).

 

1.41 “Phase III Development Costs” means all development costs incurred by
either Party with TSD’s prior approval under the Collaboration Agreement for (a)
direct support of the performance of a Phase III Trial or (b) process
development for a Product in a Phase III Trial. For clarity, Phase III
Development Costs include costs to formulate and manufacture Phase III Trial
CTM.

 

1.42 “PMDA” means the Pharmaceutical and Medical Devices Agency in Japan.

 

1.43 “PPD Product” means a human therapeutic product that comprises SYR110322,
SYR110619, [*] that PPD develops under this Agreement by electing to exercise
its option as to a PPD Product pursuant to Article 12.

 

1.44 “Product” means a human therapeutic product that comprises, consists of, or

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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incorporates a Compound that has less than [*], or has [*] and has not been
shown to have [*] the Target, including a prodrug, metabolite, ionized form
(e.g., salt), solvate (e.g., hydrate), stereoisomer (e.g., enantiomer,
diastereomer, mixture of isomers), resonant form, or tautomer of such Compound
together with any formulation ingredients, regardless of the formulation or mode
of administration of such Product. For sake of clarity, Product includes
Combination Products and Takeda Combination Products.

 

1.45 “Regulatory Approval” means any and all approvals (including supplements,
amendments, pre- and post-approvals, pricing and reimbursement approvals),
licenses, registrations or authorizations of any national, supra-national (e.g.,
the European Commission or the Council of the EU), regional, state or local
regulatory agency, department, bureau, commission, council or other governmental
entity, that are necessary for the manufacture, distribution, use or sale of a
Product in a regulatory jurisdiction.

 

1.46 “Regulatory Documentation” means, with respect to a Product, all regulatory
filings and supporting documents created, submitted to the FDA or any equivalent
agency or government authority outside of the United States (including any
supra-national agency such as in the EU) relating to such Product, and all data
contained therein, including, without limitation, the contents of any IND(s),
NDA(s), BLA(s), Drug Master File, correspondence to and from the FDA or any
equivalent agency or governmental authority outside of the United States,
minutes from meetings (whether in person or by audio conference or
videoconference) with regulatory authorities, registrations and licenses,
regulatory drug lists, advertising and promotion documents shared with
regulatory authorities, adverse event files, complaint files and manufacturing
records.

 

1.47 “Regulatory Filing” means the NDA or BLA or IND or any foreign counterparts
thereof and any other filings required by any regulatory agency, department,
bureau, commission, council or other governmental entity in a regulatory
jurisdiction relating to the study, development, manufacture or
commercialization of any Product.

 

1.48 “Serious Adverse Event” means any adverse event related to a Product that
results in any of the following outcomes: death, a life-threatening adverse drug
experience, inpatient hospitalization or prolongation of existing
hospitalization, a persistent or significant disability/incapacity, or a
congenital anomaly/birth defect. Important medical events that may not result in
death, be life-threatening, or require hospitalization may be considered a
Serious Adverse Event when, based upon appropriate medical judgment, they may
jeopardize the patient or subject and may require medical or surgical
intervention to prevent one of the outcomes listed in this definition.

 

1.49 “Takeda Combination Product” means a formulation including two or more
active pharmaceutical ingredients, or a package including two or more different
pharmaceutical products, which includes a Compound and at least one Takeda
Proprietary Compound.

 

1.50 “Takeda Proprietary Compound” means an active pharmaceutical ingredient
that (i) [*], (ii) is not a Compound, (iii) either (x) is Controlled exclusively
or

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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semi-exclusively in a country or a region by TSD, TPC or Takeda or an Affiliate
thereof, or (y) TSD, TPC or Takeda or an Affiliate thereof has or had exclusive
or semi-exclusive rights to commercialize and market such active pharmaceutical
ingredient in a country or a region, and (iv) has been incorporated into a
pharmaceutical product (including a Product) that was introduced into the
commercial market. ACTOS is one example of a Takeda Proprietary Compound.

 

1.51 “Target” means human serine protease dipeptidyl peptidase IV (DP4).

 

1.52 “Term” shall have the meaning assigned to it in Section 10.1.

 

1.53 “Territory” means throughout the world.

 

1.54 “Third Party” means any individual, corporation, partnership, limited
liability company or other entity other than (i) TSD, (ii) PPD or (iii) an
Affiliate of either of them.

 

ARTICLE 2

 

COLLABORATION AGREEMENT

 

2.1 Termination of Collaboration Agreement.

 

(a) TSD and PPD agree that the Collaboration Agreement is hereby terminated in
its entirety as of the Effective Date. As of the Effective Date, the
Collaboration Agreement shall have no further force or effect (including,
subject to Section 2.1(a)(iii), any provisions that would otherwise survive) and
no Party thereto shall have any further right or obligation thereunder except
that:

 

(i) PPD shall assign, and TSD shall assume, in an Assignment and Assumption
Agreement substantially in the form of Schedule 2.1(a)(i)(1), all contracts with
Third Parties under or in connection with the Collaboration Agreement, including
investigator sites, that are in existence as of the Effective Date, to the
extent assignable; provided, that PPD and TSD shall each use reasonable efforts
to obtain any necessary consents from Third Parties promptly after the Effective
Date. Schedule 2.1(a)(i)(2) lists all Third Party contracts in existence as of
the Effective Date. PPD confirms that it has provided TSD with true and correct
copies of all Third Party contracts in existence as of the Effective Date and as
listed in Schedule 2.1(a)(i)(2).

 

(ii) TSD shall have the obligations of payment for services to be performed by
PPD pursuant to the Collaboration Agreement as set forth in Section 5.4 of this
Agreement; and

 

(iii) Articles 12, 14, 15, 16, and 17 and Sections 3.4(e)(ii) and 11.1 of the
Collaboration Agreement shall survive termination.

 

(b) Without limiting the generality of the foregoing, following the Effective
Date, and except as specifically set forth herein, PPD shall not, directly or
indirectly, have any liability or obligation for any cost or expense related to
any Compound or Product, including but not limited to costs or expenses for
research, development, manufacturing, or commercialization of any Compound or
any Product.

 

2.2 Reversion of License Rights in the Collaboration Agreement. Except as
otherwise provided in Section 2.1(a) of this Agreement, as of the Effective
Date, (a) all

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rights and licenses granted by TSD to PPD under the Collaboration Agreement
shall terminate and revert to TSD, and (b) all rights and licenses granted by
PPD to TSD under the Collaboration Agreement shall terminate and revert to PPD.

 

2.3 End of Collaboration Agreement Report. As soon as possible, but no later
than thirty (30) days from the Effective Date, PPD shall provide to TSD a
written report summarizing the status of SYR110322 Phase II Trial and API
production for Phase III through the Effective Date. The provision of such
report shall not relieve PPD from its obligations under Section 3.3. Such report
shall identify any and all material written Information related to the API and
Phase II Trial known to PPD as of the Effective Date. PPD shall also provide to
TSD a final report for the SYR110619 Phase I trial on or about July 31, 2005.
Following delivery of such reports, TSD shall have a right to reasonably request
through the JDC additional information from PPD relating to the SYR110322 and
SYR110619 development programs and results, and PPD shall provide such
information.

 

2.4 Mutual Release From Claims Arising Under the Collaboration Agreement. Each
Party, on behalf of itself and its predecessors, successors, parents,
subsidiaries, Affiliates, segments or divisions, and present and former
shareholders, officers, directors, employees, agents, assigns and
representatives and their heirs, family members and executors, hereby releases
the other Party and its predecessors, successors, parents, subsidiaries,
Affiliates, segments or divisions, and present and former members, shareholders,
officers, directors, agents, employees, representatives, attorneys, and assigns
from any and all claims, demands, obligations, or liability of whatever kind,
that it has, had, or may have against the other Party, whether asserted or
otherwise and whether known or unknown, for any claims, actions, or matters of
any kind arising through the Effective Date in relation to the Collaboration
Agreement, provided however, that such release shall not extend to any claims,
demands, obligations, or liability of whatever kind, that it may have against
the other Party either under this Agreement or under the Collaboration Agreement
arising after the Effective Date, or claims for indemnity under Article 15 of
the Collaboration Agreement for matters covered under such indemnification
provisions that arose before the Effective Date.

 

2.5 California Civil Code Section 1542. The Parties represent that they are not
aware of any claims other than the claims that are released by this Agreement.
The Parties also acknowledge that they have been advised by legal counsel and
each Party hereby waives the provisions of California Civil Code Section 1542,
which provides as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

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ARTICLE 3

 

ASSIGNMENT and LICENSE

 

3.1 Assignment. Subject to all of the terms and conditions of this Agreement,
PPD hereby irrevocably sells, assigns, delivers, conveys, transfers and sets
over to TSD, its successors and assigns the entire right, title and interest to
Intellectual Property that PPD or an Affiliate of PPD Controls as of the
Effective Date or during the Term of this Agreement.

