Exhibit 10.21

 

Confidential Treatment Requested.  Confidential portions of this document have
been redacted
and have been separately filed with the Commission.

 

COLLABORATION AND LICENSE AGREEMENT

 

by and between

 

Incyte Corporation

Experimental Station, Route 141 & Henry Clay Road

Wilmington, Delaware

 

and

 

Novartis International Pharmaceutical Ltd.

131 Front Street

Hamilton, Bermuda HM 12

 

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TABLE OF CONTENTS

 

ARTICLE I  Definitions

1

 

 

 

ARTICLE II  Licenses

18

2.1

Rights Granted by Incyte to Novartis

18

2.2

Rights Granted by Novartis to Incyte

18

2.3

Sublicense Rights

19

2.4

Section 365(n) of The Bankruptcy Code

19

2.5

Retained Rights

20

2.6

Non-Compete

21

 

 

 

ARTICLE III  Governance

23

3.1

Joint Steering Committee

23

3.2

Subcommittees

23

3.3

Committee Meetings

26

3.4

Authority

27

3.5

Decisions

27

3.6

Committee Membership

28

 

 

 

ARTICLE IV  Development; Regulatory Matters

29

4.1

Information Transfer

29

4.2

Conduct of Development Activities

30

4.3

Development Activity Proposals

33

4.4

c-MET Licensed Compound Co-Development Option

36

4.5

Potential JAK Back-Up Compounds

36

4.6

Development Reports

38

4.7

Regulatory Matters Related to Licensed Products

39

 

 

 

ARTICLE V  Clinical and Commercial Supply

40

5.1

Clinical Supply

40

5.2

Commercial Supply by Incyte

41

5.3

Supply by Novartis to Incyte

41

 

 

 

ARTICLE VI  Commercialization and Co-Detailing Option

42

6.1

Commercialization Diligence

42

6.2

Marketing Responsibilities For Licensed Products

42

6.3

Incyte Co-Detailing Option

42

6.4

Novartis Co-Detailing Option

43

6.5

Global Branding; Trademarks

44

 

 

 

ARTICLE VII  Intellectual Property Ownership, Protection and Related Matters

45

7.1

Inventorship; Ownership

45

7.2

Prosecution and Maintenance of Patent Rights

46

7.3

Third Party Infringement

48

7.4

Patent Marking

50

 

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7.5

Third Party Licenses

50

 

 

 

ARTICLE VIII  Financial Provisions

51

8.1

License Fee

51

8.2

Milestone Payments

51

8.3

Royalties

56

8.4

Royalty Reports; Payments

58

8.5

Financial Records

58

8.6

Audits

58

8.7

Tax Matters

59

8.8

Currency Exchange

60

8.9

Late Payments

61

 

 

 

ARTICLE IX  Term and Termination

61

9.1

Agreement Term

61

9.2

Termination

61

9.3

Effects Of Termination

62

 

 

 

ARTICLE X  Indemnification; Limitation of Liability

65

10.1

By Novartis

65

10.2

By Incyte

66

10.3

Limitation of Liability

67

10.4

Insurance

67

 

 

 

ARTICLE XI  Representations and Warranties and Covenants

68

11.1

Representation Of Authority; Consents

68

11.2

No Conflict

68

11.3

Additional Incyte Representations and Warranties

68

11.4

Incyte Covenant

69

11.5

Disclaimer of Warranty

69

11.6

Standstill

69

 

 

 

ARTICLE XII  Confidentiality

71

12.1

Confidential Information

71

12.2

Permitted Disclosure

72

12.3

Publicity; Attribution; Terms of this Agreement; Non-Use of Names

72

12.4

Publications

74

12.5

Term

74

12.6

Return of Confidential Information

74

 

 

 

ARTICLE XIII  Dispute Resolution

75

13.1

Dispute Resolution Process

75

13.2

Injunctive Relief

75

 

 

 

ARTICLE XIV  Miscellaneous

75

14.1

Governing Law

75

14.2

Consent to Jurisdiction

76

 

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*** Confidential material redacted and filed separately with the Commission.

 

 

 

14.3

Assignment

76

14.4

Change of Control

77

14.5

Entire Agreement; Amendments

78

14.6

Notices

78

14.7

Force Majeure

79

14.8

Compliance With Laws

79

14.9

Use Of Names, Logos Or Symbols

79

14.10

Independent Contractors

79

14.11

Headings

80

14.12

No Implied Waivers; Rights Cumulative

80

14.13

Severability

80

14.14

Execution In Counterparts

80

14.15

No Third Party Beneficiaries

80

14.16

Exhibits

80

 

Exhibits

 

Exhibit A: Incyte Patent Rights

Exhibit A-1: c-MET Patent Rights

Exhibit A-2: JAK Patent Rights

Exhibit B: Initial Information Transfer to Novartis

Exhibit C

Exhibit C-1 Out-of-Pocket Costs

Exhibit C-2 Clinical Supply Agreement

Exhibit D: Initial Development Plans

Exhibit D-1: c-MET Development Plan

Exhibit D-2: JAK Development Plan

Exhibit E: c-MET Studies

Exhibit F: Study 351 and Study 352

Exhibit F-1: Out-of-Pocket Costs for Toxicology Studies

Exhibit F-2: Study 352 Out-of-Pocket Costs for EMEA Registration Study

Exhibit G: Press Release

Exhibit H: Replacement Provisions

Exhibit I: Pharmacovigilance Agreement

 

Schedules

 

Schedule 1.14: c-MET Licensed Back-Up Compounds

Schedule 1.62: JAK Licensed Back-Up Compounds

Schedule 4.1: ***

Schedule 4.1(c)(i): ***

Schedule 11.3: Exceptions to Representations and Warranties

 

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*** Confidential material redacted and filed separately with the Commission.