 

3.2 License. To the extent that PPD is unable to assign any Intellectual
Property Controlled by PPD or an Affiliate of PPD as of the Effective Date or
during the Term of this Agreement, PPD hereby grants and shall grant to TSD a
perpetual, worldwide, exclusive license (even as to PPD), with the right to
grant sublicenses as is reasonably necessary for TSD to achieve Rgulatory
Approval and commercialize Products, to such Intellectual Property. To the
extent that PPD is unable to grant an exclusive license to any Intellectual
Property Controlled by PPD or an Affiliate of PPD as of the Effective Date or
during the Term of this Agreement, PPD hereby grants and shall grant to TSD a
perpetual, worldwide, non-exclusive license, with the right to grant sublicenses
as is reasonably necessary for TSD to achieve Rgulatory Approval and
commercialize Products, to such Intellectual Property. TSD agrees to perform
under and abide by the terms and conditions of any underlying licenses to such
Intellectual Property.

 

3.3 Delivery of Documents and Materials. Promptly following the Effective Date,
PPD shall deliver to TSD any and all data and documentation in PPD’s Control
related to the development of a Compound or Product, and not in the possession
of TSD, on the Effective Date. Following the Effective Date, PPD shall promptly
notify TSD if it later discovers any data or documentation in PPD’s Control
related to the development of a Compound or Product that was not previously
delivered to TSD and shall promptly deliver such to TSD. Promptly following the
Effective Date, PPD shall transfer to TSD the legal title to the associated INDs
presently on file and any comparable filings in other countries of the Territory
for SYR110322 and SYR110619. PPD shall transfer to TSD ownership of all Drug
Substance, CTM and Finished Product of SYR110322 and SYR110619 and any other
Material in its possession as of the Effective Date of this Agreement, the
amounts of which are listed on Schedule 3.3.

 

3.4 Notice of New Intellectual Property Developed by PPD After the Effective
Date. PPD shall promptly provide TSD with notice of any Intellectual Property
that PPD develops following the Effective Date. PPD will promptly provide to TSD
information and access to personnel reasonably requested by TSD that is
necessary for seeking protection of such Intellectual Property. All expenses
incurred by TSD associated with seeking protection of Intellectual Property
shall be paid by TSD.

 

ARTICLE 4

 

DEVELOPMENT

 

4.1 Control over Development. Subject to Section 4.3 and its obligations to use
Diligent Efforts, TSD shall, directly or through its Affiliates or licensees or
subcontractors, have full control over implementation of all aspects of a
Product’s development, marketing and commercialization throughout the Term of
this Agreement, and shall be solely responsible for all costs and expense
associated therewith.

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4.2 Design and Modifications to the Development Plan. Except as set forth in
Section 4.3, TSD shall consult PPD with regard to the design and implementation
of a Development Plan as well as modifications to a Development Plan and take
PPD’s suggestions into consideration. Except as set forth in this Section 4.2
and Section 4.3, TSD shall have the right, in its sole reasonable discretion, to
modify a Development Plan after TSD consults with PPD about any proposed
material changes to a Development Plan and TSD shall give full consideration to
any reasonable comments or suggestions by PPD. TSD shall at all times exercise
Diligent Efforts in the design, development, implementation, and modification of
a Development Plan.

 

4.3 Development and Commercialization of SYR110322. During the term of this
Agreement, TSD shall be responsible for the remainder of clinical and
non-clinical development of SYR110322 in accordance with the 322 Development
Plan, and TSD shall be solely responsible for all costs and expenses associated
therewith. TSD shall have the right to modify the 322 Development Plan from time
to time as reasonably necessary, [*]. TSD will use Diligent Efforts to submit
applications for regulatory approval to market a Product comprising SYR110322 in
the United States, EU and Japan, and will use Diligent Efforts to file an MAA in
the European Union for a Product comprising SYR110322 with the EMEA within [*]
of acceptance of an NDA filing for a Product comprising SYR110322. Upon approval
in a country, TSD shall use Diligent Efforts to market such Product in such
country. TSD shall promptly notify PPD in writing of the First Commercial Sale
of a Product in each country. TSD shall use Diligent Efforts to exploit the
lifecycle of the Product including, where appropriate, carrying out clinical
trials and/or other studies on the Product and obtaining Marketing
Authorizations. TSD shall use Diligent Efforts to commercialize Product,
including deploying sales personnel as necessary to promote the Product, taking
into account the sales volume of the Product, the number of competitors, the
regulatory environment, and the potential for sales in a geographic area. TSD
shall use Diligent Efforts to maximize the Net Sales of Products.

 

4.4 Development and Commercialization of Backup Product. Should TSD cease to
develop and commercialize a Product comprising SYR110322 despite using Diligent
Efforts, then TSD shall use Diligent Efforts (and shall cause any Affiliates,
licensees or subcontractors participating in the subject matter of this
Agreement to use Diligent Efforts) to develop and introduce a Product comprising
one of SYR110619 [*] to the commercial market and to market such Product. Should
TSD cease to develop and commercialize such Product despite using Diligent
Efforts, then TSD shall use Diligent Efforts (and shall cause any licensees or
subcontractors participating in the subject matter of this Agreement to use
Diligent Efforts) to develop and introduce a Product comprising [*] SYR110619
[*] to the commercial market and to market such Product. With respect to this
Section 4.4, TSD will use Diligent Efforts to submit applications for regulatory
approval to market the SYR110619 [*] Product in the United States, EU and Japan.
Should TSD cease to develop and commercialize such Product despite using
Diligent Efforts, then TSD shall not have any further obligation to develop
alternative Compound(s) under this Agreement.

 

4.5 Joint Development Committee. Within thirty (30) days of the Effective Date,
PPD and TSD shall assemble a JDC. Initially, the JDC will be composed of at
least two, but no more than six, representatives, with an equal number appointed
by each of PPD and TSD, or their Affiliates. A list shall be provided to the
other Party within thirty (30) days after the Effective Date. Each Party will
promptly notify the other Party in writing of any change in its appointed
representatives. The chairperson of the JDC will be one of TSD’s or its
Affiliate’s representatives.

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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4.6 Duties of JDC. The duties of the JDC shall include, but not be limited to,
(a) reporting the progress of all Development and Marketing Plans; (b) providing
updates describing the progress made in designing and implementing new
Development or Marketing Plan(s); (c) discussing potential modifications to any
Development Plan; (d) reporting the results of any efforts, if any, to evaluate
potential therapeutic applications for Compounds other than type II diabetes;
and (e) providing updates on discovery, non-clinical and preclinical, clinical
development or marketing of Compounds other than SYR110322. TSD shall promptly
provide PPD with copies, through the JDC, of all Development Plans and Marketing
Plans. TSD shall also provide PPD with copies through the JDC of all Regulatory
Filings, Regulatory Documentation and communications with regulatory agencies
within ten (10) days of mailing or receipt of Regulatory Filings, Regulatory
Documentation or communications, as the case may be, with a regulatory agency.
TSD shall provide to PPD copies of all final clinical study reports. A PPD JDC
member shall have the right to consult with the JDC if the PPD JDC member
reasonably believes information is needed from TSD in order to protect PPD’s
interests, as the case may be, in the subject matter of this Agreement, and TSD
through the JDC shall reasonably cooperate in connection therewith. To
accomplish its objectives, the JDC will meet quarterly, or more often if
mutually agreed upon by the Parties, during the term of any Development Plan or
during any period of post-marketing regulatory activity, and will meet at least
annually thereafter. The JDC may meet in person or by telephone or video
conference. In-person JDC meetings will be held in Chicago, IL or such other
sites that the Parties may mutually agree upon. Each Party will bear all
expenses of its personnel arising from attending such meetings. Among other
duties, one of TSD’s JDC members shall prepare and promptly circulate to the
other JDC members written minutes of each such meeting, which minutes will,
without limitation, record the updates given at the meetings describing the
progress made in discovery, development, and commercialization of a Product.
Both Parties acknowledge and agree that they intend to be as transparent as
reasonably possible with each other on all material issues relating to
development and commercialization of Product, and that the forum for achieving
such transparency shall be the JDC.

 

4.7 Decision Making By the JDC. TSD shall have a sole and final vote on any
issue and matter in the JDC after taking into account TSD’s obligation to use
Diligent Efforts as set forth in Article 4.

 

4.8 Serious Adverse Event. TSD shall immediately inform PPD in writing of the
occurrence of any Serious Adverse Event with regard to a Product.

 

4.9 Clinical Development Collaboration. TSD agrees to utilize PPD exclusively
for clinical and bioanalytical CRO services related to the Phase II and Phase
III Trials of Products that are conducted in support of obtaining Regulatory
Approval in the U.S. and in the EU, in all cases, under terms and conditions
mutually acceptable to the Parties; provided that (a) PPD provides such services
at [*] rates which are applied between PPD, Takeda Global Research and
Development Center, Inc. (“TGRD”) and Takeda Europe Research & Development
Centre Ltd. (“TeuR&D), and (b) PPD demonstrates that it has and is maintaining
the requisite technical expertise and capacity to reliably provide such services
in a professional and competent manner. TSD will consider in good faith using
PPD for CRO services related to Phase IV trials

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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of the Products and biostatistics and data management services related to Phase
II-IV trials of the Products. CRO services performed by PPD pursuant to this
Section 4.9 shall be governed by that certain Global Master Agreement, Clinical
Research Management Services (Phase II-IV) dated July 1, 2004, that certain
Global Master Agreement, Bioanalytical Laboratory Services dated September 1,
2004 and that certain Global Master Agreement, Biostatistics and Data Management
Services (Phase II-IV) dated July 13, 2005, each of which is executed among
TGRD, TeuR&D and PPD Development, LP (the “Takeda MSAs”). Schedule 4.9 includes
a description of initial services that will be performed by PPD under the 322
Development Plan. Individual task orders, which more fully describe the specific
types of services and activities to be undertaken by PPD for each study under
the 322 Development Plan, will be executed under the appropriate Takeda MSA.
Each task order will be signed by TSD, as an affiliate of TGRD and TeuR&D. If
PPD is asked to perform CRO services for multiple Products at the same time, PPD
shall conduct such CRO services for such multiple Products pursuant to the
Development Plan for each such Product, and pursuant to guidance from TSD
regarding the coordination between such Products as necessary. In case of
conflict between this Agreement and the Takeda MSAs regarding the assignment or
license of Intellectual Property to TSD, the terms of this Agreement shall
prevail.

 

ARTICLE 5

 

CONSIDERATION

 

5.1 Upfront Payment. Within thirty (30) days after the Effective Date, TSD shall
pay to PPD the sum of Fifteen Million Dollars ($15,000,000).

 

5.2 Milestone Payments.

 

(a) TSD shall make the milestone payments set forth below to PPD within thirty
(30) days of the occurrence of the related milestone events with regard to a
Product. Each such milestone payment shall not come due until the related
milestone event occurs and shall only be payable upon the first occurrence of
the related milestone event. Once TSD provides PPD with payment for the
occurrence of a given milestone event, TSD shall have no further obligation to
make any further milestone payments to PPD for any future occurrence of such
milestone event whether with the same Product or a different Product. TSD shall
give PPD notice of the occurrence of a milestone event within five (5) business
days of the occurrence of such milestone event.

 

Milestone Event

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

  

Milestone Payment

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

First dosing of any Product to a subject in a

Phase III Trial

  

Fifteen million dollars

($15,000,000)

[*]

   [*] million dollars ($[*])

[*]

   [*] million dollars ($[*])

[*]

   [*] million dollars ($[*])

[*]

   [*] million dollars ($[*])

[*]

   [*] million dollars ($[*])

[*]

  

[*] million [*] thousand

dollars ($[*])

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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(b) TSD shall pay to PPD milestone payments in accordance with the schedule set
forth below with regard to Products, based on total worldwide Net Sales of all
Products for the first consecutive twelve month period during which such sales
milestone event is achieved, such payment to be made within thirty (30) days
after achievement of such milestone event. Each of the milestone payments listed
in Section 5.2(b) shall be payable only once under this Agreement regardless of
the number of Products that individually achieve the sales milestone event in a
given twelve month period or the number of times a given Product achieves such
sales milestone event in a given twelve month period.

 

Sales Milestone Event

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

  

Milestone Payment

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

First time that aggregate worldwide Net Sales

of all Products in a twelve consecutive month

period exceed [*] dollars ($[*])

   [*] dollars ($[*])

First time that aggregate worldwide Net Sales

of all Products in a twelve consecutive month

period exceed [*] dollars ($[*])

   [*] dollars ($[*])

 

5.3 Royalties. In accordance with the terms of Article 6 of this Agreement, TSD
shall pay the following running earned royalties on a Compound by Compound basis
on cumulative annual (a fiscal year starting on April 1) Net Sales as set forth
below for each Product sold. For purposes of clarification and illustration,
examples of royalty calculations are set forth on Schedule 5.3.

 

Such royalties shall be payable on cumulative Net Sales on a Compound by
Compound basis and on a country-by-country basis beginning upon the First
Commercial Sale of a Product in the country until the later of (a) the [*] year
anniversary of the First Commercial Sale of that Product in that country or (b)
[*] following [*]. For the avoidance of doubt and except as provided in (a) of
the preceding sentence, no royalties shall be payable by TSD with respect to Net
Sales of Product after the date that is [*]. Royalties under this Section 5.3
shall be based on cumulative Net Sales of Products containing the same Compound,
as calculated in accordance with Section 1.35.

 

During the [*] period following expiration of all Patents in the Collaboration
Patent Estate which [*], the specified royalty rate shall be reduced [*]. For
example, if there is at least one Patent in the Collaboration Patent Estate
issued in a country that [*] and the applicable royalty rate is [*]%, then for a
period of [*] following [*], the royalty rate will be [*]%.

 

Independent but including the preceding paragraph, the royalty rates set forth
in this Section 5.3 shall be reduced by [*] percent ([*]%) if [*]. For example,
if the stated royalty rate is [*]%, then the royalty rate is [*]% if [*] and
[*]% if the Product [*].

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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  (a) U.S. Net Sales.

 

Annual Net Sales in the United States

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

    

Royalty rate(s) per annual U.S. Net Sales

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

On the portion of annual Net Sales less than [*] US dollars ($[*])

     [*] percent ([*]%) of Net Sales

On the portion of annual Net Sales equal to or greater than [*] US dollars
($[*]) but not greater than [*] US dollars ($[*])

     [*] percent ([*]%) of Net Sales

On the portion of annual Net Sales greater than [*] US dollars ($[*])

     [*] percent ([*]%) of Net Sales

 

  (b) EU Net Sales.

 

Annual Net Sales in the EU

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

    

Royalty rate(s) per annual EU Net Sales

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

On the portion of annual Net Sales less than [*] US dollars ($[*])

     [*] percent ([*]%) of Net Sales

On the portion of annual Net Sales equal to or greater than [*] US dollars
($[*]) but not greater than [*] US dollars ($[*])

     [*] percent ([*]%) of Net Sales

On the portion of annual Net Sales greater than [*] US dollars ($[*])

     [*] percent ([*]%) of Net Sales

 

  (c) Japan Net Sales.

 

Annual Net Sales in Japan

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

    

Royalty rate(s) per annual Japanese Net Sales

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

On the portion of annual Net Sales less than [*] US dollars ($[*])

    

[*] percent ([*]%) of Net Sales

On the portion of annual Net Sales equal to or greater than [*] US dollars
($[*]) but not greater than [*] US dollars ($[*])

    

[*] percent ([*]%) of Net Sales

On the portion of annual Net Sales greater than [*] US dollars ($[*])

    

[*] percent ([*]%) of Net Sales

 

  (d) Rest of World Net Sales.

 

Annual Net Sales in all countries (in the aggregate) other than the

United States, EU and Japan

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

    

Royalty rate(s) per annual Net Sales in all countries (in the aggregate)

other than the United States, EU and Japan

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

On the portion of annual Net Sales less than [*] US dollars ($[*])

    

[*] percent ([*]%) of Net Sales

On the portion of annual Net Sales equal to or greater than [*] US dollars
($[*]) but not greater than [*] US dollars ($[*])

    

[*] percent ([*]%) of Net Sales

On the portion of annual Net Sales greater than [*] US dollars ($[*])

    

[*] percent ([*]%) of Net Sales

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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5.4 Costs and Expenses. The Parties shall apportion costs and expenses as
follows:

 

(a) PPD shall be solely responsible for all direct and indirect costs and
expenses (including internal personnel and other internal costs and expenses)
related to Phase II Trials pursuant to the Collaboration Agreement accrued prior
to [*]; and

 

(b) TSD shall reimburse PPD for [*]% of all Phase III Development Costs accrued
before [*] and PPD shall be responsible for the remaining [*]% of such costs.

 

(c) Within six (6) months of the Effective Date, PPD shall submit a final
request for reimbursement for any and all monies PPD seeks reimbursement for
from TSD under Section 5.4(b) hereof. Schedule 5.4 lists all expenses that are
outstanding under Section 5.4(b) as of the Effective Date. TSD shall pay to PPD
such amounts owed no later than thirty (30) days after receipt of such final
request from PPD.

 

5.5 Third Party License Payments. If TSD, its Affiliates or licensees pay an
upfront payment, milestone, royalty or other payment to a Third Party in
consideration for immunity from or license to such Third Party’s intellectual
property rights with respect to the Product, then [*] percent ([*]%) of such
payment shall be credited to TSD against the subsequent royalty payment that
comes due to PPD under Article 5, provided however, that no royalty payment to
PPD under Article 5 shall be reduced by more than [*] percent ([*]%). For sake
of clarity, a license to a specific pharmaceutical active ingredient other than
a Compound used in a Combination Product or a Takeda Combination Product shall
not be treated as a Third Party License payment under this Section 5.5.
Notwithstanding the foregoing, PPD shall reimburse TSD $500,000 for the [*].

 

5.6 Payments Non-Refundable. All payments to PPD under this Article 5 and
Article 6 are noncreditable and nonrefundable, and TSD shall not have any right
to set off any amounts provided to be paid under this Article 5 or Article 6.

 

ARTICLE 6

 

RECORDS; REPORTS AND PAYMENTS

 

6.1 Payment Method; Reports.

 

(a) All payments to PPD pursuant to Article 5 shall be made by Federal Reserve
electronic wire transfer in immediately available funds to an account designated
by PPD. All payments pursuant to Article 5 and this Section 6.1(a) shall be made
in U.S. dollars.