 

COLLABORATION AND LICENSE AGREEMENT

 

THIS COLLABORATION AND LICENSE AGREEMENT (the “Agreement”) is entered into as of
the 24th day of November, 2009 (the “Effective Date”), by and between Incyte
Corporation, a Delaware corporation having an office at Experimental Station,
Route 141 & Henry Clay Road, Wilmington, Delaware (“Incyte”), and Novartis
International Pharmaceutical Ltd., a limited company organized under the laws of
Bermuda having an office at 131 Front Street, Hamilton, Bermuda HM 12
(“Novartis”).

 

WHEREAS, Incyte and Novartis are each in the business of discovering, developing
and commercializing pharmaceutical products;

 

WHEREAS, Incyte has, pursuant to the c-MET Program (as defined below) and the
JAK Program (as defined below), discovered and commenced Development of the
Licensed Compounds (as defined below);

 

WHEREAS, Incyte and Novartis are interested in collaborating on activities
relating to the c-MET Program and the JAK Program and Incyte has agreed to grant
to Novartis the right to develop and commercialize the Licensed Compounds;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

When used in this Agreement, each of the following terms shall have the meanings
set forth in this ARTICLE I:

 

1.1           “Abandon” or “Abandoned” means with respect to either the JAK
Program or the c-MET Program that (a) at any point in time prior to First
Commercial Sale of a Licensed Product under such Program, no Good Faith
Development activities have occurred during at least the preceding *** and no
significant constraints on such Development imposed by a Regulatory Authority or
a Force Majeure Event have been in effect during such period and (b) at any
point in time after First Commercial Sale of a Licensed Product under such
Program, (i) Novartis does not promote a JAK Licensed Product in at least *** EU
Major Market Countries during the preceding *** and during that period
(w) Novartis has not reasonably determined that promotion in the remaining EU
Major Market Countries is likely to reduce the overall commercial viability of
the Program in the Novartis Territory, (x) no significant constraints on such
promotion imposed by a Regulatory Authority have been in effect in the
jurisdictions in which such promotion failed to occur, (y) no Force Majeure
Event has been in effect in any jurisdictions in which such promotion failed to
occur and (z) Novartis is not actively seeking pricing approval in at least ***
EU Major Market Countries, or (ii) Novartis does not promote a c-MET Licensed
Product in at least *** EU Major Market Countries and the United States during
the preceding *** months and during that period (w) Novartis

 

1

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*** Confidential material redacted and filed separately with the Commission.

 

has not reasonably determined that promotion in the remaining EU Major Market
Countries or the United States, as applicable, is likely to reduce the overall
commercial viability of the Program in the Novartis Territory, (x) no
significant constraints on such promotion imposed by a Regulatory Authority have
been in effect in the jurisdictions in which such promotion failed to occur,
(y) no Force Majeure Event has been in effect in any jurisdictions in which such
promotion failed to occur and (z) Novartis is not actively seeking pricing
approval in at least *** EU Major Market Countries and the United States.  For
purposes of clarity, Novartis may be deemed to have Abandoned a Program
irrespective of whether it has used Commercially Reasonable Efforts to Develop
and Commercialize Licensed Product(s) for such Program.

 

1.2           “Accounting Standards” with respect to Incyte means that Incyte
shall maintain records and books of accounts in accordance with (a) US GAAP
(United States Generally Accepted Accounting Principles); or (b) if mandated by
the SEC, IFRS (International Financial Reporting Standards); and with respect to
Novartis shall mean that Novartis shall maintain records and books of accounts
in accordance with IFRS.  Notwithstanding the above, prior period restatements
needed in conjunction with the IFRS adoption shall not impact royalty payments,
milestone payments and Development Costs already paid prior to the IFRS adoption
except for the fiscal year immediately prior to the fiscal year in which the
change in accounting standards is implemented.

 

1.3           “Affiliate” means any Person that, directly or indirectly,
controls, is controlled by or is under common control with a Party.  For the
purposes of this Section 1.3, the word “control” (including, with correlative
meaning, the terms “controlled by” or “under 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 *** of the Voting Stock of such entity, by contract or otherwise. The Parties
acknowledge that in the case of certain entities organized under the laws of
certain countries outside of the United States, the maximum percentage ownership
permitted by law for a foreign investor may be less than ***, and that in such
case such lower percentage shall be substituted in the preceding sentence,
provided that such foreign investor has the power to direct the management and
policies of such entity. Notwithstanding the foregoing, an entity shall not be
deemed an Affiliate by virtue of ownership of greater than *** of such entity if
such ownership is coupled with limitations, contractual or otherwise, that
prevent such owner from directing the management and policies of such entity
***.

 

1.4           “Annual Net Sales” means aggregate Net Sales of c-MET Licensed
Products or JAK Licensed Products, as applicable, by Novartis or its Affiliates
or sublicensees in any Calendar Year, or in the first and last years of the term
of this Agreement, the portion of such Calendar Year during which this Agreement
is in effect.

 

2

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*** Confidential material redacted and filed separately with the Commission.

 

1.5           “Bankruptcy Event” means with respect to a Party, (i) the entry of
an order for relief under the Bankruptcy Code (or any other bankruptcy,
insolvency, reorganization or other similar act or law of any jurisdiction now
or hereafter in effect) by such Party; (ii) the commencement of an involuntary
proceeding under the Bankruptcy Code or any other bankruptcy, insolvency,
reorganization or other similar act or law of any jurisdiction now or hereafter
in effect against such Party, if not dismissed, bonded or stayed within ***
after such commencement; (iii) the making by such Party of a general assignment
for the benefit of creditors; or (iv) the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, or trustee of all or substantially
all of the business or property of such Party,

 

1.6           “Business Day” means a day other than a Saturday or Sunday or
Federal holiday in Wilmington, Delaware, Basel, Switzerland or Hamilton,
Bermuda.

 

1.7           “Calendar Quarter” means a calendar quarter ending on the last day
of March, June, September or December.

 

1.8           “Calendar Year” means a period of time commencing on January 1 and
ending on the following December 31.