 

(b) Within forty five (45) days after the close of each calendar quarter in
which there are any Net Sales during the Term, TSD shall furnish to PPD a
statement of

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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Net Sales of each Product for such calendar quarter setting forth the Net Sales
for each country in which Products were sold during such calendar quarter, and a
calculation of royalties due pursuant to Section 5.3, together with a payment
for royalties due for such quarter. TSD will mail such report to the attention
of: Pharmaceutical Product Development, Inc., 3151 South 17th Street,
Wilmington, North Carolina, 28412, Attn: Corporate Controller. The amount of
royalty payment due to PPD shall be paid by TSD concurrently with the remittance
of each royalty report. Interest shall accrue on any payments due under this
Agreement (including royalties) not paid when due through and including the date
upon which PPD has collected the funds in accordance herewith at a rate equal to
the lesser of (i) the sum of [*] percent ([*]%) plus the prime rate of interest
quoted in the Money Rates (or equivalent) section of The Wall Street Journal (or
any substitute source mutually agreed to by the Parties), calculated daily on
the basis of a three hundred sixty (360) day year, or (ii) the maximum interest
rate allowed by applicable law. Except as set forth in Section 6.3, payments
pursuant to this Section 6.1(b) shall be made in U.S. dollars.

 

6.2 Taxes. Each Party shall pay any and all taxes levied on account of all
payments it receives under this Agreement. If laws or regulations require that
taxes be withheld, the paying Party will (a) deduct those taxes from the
remittable payment, (b) pay the taxes to the proper taxing authority, and (c)
send evidence of the obligation together with proof of tax payment to the
non-paying Party within thirty (30) days following that tax payment. Any such
payments made by the paying Party shall be treated as having been made to the
non-paying Party under this Article 6.

 

6.3 Blocked Currency. In each country where the local currency is blocked and
cannot be removed from the country, royalty payments pursuant to Section 5.3
arising from Net Sales made in that country shall be paid to PPD in the country
in local currency by deposit in a local bank designated by PPD, unless the
Parties otherwise agree.

 

6.4 Foreign Exchange. Conversion of sales recorded in local currencies to U.S.
dollars will be done for such currencies using the average rate of exchange for
the applicable quarter based upon the daily rates for such currencies at the
time published in The Wall Street Journal (or any substitute source mutually
agreed to by the Parties).

 

6.5 Records; Inspection. TSD shall keep, and shall require its Permitted Sellers
to keep, complete, true and accurate books of accounts and records for the
purpose of determining the basis and accuracy of payments to be made under this
Agreement. Such records shall be kept in accordance with generally accepted
accounting principals, showing Net Sales of Product on a country-by-country and
Product-by-Product bases, and TSD’s or its Permitted Sellers’ usual internal
practices and procedures, consistently applied. Such books and records shall be
kept for at least five (5) years following the end of the calendar quarter to
which they pertain. Such records will be open for inspection by PPD during such
five (5) year period by independent accountants reasonably acceptable to TSD,
solely for the purpose of verifying the basis and accuracy of amounts in the
payment statements hereunder. Such inspections shall be made no more than once
each calendar year, at reasonable time and on reasonable notice and shall be
limited to information related to Products. Results of any such inspection shall
be deemed to be Confidential Information of TSD. If any errors in favor of TSD
are discovered in the course of such inspection, then within thirty (30) days of
written request by PPD, TSD shall pay PPD those amounts that PPD would

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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have received in the absence of such errors, plus interest pursuant to and in
accordance with Section 6.1(b). Inspections conducted under this Section 6.5
shall be at the expense of PPD, unless a variation or error in favor of TSD
exceeding [*] percent ([*]%) of the amount stated for the period covered by the
inspection is established in the course of such inspection, whereupon all costs
relating to the inspection for such period will be paid promptly by TSD.

 

ARTICLE 7

 

INDEMNIFICATION

 

7.1 TSD Indemnification of PPD. TSD hereby agrees to indemnify, defend and hold
harmless PPD and its Affiliates and their directors, officers, agents and
employees (the “PPD Indemnitees”) from and against any and all damages,
liabilities, expenses and/or loss, including reasonable legal expenses and
reasonable attorneys’ fees (“Losses”) resulting from suits, claims, proceedings
or causes of action (“Claims”) brought by a Third Party against such PPD
Indemnitee based on: (i) any claim arising out of any allegation of infringement
or misappropriation of a Third Party’s intellectual property relating to the
subject matter of this Agreement; (ii) any breach by TSD or its Affiliates of a
representation or warranty contained in this Agreement; (iii) any breach of this
Agreement or applicable law by TSD or its Affiliates; (iv) the handling,
possession, development, manufacturing, marketing, distribution, promotion, sale
or use of Product; (v) any product liability or other claim arising out of any
allegation of injury or death caused by any person’s use of Product; (vi) any
liability or other claim (including without limitation injury or death) arising
from the use of any Drug Substance, CTM, or Product; (vii) the breach or other
violation of any underlying license to the Intellectual Property licensed to TSD
by PPD in Section 3.2, by TSD and its Permitted Sellers and other licensees or
subcontractors; (viii) the exercise of any right(s) under the Intellectual
Property, by TSD and its Permitted Sellers and other licensees or
subcontractors; (ix) any failure by TSD or its Affiliates to comply in all
material respects with applicable laws in connection with the performance of
their respective obligations or the exercise or their respective rights under
this Agreement; (x) the negligence or willful misconduct of TSD or its
Affiliates in the performance of this Agreement; and\or (xi) liabilities arising
from the contracts listed in Schedule 2.1(a)(i)(1) that are assigned to TSD
pursuant to Section 2.1(a)(i), but only to the extent such liability arises from
activities under such contracts that occur after the Effective Date; except to
the extent such PPD Losses result from (1) breach by PPD or its Affiliates of a
representation or warranty contained in this Agreement; and/or (2) breach of
this Agreement or applicable law by the PPD Indemnitee; and/or (3) the
negligence or willful misconduct of the PPD Indemnitee in the performance of
this Agreement. TSD and TPC agree to indemnify, defend and hold the PPD
Indemnitees harmless from and against any and all Losses arising from any Claim
against the PPD Indemnitees as a result of [*].

 

7.2 PPD Indemnification of TSD. PPD hereby agrees to indemnify, defend and hold
harmless TSD and its Affiliates and their directors, officers, agents and
employees (the “TSD Indemnitees”) from and against any and all Losses resulting
from Claims brought by a Third Party against such TSD Indemnitee based on: (i)
breach by PPD or its Affiliates of a representation or warranty contained in
this Agreement; (ii) any breach of this Agreement or applicable law by PPD or
its Affiliates; (iii) any failure by PPD or its Affiliates to comply in all
material respects with applicable laws in

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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connection with the performance of its respective obligations or the exercise or
its respective rights under this Agreement; and/or (iv) the negligence or
willful misconduct of PPD or its Affiliates in the performance of this
Agreement; except to the extent such Losses result from (1) breach by TSD or its
Affiliates of a representation or warranty contained in this Agreement; (2)
breach of this Agreement or applicable law by the TSD Indemnitee; and/or (3) the
negligence or willful misconduct of the TSD Indemnitee in the performance of
this Agreement.

 

7.3 Notice of Request for Indemnification. In the event that an Indemnitee is
seeking indemnification under Section 7.1 or Section 7.2, it shall inform the
indemnifying Party of a claim as soon as reasonably practicable after it
receives notice of the Claim, shall permit the indemnifying Party to assume
direction and control of the defence of the Claim (including the right to settle
the Claim solely for monetary consideration), and shall cooperate as requested
by the indemnifying Party (at the expense of the indemnifying Party) in the
defence of the Claim.

 

7.4 Limitation on Liability. IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES,
OR THEIR DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS BE LIABLE TO THE OTHER PARTY
FOR ANY INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES,
WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT
LIABILITY OR OTHER TORT, OR OTHERWISE ARISING OUT OF THIS AGREEMENT, PROVIDED
HOWEVER, THAT THE FOREGOING SHALL NOT PRECLUDE A CLAIM BY PPD FOR DAMAGES CAUSED
BY A MATERIAL BREACH BY TSD OF ITS OBLIGATIONS UNDER THIS AGREEMENT FOR THOSE
PAYMENTS THAT PPD WOULD HAVE REALIZED PURSUANT TO ARTICLE 5 HAD TSD COMPLIED
WITH ITS OBLIGATIONS UNDER THIS AGREEMENT.

 

7.5 Payment of Indemnification. Upon the final, unappealable determination of
liability and the amount of the indemnification payment under this Article, the
indemnifying Party will pay such amount to the Indemnified Party in immediately
available funds within thirty (30) days after such determination.

 

7.6 Clinical Trial Insurance. Prior to TSD initiating any clinical trial with
respect to a Compound or Product, TSD shall have and maintain such type and
amounts of liability insurance covering the development activities contemplated
hereunder and that are normal and customary in the pharmaceutical industry
generally for parties similarly situated, and shall name PPD as an additional
insured thereunder. TSD shall furnish to PPD certificates evidencing the
insurance coverage, including amendments and revisions thereto, within five (5)
business days of PPD’s written request.

 

ARTICLE 8

 

CONFIDENTIALITY AND PUBLICITY

 

8.1 Nondisclosure of Confidential Information. All Information disclosed by one
Party to the other Party pursuant to this Agreement shall be “Confidential
Information,” provided that it is marked or otherwise identified as
“confidential” or “proprietary.” The Parties agree that during the Term, and for
a period of five (5) years thereafter, a Party receiving Confidential
Information of the other Party will (a) maintain in confidence such Confidential
Information to the same extent such Party maintains its own proprietary business
information of similar kind and value (but at a

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minimum each Party shall use commercially reasonable efforts), (b) not disclose
such Confidential Information to any Third Party without prior written consent
of the other Party, and (c) not use such Confidential Information for any
purpose except those permitted by this Agreement.