 

1.9           “Change of Control” of a Party means that any of the following has
occurred:

 

(A)               ANY PERSON OR GROUP THAT IS A *** BECOMES THE BENEFICIAL
OWNER, DIRECTLY OR INDIRECTLY, OF *** OR MORE OF THE OUTSTANDING VOTING STOCK OR
VOTING POWER OVER VOTING STOCK OF (I) SUCH PARTY OR (II) ANY ONE OR MORE PERSONS
THAT CONTROLS SUCH PARTY (SUCH PARTY, TOGETHER WITH THE PERSONS DESCRIBED IN
CLAUSE (II), EACH HEREINAFTER REFERRED TO, INDIVIDUALLY, AS A “GROUP COMPANY”
AND, COLLECTIVELY, AS THE “GROUP COMPANIES”); OR

 

(B)               THE SALE OR DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE
ASSETS OF THE GROUP COMPANIES, ON A CONSOLIDATED BASIS; OR

 

(C)               A MERGER, REORGANIZATION, CONSOLIDATION OR OTHER SIMILAR
TRANSACTION (OR SERIES OF RELATED TRANSACTIONS) OF ANY GROUP COMPANY WITH ANY
PERSON OR ANY AFFILIATE OF SUCH PERSON, IN EACH CASE, THAT IS A *** (OTHER THAN
WITH ANY OF THE GROUP COMPANY’S WHOLLY-OWNED SUBSIDIARIES) OR WITH A GROUP THAT
CONTAINS A ***, THAT RESULTS IN THE SHAREHOLDERS OF THE APPLICABLE GROUP COMPANY
IMMEDIATELY BEFORE THE OCCURRENCE OF SUCH TRANSACTION (OR SERIES OF RELATED
TRANSACTIONS) BENEFICIALLY OWNING IMMEDIATELY AFTER SUCH TRANSACTION *** OF THE
OUTSTANDING VOTING STOCK OR VOTING POWER OVER VOTING STOCK OF THE SURVIVING OR
NEWLY-CREATED ENTITY IN SUCH TRANSACTION (OR SERIES OF RELATED TRANSACTIONS); OR

 

(D)               A CHANGE IN THE BOARD OF DIRECTORS OF ANY GROUP COMPANY IN
WHICH THE INDIVIDUALS WHO CONSTITUTED THE BOARD OF DIRECTORS OF SUCH GROUP
COMPANY AT THE BEGINNING OF THE *** PERIOD IMMEDIATELY PRECEDING SUCH CHANGE
(TOGETHER WITH ANY OTHER DIRECTOR WHOSE ELECTION BY THE BOARD OF DIRECTORS OF
SUCH GROUP COMPANY OR WHOSE NOMINATION FOR ELECTION BY THE STOCKHOLDERS OF SUCH
GROUP COMPANY WAS APPROVED BY A VOTE OF *** THE DIRECTORS THEN IN OFFICE EITHER
WHO WERE DIRECTORS AT THE BEGINNING OF SUCH PERIOD OR WHOSE ELECTION OR
NOMINATION FOR ELECTION WAS PREVIOUSLY SO APPROVED (EITHER BY A SPECIFIC

 

3

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*** Confidential material redacted and filed separately with the Commission.

 

VOTE OR BY APPROVAL OF A PROXY STATEMENT IN WHICH SUCH INDIVIDUAL IS NAMED AS A
NOMINEE FOR ELECTION AS A DIRECTOR)), CEASE FOR ANY REASON TO CONSTITUTE A
MAJORITY OF THE DIRECTORS THEN IN OFFICE.

 

For purposes of this definition of “Change of Control” only: (i) references to
any Group Company shall be deemed to include all successors in any merger,
consolidation, reorganization or similar transaction (or series of related
transactions) preceding any transaction (or series of related transactions)
described above; (ii) “beneficial ownership” (and other correlative terms) means
beneficial ownership as defined in Rule 13d-3 under the Exchange Act; it being
understood and agreed that “beneficial ownership” shall also include any
securities that any Person or any of such Person’s Affiliates has the right to
acquire pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; (iii) “group” means group as defined in the Exchange Act and the
rules of the SEC thereunder as in effect on the date hereof; (iv) “control”
(including, with correlative meaning, the term “controlled by”) 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
*** of the Voting Stock of such entity, or by contract or otherwise; and (v) ***
shall mean at a given time, ***.

 

1.10         “c-MET” means human Met tyrosine kinase.

 

1.11         “c-MET Excluded Compound” means a ***.

 

1.12         “c-MET Field” means the treatment, control, management, mitigation,
prevention, cure or diagnosis of any and all Indications in humans and animals.

 

1.13         “c-MET Inhibitor Compound” means any compound ***.

 

1.14         “c-MET Licensed Compound” means (a) the c-MET Inhibitor Compound
known as INCB28060 (the chemical structure of which has previously been
disclosed to Novartis in a letter dated November 23, 2009);  (b) the back-up
c-MET Inhibitor Compounds set forth on Schedule 1.14 (the chemical structures of
which have previously been disclosed to Novartis in a letter dated November 20,
2009) (each a “c-MET Licensed Back-Up Compound”); (c) all salts, prodrugs,
esters, metabolites, solvates, stereoisomers and polymorphs of the foregoing;
and (d) all derivatives of the foregoing containing one or more atoms
substituted with a radio isotope (including without limitation derivatives
containing deuterium).

 

4

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1.15         “c-MET Licensed Product” means a product or product candidate that
contains one or more c-MET Licensed Compounds as the active ingredient,
including all formulations and dosages of such c-MET Licensed Compounds and all
processes and delivery systems that incorporate such c-MET Licensed Compounds.

 

1.16         “c-MET Program” means a program conducted pursuant to this
Agreement and directed to the research, Development and Commercialization of
c-MET Licensed Compounds and c-MET Licensed Products in the c-MET Field.

 

1.17         “c-MET Program Term” means the period beginning on the Effective
Date and continuing until the earlier of (a) the termination of this Agreement
in its entirety or the c-MET Program in accordance with Section 9.2 or
(b) following the First Commercial Sale of any c-MET Licensed Product, the
expiration of the last-to-expire of all Royalty Terms with respect to all c-MET
Licensed Compounds and c-MET Licensed Products.

 

1.18         “Clinical Trial” means a Phase I Study, a Phase II Study, a Phase
III Study, a Phase IV Study or a combination of two (2) of any of the foregoing
studies.

 

1.19         “Commercialization” or “Commercialize” means any activities
directed to obtaining pricing and/or reimbursement approvals, marketing,
promoting, distributing, importing, offering to sell, and/or selling a product
(including establishing the price for such product).

 

1.20         “Commercially Reasonable Efforts” of a Party means the reasonable,
diligent, good faith efforts of the type to accomplish such objective as such
Party would normally use to accomplish a similar objective under similar
circumstances, it being understood and agreed that, with respect to efforts to
be expended in relation to a product, such efforts shall be substantially
consistent with those efforts and resources commonly used by such Party for any
other product owned by it or in relation to which it may have rights, which
other product is at a similar stage in its Development or product life and is of
similar market and economic potential as products expected to result from the
Licensed Compounds at a similar stage in their Development or product life, and
that any such other product owned by it or over which it has rights will not be
given any preferential treatment when compared to the objectives to be carried
out pursuant to this Agreement, provided that such efforts continue to be
commercially reasonable in light of the scientific and economic outlook for the
product, all as measured by the facts and circumstances at the time such efforts
are due.

 

1.21         “Confidential Information” means (a) all confidential or
proprietary information relating to Licensed Compounds, and (b) all other
confidential or proprietary documents, technology, Know-How or other information
(whether or not patentable) actually disclosed by one Party to the other
pursuant to this Agreement or the Prior Confidentiality Agreements.

 

1.22         “Control” or “Controlled” means, with respect to any (a) material,
document, item of information, method, data or other Know-How or (b) Patent
Rights or other Intellectual Property Rights, the possession by a Party or its
Affiliates, whether by ownership or license (other than by licenses granted
under this Agreement), of the ability to grant to the other Party access, a
license and/or a sublicense as provided herein without requiring the consent of
a Third

 

5

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Party or violating the terms of any agreement or other arrangement with any
Third Party, in each case as of the Effective Date, or if any of the same are
acquired or created after the Effective Date, at the date it is acquired or
created by the relevant Party or its Affiliate.

 

1.23         “Cover”, “Covering” or “Covered” with respect to a product,
technology, process or method, means that, but for a license granted to a Person
under a Valid Claim included in the Patent Rights under which such license is
granted, the Development, manufacture, Commercialization and/or other use of
such product or the practice of such technology, process or method, by such
Person would infringe such Valid Claim (or, in the case of a Valid Claim that
has not yet issued, would infringe such Valid Claim if it were to issue).

 

1.24         “Detail” means face-to-face discussions with physicians and other
health care practitioners who are permitted under applicable Laws to prescribe a
Licensed Product for the purpose of promoting a Licensed Product to such
physicians or practitioners.

 

1.25         “Development” or “Develop” means, with respect to a compound,
preclinical and clinical drug development activities, including, among other
things:  the conduct of Clinical Trials, test method development and stability
testing, toxicology, formulation and delivery system development, process
development, pre-clinical and clinical Drug Substance and Drug Product supply,
manufacturing scale-up, development-stage manufacturing, quality
assurance/quality control procedure development and performance with respect to
clinical materials, statistical analysis and report writing and clinical
studies, regulatory affairs, and all other pre-Regulatory Approval activities. 
When used as a verb, “Develop” means to engage in Development.  For the
avoidance of doubt, “Development” shall include Phase IV Studies.

 

1.26         “Development Costs” means the costs and expenses incurred by or on
behalf of a Party attributable to, or reasonably allocable to, the Development
of Licensed Products and that are materially consistent, as applicable, with the
Development Plan and Development Budget.  Development Costs shall not include
costs that are allocable to the costs of management, financial, legal or
business development personnel.  “Development Costs” shall include (a) the costs
of Clinical Trials, the preparation, collation and/or validation of data from
such Clinical Trials and the preparation of medical writing and publishing,
(b) the FTE costs of the relevant Party or its Affiliates, (c) all Out-of-Pocket
Costs incurred by the Parties or their Affiliates, including payments made to
Third Parties with respect to any of the foregoing (except to the extent that
such costs have been included in FTE costs), (d) Regulatory Expenses and (e) the
cost of contract research organizations (CROs) and clinical supply, including:
(i) costs of Drug Products, packaging of Drug Products and distribution of Drug
Products used in Clinical Trials, (ii) expenses incurred to purchase and/or
package comparator drugs, and (iii) costs and expenses of disposal of clinical
samples.

 

1.27         “Disclosing Party” means, with respect to Confidential Information,
Patent Rights or Know-How, the Party that Controls such Confidential
Information, Patent Rights or Know-How.

 

1.28         “Drug Product” means a finished dosage form that contains the Drug
Substance.

 

1.29         “Drug Substance” means the active pharmaceutical ingredient.

 

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*** Confidential material redacted and filed separately with the Commission.

 

1.30         “EMEA” means the European Medicines Agency, or a successor agency
thereto.

 

1.31         “EU Major Market Countries” means ***.

 

1.32         “Executive Officers” means the Chief Executive Officer of Incyte
(or a senior executive officer of Incyte designated by Incyte’s Chief Executive
Officer) and the Chief Executive Officer of Novartis Oncology (or a senior
executive officer of Novartis or its Affiliate as designated by the Chief
Executive Officer of Novartis Oncology).

 

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

 

1.34         “Field” means the c-MET Field and the JAK Field.