 

8.2 Exceptions. The obligations in Section 8.1 shall not apply with respect to
any portion of the Confidential Information that the receiving Party can show by
competent written proof:

 

(a) Is publicly disclosed by the disclosing Party, either before or after it is
disclosed to the receiving Party hereunder; or

 

(b) Was known to the receiving Party, without obligation to keep it
confidential, prior to disclosure by the disclosing Party; or

 

(c) Is subsequently disclosed to the receiving Party by a Third Party lawfully
in possession thereof and without obligation to keep it confidential; or

 

(d) Has been published by a Third Party; or

 

(e) Has been independently developed by the receiving Party without the aid,
application or use of all or any part of Confidential Information.

 

For purposes of clarification, all Information and Intellectual Property,
including without limitation all Regulatory Filings, all Regulatory
Documentation and all Regulatory Approvals assigned by PPD to TSD pursuant to
Section 3.1, shall be deemed Confidential Information of TSD and shall not be
subject to the exceptions set forth in (b) and/or (e) in this Section 8.2.

 

8.3 Authorized Disclosure. A Party may disclose the Confidential Information
belonging to the other Party to the extent such disclosure is reasonably
necessary in the following instances:

 

(a) Prosecuting or defending litigation;

 

(b) Complying with applicable court order, law, governmental regulations or the
rules of any national securities exchange or association; and

 

(c) Disclosure, in connection with the performance of this Agreement, to
licensees, research collaborators, employees, consultants, or agents, each of
whom prior to disclosure must be bound by similar obligations of confidentiality
and non-use at least equivalent in scope to those set forth in this Article 8.

 

The Parties acknowledge that the terms of this Agreement shall be treated as
Confidential Information of both Parties. Such terms may be disclosed by a Party
to investment bankers, investors, potential investors, lenders and other
financing parties, provided that they are bound by similar obligations of
confidentiality and non-use at least equivalent in scope to those set forth in
this Article 8. In addition, a copy of this Agreement may be filed by either
Party with the Securities and Exchange Commission if such filing is required by
law or regulation. In connection with any such filing, such Party shall
endeavour to obtain confidential treatment of such terms and other trade secret
information to the extent permitted by the Securities and Exchange Commission.
Notwithstanding the foregoing, the Parties shall have the right to publicly
disclose the financial information regarding this Agreement as set forth in
Schedule 8.3.

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ARTICLE 9

 

REPRESENTATIONS AND WARRANTIES AND COVENANTS

 

9.1 Representations and Warranties of the Parties. Each Party hereby represents
and warrants to the other Party that as of the Effective Date:

 

(a) Such Party is duly organized and validly existing and in good standing under
the laws of the jurisdiction of its organization;

 

(b) Such Party has the full power and is duly authorized to enter into, execute
and deliver this Agreement, and to carry out and otherwise perform its
obligations hereunder;

 

(c) This Agreement has been duly executed and delivered by, and is the legal and
valid obligation binding upon such Party and the entry into, the execution and
delivery of, and the carrying out and other performance of its obligations under
this Agreement by such Party (i) does not conflict with, or contravene or
constitute any default under, any agreement, instrument or understanding, oral
or written, to which it is a party, and (ii) does not violate applicable law or
any judgment, injunction, order or decree of any government authority having
jurisdiction over it; and

 

(d) Such Party does not, to its knowledge, employ and will not, to its
knowledge, employ, or use, a person or entity debarred under Section 306(a) or
(b) of the Federal Food, Drug, and Cosmetic Act. Further, such Party, to its
knowledge, does not employ and, to its knowledge, has not used a contractor or
consultant that has employed, any individual or entity debarred by the FDA, or,
to the knowledge of such Party, any individual who or entity which is the
subject of an FDA debarment investigation or proceeding.

 

9.2 Representations and Warranties of PPD. PPD hereby represents and warrants to
TSD that as of the Effective Date that:

 

(a) To PPD’s knowledge PPD has the right and authority to make the assignments
and to grant the rights and licenses specified in Article 3 to TSD in all
material respects;

 

(b) PPD’s interest in Intellectual Property arising under the Collaboration
Agreement are free and clear of any lien, encumbrance, security interest or
restriction;

 

(c) PPD has not granted any right, license or interest in, to or under the
Intellectual Property inconsistent with the assignment and license rights
granted to TSD under Article 3;

 

(d) PPD has no knowledge of any actions, suits, investigations, claims or
proceedings pending or threatened relating to the Intellectual Property;

 

(e) To PPD’s knowledge, PPD has conducted research, development and other
activities under the Collaboration Agreement in compliance with all applicable
laws, regulations, standards, and guidelines in force in the United States,
including, but not limited to, the GCP, GLP, and GMP;

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(f) PPD has disclosed to TSD all material Information regarding the Products in
PPD’s possession, including, but not limited to, all safety data and
information;

 

(g) DISCLAIMER OF PPD IMPLIED WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED IN THIS
ARTICLE, PPD MAKES NO REPRESENTATION OR WARRANTY THAT THE USE OF INTELLECTUAL
PROPERTY WILL NOT VIOLATE ANY INTELLECTUAL PROPERTY RIGHTS OF ANY PERSON. PPD
SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY WARRANTIES INCLUDING
WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE WITH
REGARD TO THE LIKELIHOOD OF SUCCESS OF PRODUCT AFTER THE EFFECTIVE DATE,
PROVIDED HOWEVER, THAT NOTHING IN THIS SECTION 9.2(g) SHALL BE CONSTRUED AS
LIMITING PPD’S OBLIGATION TO DISCLOSE INFORMATION PURSUANT TO SECTION 2.3 AND
3.3 HEREUNDER TO TSD.

 

9.3 Covenants of PPD. For so long as there is development activity on SYR110322,
SYR110619 [*] by TSD or its Affiliates, or marketing or sales of Products by
TSD, its Affiliates or licensees:

 

(a) PPD covenants that it will not discover, develop, or commercialize any
product directed to the Target;

 

(b) PPD covenants that it will not acquire from any Third Party the right to
discover, develop, or commercialize any product directed to the Target;

 

(c) PPD covenants that it will not enter into any agreement in which any Third
Party pursuant to such agreement discovers, develops, or commercializes any
product directed to the Target; and

 

(d) PPD covenants that it will not invest in any Third Party that, to PPD’s
knowledge at the time such investment is made, is engaged or intends to engage
in the discovery, development or commercialization of any product directed to
the Target.

 

Notwithstanding the foregoing covenants, PPD may provide services to Third
Parties in connection with the preclinical and clinical development of one or
more inhibitors of the Target and products containing or comprising such
inhibitors, provided that (a) such services are limited to those that are usual
and customary for clinical research organizations in general and PPD in
particular; and (b) PPD shall not retain (1) any right, title, interest or
license in any such inhibitor; or (2) any right to receive (directly or
indirectly) any consideration in connection with the subsequent development,
regulatory filings, regulatory approval, promotion or sales of such inhibitors
or products (other than normal and customary fees and expenses charged by PPD
for any such services).

 

9.4 Covenant of TSD and TPC. For the period extending from the Effective Date
until [*], TSD and TPC covenant that they will not (and will not permit their
Affiliates to) (i) enter into a [*], or (ii) [*].

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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ARTICLE 10

 

Term of Agreement

 

10.1 Term of Agreement. The term of this Agreement shall commence on the
Effective Date and continue in full force and effect until the later of the
expiration of TSD’s obligation to pay royalties under Section 5.3 or the
expiration of PPD’s obligation to pay royalties under Section 12.7, provided
however, that the term shall expire on the twenty (20) year anniversary of the
Effective Date if at such time neither of the following events have occurred:
(i) a First Commercial Sale of a Product or a first sale of a Product by PPD,
its Affiliates or its licensees; or (ii) an issuance of a Patent in the
Collaboration Patent Estate (the “Term”).

 

10.2 Survival. Expiration of this Agreement shall not relieve any Party of any
of its obligations that were incurred prior to expiration. In addition, Articles
3 (excluding Section 3.4), 7 (excluding Section 7.6) and 8, Sections 6.5, 13.2,
13.14 and 13.15, and the indemnification obligations set forth in the last
sentence of Section 12.6 shall survive expiration of this Agreement.

 

ARTICLE 11

 

INTELLECTUAL PROPERTY MATTERS

 

11.1 Collaboration Patent Estate Maintenance. TSD shall have the sole right and
responsibility in its commercially reasonable discretion at TSD’s sole expense,
for preparing, filing, prosecuting and maintaining Patents in the Collaboration
Patent Estate. TSD shall keep PPD reasonably informed with respect to the status
of such Patents and their prosecution. TSD shall provide to PPD, at least on an
annual basis, with a list accurately identifying the status of all Patents in
the Collaboration Patent Estate.

 

11.2 Assistance with Intellectual Property Protection. PPD will provide to TSD
information in PPD’s possession or Control and access to PPD personnel as
reasonably requested by TSD, at TSD’s sole cost, that is necessary or useful for
seeking such Intellectual Property protection. All expenses incurred by TSD
associated with seeking protection of Intellectual Property shall be paid by
TSD. In connection with any action involving a Patent in the Collaboration
Patent Estate or a Product, PPD shall provide TSD with any information or
assistance that TSD reasonably requests, at TSD’s sole cost.