 

1.35         “First Commercial Sale” means, with respect to a Licensed Product,
the first shipment of such Licensed Product to a Third Party by, as applicable,
Novartis or its Affiliates or sublicensees or Incyte or its Affiliates or
sublicensees in a country following applicable Regulatory Approval (other than
applicable governmental price and reimbursement approvals) of such Licensed
Product in such country.  Sales or transfers of reasonable quantities of
Licensed Product for Clinical Trial purposes, or for compassionate or similar
use, shall not be considered a First Commercial Sale.

 

1.36         “Force Majeure Event” means an event, act, occurrence, condition or
state of facts, in each case outside the reasonable control of a Party,
including acts of God; acts of any government; any rules, regulations or orders
issued by any governmental authority or by any officer, department, agency or
instrumentality thereof; fire; storm; flood; earthquake; accident; war;
rebellion; insurrection; riot; terrorism and invasion, that interfere with the
normal business operations of such Party.

 

1.37         “FPFV” means the first subject’s first screening visit in a
Clinical Trial that results in such subject signing an informed consent.

 

1.38         “FTE” means a full-time equivalent person year (consisting of a
total of *** hours per year) of scientific, technical or commercialization work
undertaken by Incyte or Novartis employees, as applicable.

 

1.39         “FTE Rate” means the rate per FTE (which may be prorated on a daily
basis as necessary) of *** per annum, with respect to Development or
Commercialization activities conducted pursuant to this Agreement, subject to
annual adjustment by the rate of the Employment Cost Index for total
compensation for the “management, professional and related” occupational group,
as published by the United States Department of Labor, Bureau of Labor
Statistics (or any similar index agreed upon by the Parties if such index ceases
to be compiled and published).

 

1.40         “Generic Competition” means, with respect to a Licensed Product in
any country in a given Calendar Quarter, if, during such Calendar Quarter and
the immediately preceding Calendar Quarter, one or more Generic Products shall
be commercially available in such country

 

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*** Confidential material redacted and filed separately with the Commission.

 

and such Generic Products shall in the aggregate have a market share of *** of
the aggregate market share of such Licensed Product and Generic Products (based
on data provided by IMS International or, if such data is not available, such
other reliable data source as agreed by the Parties (such agreement not to be
unreasonably withheld)) as measured by unit sales.

 

1.41         “Generic Product” means any pharmaceutical product that contains a
Licensed Compound and that is sold under a marketing authorization granted by a
Regulatory Authority to a Person other than a Party or its Affiliates, licensees
or sublicensees.

 

1.42         “Good Faith Development” means Development conducted in good faith
with the intention of advancing a Program toward registration (and not for the
sole purpose of preserving rights hereunder).

 

1.43         “Hematology Field” means the treatment, control, mitigation,
prevention, cure, or diagnosis of all hematologic Indications as defined as of
the Effective Date in subsections 280 — 289 (Diseases of the blood and
blood-forming organs) of the International Classification of Diseases, Ninth
Revision, Clinical Modification (ICD-9-CM).

 

1.44         “Incyte Group Member” means Incyte and any direct or indirect
wholly owned subsidiary of Incyte.

 

1.45         “Incyte IP” means Incyte Know-How and Incyte Patent Rights.

 

1.46         “Incyte Know-How” means all Know-How that (a) is Controlled by
Incyte or any of its Affiliates as of the Effective Date or during the Term; and
(b) is necessary or useful to Develop, manufacture or Commercialize any Licensed
Products or Licensed Compounds; provided, however, that Incyte Know-How
specifically excludes Joint IP.

 

1.47         “Incyte Patent Rights” means all Patent Rights that (a) are
Controlled by Incyte or any of its Affiliates as of the Effective Date or during
the Term; and (b) are necessary or useful to Develop, manufacture or
Commercialize any of (x) c-MET Licensed Compounds and c-MET Licensed Products
(the “c-MET Patent Rights”); and (y) JAK Licensed Compounds and JAK Licensed
Products (the “JAK Patent Rights”); provided, however, that Incyte Patent Rights
specifically exclude Joint IP.  The c-MET Patent Rights that exist as of the
Effective Date are set forth in Exhibit A-1 and the JAK Patent Rights that exist
as of the Effective Date are set forth on Exhibit A-2.

 

1.48         “Incyte Territory” means, with respect to all JAK Licensed Products
and JAK Patent Rights, the United States of America and its territories and
possessions.

 

1.49         “IND” means an Investigational New Drug Application filed with the
FDA under 21 C.F.R. Part 312 or similar non-United States application or
submission in any country or group of countries for permission to conduct human
clinical investigations.

 

1.50         “Indication” shall mean any disease, condition or syndrome, or sign
or symptom of, or associated with, a disease or condition.

 

8

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*** Confidential material redacted and filed separately with the Commission.

 

1.51         “Inflammatory Disease” means any inflammatory disease, including
the following Indications: RA (and other arthritides including Juvenile RA,
ankylosing spondylitis, Sero-negative spondyloarthropathies and psoriatic
arthritis), IBD, Crohn’s, Psoriasis, Asthma, chronic obstructive pulmonary
disease, Multiple Sclerosis and Systemic Lupus Erythematosus.  Notwithstanding
the foregoing, Inflammatory Disease shall specifically exclude (a) any
hematologic Indications as defined as of the Effective Date in subsections 280 —
289 (Diseases of the blood and blood-forming organs) of the International
Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) and
(b) oncology Indications as defined as of the Effective Date in subsections 140
— 239 (Neoplasms) of the International Classification of Diseases, Ninth
Revision, Clinical Modification (ICD-9-CM), including all hematologic
malignancies, solid tumors and myeloproliferative diseases (including
Myelofibrosis, Polycythemia Vera and Essential Thrombocythemia).

 

1.52         “Intellectual Property Rights” means patents, trade secrets,
copyrights and other forms of proprietary or industrial rights pertaining to
inventions, Know-How, original works, and other forms of intellectual property.