 

11.3 Enforcement of Intellectual Property Rights

 

(a) If PPD believes that a Third Party is or may be infringing a Patent in the
Collaboration Patent Estate with respect to such Third Party’s serine protease
dipeptidyl peptidase IV inhibitor, PPD shall immediately provide TSD notice of
such belief and the related facts in reasonable detail to allow TSD to assess
the potential infringement.

 

(b) If a Third Party infringes a Patent in the Collaboration Patent Estate with
respect to such Third Party’s serine protease dipeptidyl peptidase IV inhibitor,
TSD or its Affiliate shall have the sole right (but not the obligation) to
pursue any and all injunctive relief, and any or all compensatory and other
remedies and relief (collectively, “Remedies”), against such Third Party.

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11.4 Assistance and Cooperation. If TSD or its Affiliate pursues Remedies
hereunder, PPD will use all reasonable efforts to assist and cooperate with TSD
or its Affiliate pursuing such Remedies. TSD will bear all costs and expenses
relating to such pursuit. Any damages or other amounts collected with respect to
such Third Party’s serine protease dipeptidyl peptidase IV inhibitor will first
be used to reimburse TSD for its out of pocket costs and expenses; and then, any
remaining amount will be distributed [*]% to TSD and [*]% to PPD.

 

11.5 Trademarks. As between the Parties, TSD, its Affiliates or their licensee
shall own all trademarks developed by TSD or its licensee used to identify a
Product sold by TSD.

 

ARTICLE 12

 

PPD OPTION TO PPD PRODUCTS

 

12.1 PPD Option #1 to Develop PPD Products. PPD may elect to pursue the
development and commercialization of one or more of SYR110322, SYR110619, [*] as
a PPD Product at such time that TSD is not actively developing or
commercializing at least one of SYR110322, SYR110619, [*] (“PPD Option #1”).

 

12.2 PPD Option #2 to Develop PPD Products. In the event that (a) PPD provides
TSD with notice that a material breach has occurred under the Agreement with
regard to TSD’s failure to use Diligent Efforts to develop SYR110322, SYR110619,
[*]; (b) TSD does not make substantial sustained efforts to effect a cure of
such material breach within ninety (90) days of receipt of such written notice
by PPD where such substantial sustained efforts are reasonably likely to cure
such breach; and (c) PPD provides notice that that such material breach has not
been cured, then PPD may pursue the development and commercialization of the
Compound that was the subject of the material breach as a PPD Product if PPD
provides notice to TSD within one (1) year from the date of written notice of
such material breach (“PPD Option #2”).

 

12.3 PPD Election to Develop PPD Products. PPD may elect to exercise PPD Option
#1 or PPD Option #2 by providing TSD with written notice indicating the
Compound(s) from among SYR110322, SYR110619, [*] which PPD desires to develop
and commercialize. The Parties agree to make an appropriate filing with the
Federal Trade Commission under the HSR Act, if necessary, as soon as practicable
upon the receipt by TSD of an election by PPD under this Section 12.3, and shall
use their best efforts to expedite such filing. The Parties will share equally
the HSR Act filing fee and will request early termination of the waiting period.

 

12.4 License to PPD regarding PPD Products. Subject to the terms of this
Agreement, TSD will grant to PPD as of the Effective Date a perpetual, royalty
bearing, worldwide, exclusive (even as to TSD) license, with right to grant
sublicenses, to all Intellectual Property owned or otherwise Controlled by TSD
or its Affiliates related to SYR110322, SYR110619, [*], to develop, make, have
made, use, import, offer for sale and sell Products comprising SYR110322,
SYR110619, [*] (the “PPD License”). To the extent that TSD is unable to grant an
exclusive license to any Intellectual Property Controlled by TSD or an Affiliate
of TSD, such license granted by TSD to PPD will be non-exclusive with respect to
such Intellectual Property. The PPD License granted by TSD to PPD pursuant to
this Section 12.4 is conditioned upon and shall only become

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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effective on a Compound by Compound basis following the exercise of PPD Option
#1 or PPD Option #2 pursuant to Sections 12.1-12.3, subject to the expiration or
earlier termination of any notice and waiting period under the HSR Act, if
necessary. Any costs not otherwise reimbursed by PPD for licenses to Third Party
intellectual property rights acquired pursuant to Section 5.5, to the extent
transferred (TSD does not assure their transferability) from TSD to PPD at PPD’s
request, shall be immediately reimbursed by PPD.

 

12.5 TSD Obligations Following PPD’s Exercise of Option #1 or Option #2. At such
time that PPD exercises PPD Option #1 or PPD Option #2 pursuant to Section 12.3,
the PPD License shall become effective. Promptly following effectiveness of the
PPD License, TSD shall deliver to PPD any and all data and documentation in
TSD’s Control relating to the development of such elected Compound. TSD shall
also promptly notify PPD if it later discovers any data or documentation in
TSD’s Control related to the development of such elected Compound that was not
previously delivered to PPD and shall promptly deliver such to PPD. TSD shall
also transfer to PPD the legal title to the associated INDs presently on file
and any comparable filings in other countries of the Territory for such elected
Compound. TSD shall also transfer to PPD ownership of all Drug Substance, CTM
and Finished Product of such elected Compound and any other Material in TSD’s
possession as of the time such option is exercised.

 

12.6 Control over development of PPD Products. Following the effectiveness of
the PPD License, PPD shall have the right, at its sole discretion and expense,
to develop and commercialize such elected Compound. PPD shall be free to select
Affiliates, licensees and subcontractors, in its sole discretion, to develop and
commercialize PPD Products for such elected Compound, provided however, that PPD
shall be liable for all of its obligations under this Article. PPD shall also
provide TSD with the same indemnification protection as TSD affords to PPD
pursuant to this Agreement for Products.

 

12.7 Payments to TSD for PPD Products. In regard to any Compound(s) from among
SYR110322, SYR110619, [*] that PPD exercises Option #1 or PPD Option #2 pursuant
to Section 12.3, then effective as of when PPD exercises such option, PPD shall
have the same Milestone Payment and Royalty obligations to TSD that TSD would
have had to PPD under Article 5 of this Agreement if it were TSD developing such
PPD Product instead of PPD. PPD shall pay TSD out of Net Sales of PPD Products
all costs in regard to Drug Substance, CTM and Finished Product of such elected
Compound and any other Material transferred to PPD pursuant to Section 12.5.

 

12.8 Reversion to TSD absent PPD Diligent Efforts All rights granted to PPD
under this Article shall be subject to reversion to TSD at any such time that
PPD fails to utilize Diligent Efforts to develop and commercialize such elected
Compound or materially breaches its obligations under this Article including the
payment obligations set forth in Section 12.7.

 

12.9 Exercise of PPD Option #2 not exclusive remedy. The Parties agree that
PPD’s exercise of PPD Option #2 pursuant to Section 12.3 based on a material
breach shall not be exclusive or prejudicial to any other rights or remedies
that PPD may otherwise have on account of the failure of TSD to use Diligent
Efforts to develop SYR110322, SYR110619, [*].

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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12.10 Specific Performance as Remedy for Breach of Section 12.5. The Parties
agree that following PPD’s proper exercise of PPD Option #1 or PPD Option #2
pursuant to Sections 12.1-12.3, should TSD fail to reasonably comply with its
obligations under Section 12.5, then, following such breach, PPD shall have the
right to seek specific performance by TSD of its obligations under Section 12.5.

 

ARTICLE 13

 

MISCELLANEOUS

 

13.1 Entire Agreement; Amendment. This Agreement sets forth the complete, final
and exclusive agreement and all the covenants, promises, agreements, warranties,
representations, conditions and understandings between the Parties hereto and
supersedes and terminates all prior and contemporaneous agreements and
understandings between the Parties, including without limitation, the
Collaboration Agreement. There are no covenants, promises, agreements,
warranties, representations, conditions or understandings, either oral or
written, between the Parties other than as are set forth herein and therein. No
subsequent alteration, amendment, change or addition to this Agreement shall be
binding upon the Parties unless reduced to writing and signed by an authorized
officer of each Party.

 

13.2 Governing Law. Resolution of all disputes arising out of or related to this
Agreement or the performance, enforcement, breach or termination of this
Agreement and any remedies relating thereto, shall be governed by and construed
under the substantive laws of the State of New York, without regard to conflicts
of law rules that would provide for application of the law of a jurisdiction
outside New York.

 

13.3 Notices. Any notice required or permitted to be given under this Agreement
shall be in writing, shall specifically refer to this Agreement and shall be
deemed to have been sufficiently given for all purposes if mailed by first class
certified or registered mail, postage prepaid, express delivery service or
personally delivered. Unless otherwise specified in writing, the mailing
addresses of the Parties shall be as described below.

 

For TSD:      Takeda San Diego, Inc.        10410 Science Center Drive       
San Diego, CA 92121        Fax: (858) 550-0992        Attention: General Counsel
With a copy to:      Takeda Pharmaceutical Company Limited        1-1 Doshomachi
4-chome, Chuo-ku, Osaka, Japan        Fax: 81-6-6204-2055        Attention:
General Manager, Legal Department For PPD:      Development Partners, LLC       
3151 South 17th Street        Wilmington, NC 28412        Fax: (910) 762-5820  
     Attention: President

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With a copy to:      Pharmaceutical Product Development, Inc.        3151 South
17th Street        Wilmington, NC 28412        Fax: (910) 762-5820       
Attention: General Counsel

 

13.4 United States Dollars. References in this Agreement to “Dollars” or “$”
shall mean the legal tender of the United States of America.