 

1.53         “Inventions” means all patentable inventions, discoveries,
improvements and other technology and any Patent Rights based thereon, that are
discovered, made or conceived during and in connection with the research,
Development, manufacture and Commercialization of Licensed Compounds or Licensed
Products.

 

1.54         “JAK” means human Jak Tyrosine Kinase.

 

1.55         “JAK2” means Jak2 Tyrosine Kinase.

 

1.56         “JAK3” means Jak3 Tyrosine Kinase.

 

1.57         “JAK Excluded Compound” means a ***.

 

1.58         “JAK2 Inhibitor Compound” means ***.

 

1.59         “JAK Field” means the Hematology Field and the Oncology Field, and
includes all forms of administration except topical.

 

1.60         “JAK Licensed Compound” means (a) the JAK2 Inhibitor Compound known
as INCB018424 (the chemical structure of which has previously been disclosed to
Novartis in a letter dated November 23, 2009); (b) the back-up JAK2 Inhibitor
Compounds set forth on Schedule 1.60 (the chemical structures of which have
previously been disclosed to Novartis in a letter dated November 20, 2009) (each
a “JAK Licensed Back-Up Compound”); (c) any Potential JAK Licensed Compound to
the extent deemed a JAK Licensed Compound pursuant to Section 4.5; (d) all
salts, prodrugs, esters, metabolites, solvates, stereoisomers and polymorphs of
the foregoing; and (e) all derivatives of the foregoing containing one or more
atoms substituted with a radio isotope (including without limitation derivatives
containing deuterium).

 

9

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*** Confidential material redacted and filed separately with the Commission.

 

1.61         “JAK Licensed Product” means a product or product candidate that
contains one or more JAK Licensed Compounds as the active ingredient, including
all formulations and dosages of such JAK Licensed Compounds and all processes
and delivery systems that incorporate such JAK Licensed Compounds.

 

1.62         “JAK Program” means a program conducted pursuant to this Agreement
and directed to the research, Development and Commercialization of JAK Licensed
Compounds and JAK Licensed Products in the JAK Field.

 

1.63         “JAK Program Term” means the period beginning on the Effective Date
and continuing until the earlier of (a) the termination of this Agreement in its
entirety or the JAK Program in accordance with Section 9.2 or (b) following the
First Commercial Sale of any JAK Licensed Product, the expiration of the
last-to-expire of all Royalty Terms with respect to all JAK Licensed Compounds
and JAK Licensed Products.

 

1.64         “Know-How” means any information, ideas, data, inventions, works of
authorship, trade secrets, technology, or materials, including formulations,
molecules, assays, reagents, compounds, compositions, human or animal tissue,
samples or specimens, and combinations or components thereof, whether or not
proprietary or patentable, or public or confidential, and whether stored or
transmitted in oral, documentary, electronic or other form, including all
Regulatory Documentation, but excluding any such information or materials
publicly disclosed in Patent Rights.

 

1.65         “Law” means any law, statute, rule, regulation, ordinance or other
pronouncement having the effect of law, of any federal, national, multinational,
state, provincial, county, city or other political subdivision, including
(a) good clinical practices and adverse event reporting requirements, guidance
from the International Conference on Harmonization or other generally accepted
conventions, and all other rules, regulations and requirements of the FDA and
other applicable Regulatory Authorities, (b) the Foreign Corrupt Practices Act
of 1977, as amended, or any comparable laws in any country, and (c) all export
control laws.

 

1.66         “Licensed Compounds” means:  (a) c-MET Licensed Compounds; and
(b) JAK Licensed Compounds.

 

1.67         “Licensed Patent Rights” means with respect to the Patent Rights
licensed to Novartis hereunder, the Incyte Patent Rights and with respect to the
Patent Rights licensed to Incyte hereunder, the Novartis Patent Rights.  In each
case, Patent Rights forming part of the Joint IP shall be included, as
applicable, in the Incyte Patent Rights and Novartis Patent Rights.

 

1.68         “Licensed Product” means a c-MET Licensed Product or a JAK Licensed
Product.  As used in this Agreement, except where not appropriate in context,
the Licensed Product also includes the Licensed Compound contained in the
Licensed Product.

 

1.69         “***” means ***.

 

1.70         “MHLW” means the Japanese Ministry of Health, Labor and Welfare, or
a successor agency thereto.

 

10

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*** Confidential material redacted and filed separately with the Commission.

 

1.71         “***” means ***.

 

1.72         “NDA” means (a) (i) a New Drug Application submitted to the FDA, or
any successor application or procedure, as more fully defined in 21 C.F.R. §
314.50 et. seq., or (ii) any non-United States counterpart of such a New Drug
Application, and (b) all supplements and amendments, including supplemental New
Drug Applications (and any non-United States counterparts) that may be filed
with respect to the foregoing.

 

1.73         “Net Sales” means, with respect to any Licensed Product, the net
sales on behalf of a Royalty Paying Party or its Affiliates, licensees or
sublicensees sold to Third Parties as determined in accordance with the Royalty
Paying Party’s usual and customary accounting methods, which are in accordance
with Accounting Standards, as consistently applied by such Royalty Paying Party,
including a deduction of a fixed percentage of *** for distribution and
warehousing expenses and any amounts credited for uncollectible amounts on
previously sold Licensed Products.

 

(A)               IN THE CASE OF ANY SALE OR OTHER DISPOSAL OF THE LICENSED
PRODUCT BETWEEN OR AMONG A ROYALTY PAYING PARTY AND ITS AFFILIATES, LICENSEES
AND SUBLICENSEES FOR RESALE, NET SALES SHALL BE DEEMED TO OCCUR AND SHALL BE
CALCULATED AS ABOVE ONLY ON THE FIRST ARM’S-LENGTH SALE THEREAFTER TO A THIRD
PARTY.

 

(B)               IN THE CASE OF ANY SALE THAT IS NOT INVOICED OR IS DELIVERED
BEFORE INVOICE, NET SALES SHALL BE CALCULATED AT THE TIME ALL THE REVENUE
RECOGNITION CRITERIA UNDER THE APPLICABLE ACCOUNTING STANDARDS ARE MET.

 

(C)               IN THE CASE OF ANY SALE OR OTHER DISPOSAL FOR VALUE, SUCH AS
BARTER OR COUNTER-TRADE, OF LICENSED PRODUCT, OR PART THEREOF, OTHER THAN IN AN
ARM’S LENGTH TRANSACTION EXCLUSIVELY FOR CASH, NET SALES SHALL BE CALCULATED AS
ABOVE ON THE VALUE OF THE NON-CASH CONSIDERATION RECEIVED OR THE FAIR MARKET
PRICE (IF HIGHER) OF THE LICENSED PRODUCT IN THE COUNTRY OF SALE OR DISPOSAL, AS
DETERMINED IN ACCORDANCE WITH THE ACCOUNTING STANDARDS.

 

(D)               IN THE EVENT THE LICENSED PRODUCT IS SOLD IN A FINISHED DOSAGE
FORM CONTAINING THE LICENSED PRODUCT IN COMBINATION WITH ONE OR MORE OTHER
ACTIVE INGREDIENTS (A “COMBINATION PRODUCT”), THE NET SALES OF THE LICENSED
PRODUCT, FOR THE PURPOSES OF DETERMINING ROYALTY PAYMENTS, SHALL BE DETERMINED
BY MULTIPLYING THE NET SALES (AS DEFINED ABOVE IN THIS SECTION) OF THE
COMBINATION PRODUCT BY THE FRACTION, A/(A+B) WHERE A IS THE WEIGHTED (BY SALES
VOLUME) AVERAGE SALE PRICE IN A PARTICULAR COUNTRY OF THE LICENSED PRODUCT IN
THE PRIOR CALENDAR YEAR WHEN SOLD SEPARATELY IN FINISHED FORM AND B IS THE
WEIGHTED AVERAGE SALE PRICE IN THAT COUNTRY IN THE PRIOR CALENDAR YEAR OF THE
OTHER PRODUCT(S) SOLD SEPARATELY IN FINISHED FORM.  IN THE EVENT THAT SUCH
AVERAGE SALE PRICE CANNOT BE DETERMINED FOR BOTH THE LICENSED PRODUCT AND THE
OTHER PRODUCT(S) IN COMBINATION, NET SALES FOR PURPOSES OF DETERMINING ROYALTY
PAYMENTS SHALL BE

 

11

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AGREED BY THE PARTIES BASED ON THE RELATIVE VALUE CONTRIBUTED BY EACH COMPONENT,
SUCH AGREEMENT SHALL NOT BE UNREASONABLY WITHHELD.

 

1.74         “Novartis Group Member” means Novartis AG and any direct or
indirect wholly owned subsidiary of Novartis.

 

1.75         “Novartis Improvements” means Novartis Patent Rights that
(a) constitute an improvement to the Incyte IP that is made by or on behalf of
Novartis or its Affiliates during the Term; (b) are necessary or useful to
Develop, manufacture or Commercialize any JAK Licensed Compounds; and (c) relate
to (i) uses of JAK Licensed Compounds or (ii) methods of manufacturing JAK
Licensed Compounds.

 

1.76         “Novartis IP” means, collectively, Novartis Know-How and Novartis
Patent Rights.

 

1.77         “Novartis Know-How” means all Know-How that: (a) is Controlled by
Novartis or any of its Affiliates as of the Effective Date or during the Term;
and (b) is necessary or useful to Develop, manufacture or Commercialize any
Licensed Compounds or Licensed Products; provided, however, that Novartis
Know-How specifically excludes Joint IP.

 

1.78         “Novartis Oncology” means the Novartis oncology business unit of
Novartis.

 

1.79         “Novartis Patent Rights” means all Patent Rights that: (a) are
Controlled by Novartis or its Affiliates as of the Effective Date or during the
Term; and (b) are necessary or useful to Develop, manufacture or Commercialize
all or any of the Licensed Compounds and Licensed Products; provided, however,
that Novartis Patents Rights specifically excludes Joint IP. 

 

1.80         “Novartis Sponsored Study” means any Clinical Trial sponsored by
Novartis, its Affiliates or sublicensees, but specifically excludes any
investigator initiated studies.

 

1.81         “Novartis Standard Exchange Rate Methodology” means, with respect
to amounts invoiced in United States Dollars, all such amounts shall be
expressed in United States Dollars.  With respect to amounts invoiced in a
currency other than United States Dollars, all such amounts shall be expressed
both in the currency in which the amount was invoiced and in the United States
Dollar equivalent.  The United States Dollar equivalent shall be calculated
using Novartis’ then-current standard exchange rate methodology, which is in
accordance with applicable Accounting Standards, applied in its external
reporting (which is ultimately based on official rates such as those published
by the European Central Bank) for the conversion of foreign currency sales into
United States Dollars.

 

1.82         “Novartis Territory” means (a) with respect to c-MET Licensed
Products and c-MET Patent Rights, the entire world; and (b) with respect to JAK
Licensed Products and JAK Patent Rights, the entire world other than the Incyte
Territory (the “Novartis JAK Territory”).

 

1.83         “Oncology Field” means the treatment, control, mitigation,
prevention, cure, or diagnosis of any oncology Indications as defined as of the
Effective Date in subsections 140 — 239 (Neoplasms) of the International
Classification of Diseases, Ninth Revision, Clinical

 

12

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

 

Modification (ICD-9-CM), including all hematologic malignancies, solid tumors
and myeloproliferative diseases (including Myelofibrosis, Polycythemia Vera and
Essential Thrombocythemia).