 

13.5 No Strict Construction. This Agreement has been prepared jointly and shall
not be strictly construed against either Party.

 

13.6 Assignment. Neither PPD or TSD may sell, assign, transfer, convey, license,
sublicense, pledge, or otherwise dispose (collectively “assignment”) this
Agreement or any rights or obligations under this Agreement or any Intellectual
Property without the prior written consent of the other, provided, that (a) PPD
or TSD may make such an assignment without the other Party’s consent to an
Affiliate, provided that such Affiliate agrees in writing to be bound by the
terms and conditions of this Agreement, and, in the case of a transfer by TSD,
any Intellectual Property so assigned by TSD or its Affiliates shall be subject
to the PPD License, and (b) PPD may sell, assign, transfer, convey, license,
sublicense, pledge, or otherwise dispose to a Third Party without the other
Party’s’ consent any right to milestone and/or royalty payments, or other
payments that may inure to PPD’s benefit pursuant to the terms of this
Agreement, and provided however, that PPD may not assign PPD’s right to
participate in the JDC pursuant to Section 4.5 or assign any rights PPD may have
to perform CRO services for TSD pursuant to Section 4.9. Notwithstanding the
foregoing, TSD shall have the right to independently select and utilize
Affiliates, licensees and subcontractors in its sole discretion to perform its
duties under the Agreement, provided that TSD uses commercially reasonable
efforts to cause such Affiliates, licensees and subcontractors to use Diligent
Efforts in performing such duties, TSD remains liable for all of its obligations
under this Agreement, and any sale of Products by a Permitted Seller is included
in Net Sales in accordance with Section 1.35.

 

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

 

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

 

13.9 Severability. If any one or more of the provisions of this Agreement is
held to be invalid or unenforceable by any court of competent jurisdiction from
which no appeal can be or is taken, the provision shall be considered severed
from this Agreement and shall not serve to invalidate any remaining provisions
hereof. The Parties shall make a good faith effort to replace any invalid or
unenforceable provision with a valid and enforceable one such that the
objectives contemplated by the Parties when entering this Agreement may be
realized.

 

13.10 Ambiguities. Ambiguities, if any, in this Agreement shall not be construed
against any Party, irrespective of which Party may be deemed to have authored
the ambiguous provision.

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13.11 Headings. The headings for each article and section in this Agreement have
been inserted for convenience of reference only and are not intended to limit or
expand on the meaning of the language contained in the particular article or
section.

 

13.12 No Waiver. Any delay in enforcing a Party’s rights under this Agreement or
any waiver as to a particular default or other matter shall not constitute a
waiver of such Party’s rights to the future enforcement of its rights under this
Agreement, excepting only as to an express written and signed waiver as to a
particular matter for a particular period of time.

 

13.13 Tax Treatment and Tax Structure Disclosure. Notwithstanding anything
herein to the contrary, any Party to this Agreement (and any employee,
representative, or other agent of any Party to this Agreement) may disclose to
any and all persons, without limitation of any kind, the tax treatment and tax
structure of the transactions contemplated by this Agreement and all
Information, intellectual property of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure; provided however, that such disclosure may not be made to the extent
a lack of disclosure is reasonably necessary to comply with any applicable
federal or state securities laws. For the purposes of the foregoing sentence,
(a) the “tax treatment” of a transaction means the purported or claimed federal
income tax treatment of the transaction, and (b) the “tax structure” of a
transaction means any fact that may be relevant to understanding the purported
or claimed federal income tax treatment of the transaction.

 

13.14 Dispute Resolution. (a) If a dispute arises between the parties as to the
interpretation or performance of any of the provisions of this Agreement or as
to matters related to but not covered by this Agreement, then the Parties shall
consult initially to try to resolve the matter amicably. If they shall not be
capable of resolving the matter within forty five (45) days of the dispute
arising, the matter shall be dealt with in accordance with the provisions of
Section 13.14(b).

 

(b) All disputes arising out of or in connection with the Agreement shall be
settled by final and binding arbitration by the American Arbitration Association
(“AAA”), under its commercial rules then in effect except as provided herein.
The arbitration will be conducted in New York, NY or such other geographically
neutral site within the United States that is mutually agreed by the Parties.
All proceedings shall be held in English and a transcribed record prepared in
English. The parties shall choose, by mutual agreement, one arbitrator within
twenty (20) days of the filing of an arbitration demand with the AAA. If the
parties are unable to appoint an arbitrator within the time herein provided or
any extension of time that is mutually agreed on, one arbitrator will be
appointed by PPD, one arbitrator will be appointed by TSD, and the third
arbitrator will be appointed by the two arbitrators within thirty (30) days of
the date on which the initial period for appointment of a sole arbitrator by
mutual agreement lapsed. The award rendered by the arbitrator shall include all
costs of arbitration, reasonable attorneys’ fees and reasonable costs for expert
and other witnesses, and judgment on such award may be entered in any court
having jurisdiction thereof. Nothing in this Agreement shall be deemed as
preventing either party from seeking injunctive relief (or any other provisional
remedy) from any court having jurisdiction over the Parties and the subject
matter of the dispute as necessary to protect either Party’s name, proprietary
information, trade secrets, know-how or any other proprietary right. If the
issues in dispute involve scientific or technical matters, any arbitrator chosen
hereunder shall have educational training and/or experience sufficient to
demonstrate a reasonable level of knowledge in the field of biotechnology.

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13.15 Joint Responsibility. (a) PPD and PPD, Inc. shall be jointly and severally
liable for any and all obligations of PPD hereunder. PPD, Inc. hereby
unconditionally and irrevocably guarantees to TSD the performance of all of the
obligations of PPD under this Agreement, including the due and prompt payment by
PPD of any amounts payable under Article 7 and Sections 12.6 and 12.7 of this
Agreement and the satisfaction of each of the representations, warranties and
indemnities of PPD set forth therein. In case of the failure of PPD promptly to
satisfy any of its obligations under Article 7 and Sections 12.6 and 12.7 of
this Agreement, PPD, Inc. hereby agrees to cause the payment of such amounts to
be made promptly when and as such amounts become due and payable and as if such
amounts were paid by PPD. PPD Inc.’s obligations under this Section 13.15 shall
survive any transfer of ownership of PPD, Inc. or any of its assets or the
assignment by PPD, Inc. of any of its obligations under this Agreement.

 

(b) TSD and TPC shall be jointly and severally liable for any and all
obligations of either of them hereunder. TPC hereby unconditionally and
irrevocably guarantees to PPD the performance of all of the obligations of TSD
under this Agreement, including the due and prompt payment by TSD of any amounts
payable under Articles 5, 6 and 7 of this Agreement and the satisfaction of each
of the representations, warranties and indemnities of TSD set forth therein. In
case of the failure of TSD to promptly pay any amounts due to PPD pursuant
Articles 5 or 6 of this Agreement, or to satisfy any of its obligations under
Article 7 of this Agreement, TPC hereby agrees to cause the payment of such
amounts to be made promptly when and as such amounts become due and payable and
as if such amounts were paid by TSD. TPC’s obligations under this Section 13.15
shall survive any transfer of ownership of TPC or any of its assets or the
assignment by TPC of any of its obligations under this Agreement.

 

13.16 Schedules, Exhibits and Attachments. All schedules, exhibits and
attachments referred to herein are intended to be and hereby are specifically
made part of this Agreement. However, if there is a conflict between a term or
condition of such schedules, exhibits and attachments and this Agreement, the
terms and conditions of this Agreement shall prevail.

 

13.17 Publicity. The Parties agree that the public announcement of the execution
of this Agreement shall be substantially in the form of the press release
attached as Schedule 13.17. Any other written publication, news release or other
written public announcement relating to this Agreement or to the performance
hereunder, shall first be reviewed and approved by both Parties; provided,
however, that any disclosure which is required by law as advised by the
disclosing Party’s counsel may be made without the prior consent of the other
Party, although the other Party shall be given prompt notice of any such legally
required written disclosure and to the extent practicable shall provide the
other Party an opportunity to comment on the proposed written disclosure.

 

13.18 Third-Party Beneficiaries; Affiliates. No Third Party is intended or shall
be deemed to be a beneficiary of any provision of this Agreement. TSD and TPC
acknowledge that Affiliates of TSD and TPC have certain obligations under this
Agreement, and TSD and TPC shall ensure that their respective Affiliates perform
and otherwise comply with all such obligations. Neither Party shall permit any
of its Affiliates to take any action which, if taken by it, would violate its
obligations hereunder.

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

[Signature page follows]

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

IN WITNESS WHEREOF, the Parties have signed this Agreement as of the date(s) set
forth below.

 

Takeda San Diego, Inc.

By:

  

 

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

Name:

  

Steve Kaldor

Title:

  

President and Chief Scientific Officer

Date:

  

 

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

Takeda Pharmaceutical Company Limited

By:

  

 

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

Name:

  

Yasuchika Hasegawa

Title:

  

President and Chief Operating Officer

Date:

  

 

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

Development Partners, LLC

By:

  

 

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

Name:

  

 

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

Title:

  

 

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

Date:

  

 

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

Pharmaceutical Product Development, Inc.

By:

  

 

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

Name:

  

 

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

Title:

  

 

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

Date:

  

 

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

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

Schedule 1.5

 

COLLABORATION PATENT ESTATE

 

[*]

 

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

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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

Schedule 1.12

 

322 DEVELOPMENT PLAN

 

[*]

 

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

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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

Schedule 2.1(a)(i)(1)

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into this
[            ] day of July, 2005 by and among Pharmaceutical Product
Development, Inc., a North Carolina corporation, PPD Development, LP, a Texas
limited partnership, and Development Partners, LLC, a Delaware limited liability
company (hereinafter collectively referred to as the “Assignor”) and Takeda San
Diego, Inc., a Delaware corporation (hereinafter “Assignee”). Unless otherwise
defined herein, capitalized terms used in this Assignment and Assumption
Agreement shall have the meanings assigned to them in the Agreement among the
Assignor, the Assignee and Takeda Pharmaceutical Company Limited, dated as of
July [            ], 2005 (the “Agreement”).

 

WHEREAS, in accordance with the terms of the Agreement, Assignor is selling and
assigning to Assignee, and Assignee is purchasing, accepting assignment and
assuming from Assignor, Assignor’s right, title, interest and obligations in, to
and under certain contracts and other agreements of Assignor as set forth in
Schedule 2.1(a)(i)(2) to the Agreement (hereinafter “Assigned Contracts”); and

 

WHEREAS, Assignor and Assignee desire (i) to effect the transfer and assignment
to Assignee of Assignor’s right, title and interest in, to and under the
Assigned Contracts and (ii) to evidence the assumption by Assignee of all
obligations and duties thereunder.

 

NOW, THEREFORE, for good and valuable consideration as set forth in the
Agreement, it is agreed as follows:

 

1. Assignor hereby grants, conveys, sells, assigns and transfers to Assignee,
its successors and assigns, forever, without reservation, all of Assignor’s
right, title and interest as of the date hereof in the Assigned Contracts.

 

2. Assignee hereby assumes and agrees that it will perform and discharge all
liabilities and obligations of Assignor under the Assigned Contracts that arise
or are to be performed from and after the date hereof.

 

3. This Assignment and Assumption Agreement has been executed and delivered
pursuant to the Agreement, the terms, conditions, representations and warranties
of which are incorporated by reference herein. This Assignment and Assumption
Agreement shall not be deemed to modify or supersede the Agreement in any manner
whatsoever.

 

4, This Assignment and Assumption Agreement shall be binding upon and inure to
the benefit of Assignor and Assignee and their respective successors and
assigns, and shall be construed under and governed by the laws of the State of
New York. This Assignment and Assumption 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.

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be executed in counterparts on the date first above
written.

 

Pharmaceutical Product Development, Inc.

By:    

Name:

   

Title:

   

PPD Development, LP

By: PPD GP, LLC

Its: Sole General Partner

By:    

Name:

   

Title:

   

Development Partners, LLC

By: Applied Bioscience International Inc.

Its: Sole Manager

By:    

Name:

   

Title:

   

Takeda San Diego, Inc.

By:    

Name:

   

Title:

   

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

Schedule 2.1(a)(i)(2)

 

THIRD PARTY CONTRACTS ASSUMED BY TSD

 

[*]

 

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

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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

Schedule 3.3

 

322 AND 619 MATERIAL

 

[*]

 

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

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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

Schedule 4.9

 

ADDENDUM FOR 322 DEVELOPMENT SERVICES

 

[*]

 

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

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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

Schedule 5.3

 

EXAMPLES OF ROYALTY CALCULATIONS

 

[*]

 

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

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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

Schedule 5.4

 

OUTSTANDING DEVELOPMENT EXPENSES

 

[*]

 

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

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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

Confidential

 

Schedule 8.3

 

AUTHORIZED PUBLIC DISCLOSURE

 

The parties shall have the right to disclose the following information:

 

•   Takeda will pay PPD an upfront payment of $15 million,

 

•   Takeda will pay PPD a development milestone of $15 million if and when the
first dosing of a subject in a Phase III trial occurs,

 

•   Takeda will pay PPD additional milestone payments of up to $70.5 million
upon the occurrence of certain milestone events. The parties may disclose the
milestone events, if SEC requires so.

 

•   Commercial milestone payments of up to $33 million based on the achievement
of specified worldwide sales targets for the DPP-IV compounds, and

 

•   Tiered Royalties, based on sales of the DPP-IV compounds. In the US,
royalties range from middle single digit royalties to low double digit
royalties. For EU and Japan, royalties range from mid to upper single digit
royalties, with similar royalties for ROW.

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

Schedule 13.17

 

PRESS RELEASE

 

Takeda Pharmaceutical Company Limited

PPD, Inc.

 

Contact for Takeda:

Seizo Masuda

+81-6-6204-2060

Masuda_Seizo@takeda.co.jp

 

Contact for PPD:

Steve Smith

+910 772 7585

stephen.smith@wilm.ppdi.com

 

July xx, 2005

 

Takeda Acquires the Rights to DPP4 Inhibitors Granted to PPDI

 

Osaka, Japan/Wilmington, N.C., July xx, 2005 — Takeda Pharmaceutical Company
Limited (“Takeda”) and PPD, Inc. (Nasdaq: PPDI) today announced an agreement in
which Takeda acquired the development and marketing rights to all dipeptidyl
peptidase IV (DPP4) inhibitors previously granted to PPD under an agreement
between PPD and Syrrx, Inc. Takeda acquired Syrrx, Inc., now known as Takeda San
Diego, Inc., in March 2005.

 

Under the new agreement, Takeda, through Takeda San Diego, acquired all the
remaining rights to develop and commercialize the DPP4 inhibitors, which rights
had been shared by PPD and Takeda San Diego under the collaboration agreement
dated November 19, 2003. In exchange for terminating the collaboration agreement
and transferring its rights to Takeda, PPD will receive an upfront payment of
US$15.0 million, plus development and sales milestones, and royalties on sales
of DPP4 inhibitors if approved for marketing.

 

The agreement further provides that PPD will serve as the sole provider to
Takeda of Phase II and Phase III clinical development services in the US and the
EU for the DPP4 inhibitors. This will enable the DPP4 development program to
continue without interruption. Further details of the financial terms of the
agreement were not disclosed.

 

A variety of pre-clinical and clinical findings to date indicate DPP4 inhibitors
have the potential to treat type 2 diabetes. DPP4 degrades GLP-1 (Glucagon-like
peptide-1), an important hormone that is released in response to the intake of
food and that stimulates pancreatic beta cells to increase the secretion of
insulin and that has potential to improve beta cell function itself. DPP4
inhibitors, taken orally, work by blocking GLP-1 degradation to keep its
concentration for a longer period of time. Therefore, DPP4 inhibitors are
expected to be one of the new generation agents for diabetes treatment.

 

“We are pleased to reach this agreement with PPD, allowing us full rights to
DPP4 inhibitors created by our new colleagues at Takeda San Diego,” said
Yasuchika Hasegawa, President & Chief Operating Officer of Takeda. “We believe
that these DPP4 inhibitors will enhance Takeda’s diabetes franchise in the
future”.

 

“We too are excited with the new arrangement with Takeda for the continued
development and commercialization of the DPP4 assets,” said Fred Eshelman, Chief
Executive Officer of PPD. “With the signing of this agreement, this becomes the
second program under which we have advanced the clinical development of a
compound and then transferred it to a third party for continued development and
commercialization, thereby further validating our compound partnering strategy.
As a worldwide leader in diabetes medicines, we believe that Takeda is an
outstanding partner for this program.”

 

###

 

<About Takeda>

Takeda, located in Osaka, Japan, is a research-based global company with its
main focus on pharmaceuticals. As the largest pharmaceutical company in Japan
and one of the global leaders of the industry, Takeda is committed to striving
toward better health for individuals and progress in medicine by developing
superior pharmaceutical products.

For more information on Takeda, visit our website, http://www.takeda.com

 

<About PPD>

As a leading global provider of discovery and development services and products
for pharmaceutical, biotechnology and medical device companies, PPD applies
innovative technologies, therapeutic expertise and a commitment to quality to
help clients maximize the return on their R&D investments. With proven early
discovery through post-market resources, the company also offers compound
partnering opportunities. PPD has more than 7,100 professionals worldwide with
offices in 28 countries. For more information on PPD, visit our Web site at
http://www.ppdi.com.

 

Except for historical information, all of the statements, expectations and
assumptions contained in this news release, including the expectations and
assumptions about the future development and commercialization of DPP4
inhibitors, are forward-looking statements that involve a number of risks and
uncertainties. Although PPD attempts to be accurate in making these
forward-looking statements, it is possible that future circumstances might
differ from the assumptions on which such statements are based. In addition,
other important factors which could cause results to differ materially include
the following: risks associated with the development and commercialization of
drugs; risks associated with and dependence on collaborative relationships;
rapid technological advances that make products less competitive; economic
conditions and competition in the pharmaceutical industry; and the other risk
factors set forth from time to time in the SEC filings for PPD, copies of which
are available free of charge upon request from the PPD investor relations
department.

 

 

###