 

1.84         “Out-of-Pocket Costs” means, with respect to certain activities
hereunder, direct expenses paid or payable by either Party or its Affiliates to
Third Parties (other than employees of such Party or its Affiliates) that are
specifically identifiable and incurred to conduct such activities for Licensed
Products, have been recorded in accordance with the Accounting Standards, and
for the avoidance of doubt, do not include pre-paid amounts or capital
expenditures.

 

1.85         “Party” means Novartis or Incyte.  “Parties” means Novartis and
Incyte.

 

1.86         “Patent Rights” means all patents and patent applications in any
country in the world, including any continuations, continuations-in-part,
divisions, provisionals or any substitute applications, any patent issued with
respect to any such patent applications, any reissue, reexamination, renewal or
extension (including any supplemental protection certificate) of any such
patent, and any confirmation patent or registration patent or patent of addition
based on any such patent, and all non-United States counterparts of any of the
foregoing.

 

1.87         “Patent Term Extension” means any patent term extension, adjustment
or restoration or supplemental protection certificates.

 

1.88         “Person” means any natural person, general or limited partnership,
corporation, limited liability company, limited liability partnership, firm,
association or organization or other legal entity.

 

1.89         “Phase I Study” means a study in humans which provides for the
first introduction into humans of a product, conducted in healthy volunteers or
patients to obtain information on product safety, tolerability, pharmacological
activity or pharmacokinetics, as more fully defined in 21 C.F.R. § 312.21(a) (or
the non-United States equivalent thereof).

 

1.90         “Phase II Study” means a study in humans of the safety, dose
ranging and efficacy of a product, which is prospectively designed to generate
sufficient data (if successful) to commence pivotal clinical trials, as further
defined in 21 C.F.R. § 312.21(b) (or the non-United States equivalent thereof).

 

1.91         “Phase III Study” means a controlled study in humans of the
efficacy and safety of a product, which is prospectively designed to demonstrate
statistically whether such product is effective and safe for use in a particular
Indication in a manner sufficient to file an NDA to obtain regulatory approval
to market the product, as further defined in 21 C.F.R. § 312.21(c) (or the
non-United States equivalent thereof).

 

1.92         “Phase IV Study” means a human clinical trial which is conducted on
a product after Regulatory Approval of the product has been obtained from an
appropriate Regulatory Authority, and includes (a) trials conducted voluntarily
for enhancing marketing or scientific knowledge of an approved Indication or
(b) trials conducted after Regulatory Approval due to

 

13

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*** Confidential material redacted and filed separately with the Commission.

 

request or requirement of a Regulatory Authority or as a condition of a
previously granted Regulatory Approval.

 

1.93         “Primary Detail” means a Detail in which *** of the time spent
during such sales presentation is spent on a Licensed Product and for which ***
of the sales representative’s incentive compensation is tied to such Detail.

 

1.94         “Prior Confidentiality Agreements” means the Confidentiality
Agreements between Incyte and Novartis Institutes for BioMedical Research, Inc.,
an Affiliate of Novartis, dated as of October 30, 2008 and between Incyte and
Novartis Pharmaceuticals Corporation, an Affiliate of Novartis, dated as of
December 11, 2008 and amended as of January 29, 2009.

 

1.95         “Program” means the JAK Program or the c-MET Program. “Programs”
means the JAK Program and the c-MET Program.

 

1.96         “Publication” means any publication in a scientific journal, any
abstract to be presented to any scientific audience, any presentation at any
scientific conference, including slides and texts of oral or other public
presentations, any other scientific presentation and any other oral, written or
electronic disclosure directed to a scientific audience which pertains to the
Licensed Compound, the Licensed Product or the use of the Licensed Product. 

 

1.97         “Randomized Clinical Trial” means a Clinical Trial in human
patients of the efficacy of a product that is designed with parallel groups
comparing, as applicable, a c-MET Inhibitor Compound or Potential JAK Back-Up
Compound to either a placebo or an active comparator.

 

1.98         “Regulatory Approval” means all approvals (including any applicable
governmental price and reimbursement approvals), licenses, registrations, and
authorizations of any federal, national, multinational, state, provincial or
local Regulatory Authority, department, bureau and other governmental entity
that are necessary and sufficient for the marketing and sale of a product in a
country or group of countries.

 

1.99         “Regulatory Authority” means, with respect to a country, the
regulatory authority or regulatory authorities of such country with authority
over the testing, manufacture, use, storage, importation, promotion, marketing,
pricing or sale of a pharmaceutical product in such country.

 

1.100       “Regulatory Documentation” means, with respect to the Licensed
Compounds and Licensed Products, all INDs and other regulatory applications
submitted to any Regulatory Authority, Regulatory Approvals, pre-clinical and
clinical data and information, regulatory materials, drug dossiers, master files
(including Drug Master Files, as defined in 21 C.F.R. 314.420 and any non-United
States equivalents), and any other reports, records, regulatory correspondence
and other materials relating to Development or Regulatory Approval of a Licensed
Compound or Licensed Product, or required to manufacture, distribute or sell the
Licensed Products, including any information that relates to pharmacology,
toxicology, chemistry, manufacturing and controls data, batch records, safety
and efficacy, and any safety database.

 

14

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1.101       “Regulatory Exclusivity” means the ability to exclude Third Parties
from Commercializing a Licensed Product in a country, either through data
exclusivity rights, orphan drug designation, or such other rights conferred by a
Regulatory Authority in such country, other than through Patent Rights.

 

1.102       “Regulatory Expenses” means, with respect to a Licensed Compound or
Licensed Product, all Out-of-Pocket Costs incurred by or on behalf of a Party in
connection with the preparation and filing of regulatory submissions for
Licensed Product and obtaining of Regulatory Approvals.

 

1.103       “Right of Reference or Use” means a “Right of Reference or Use” as
that term is defined in 21 C.F.R. §314.3(b), and any non-United States
equivalents.

 

1.104       “Royalty Paying Party” means the Party required to pay royalties to
the other Party with respect to a Licensed Product pursuant to Sections
2.6(a)(iii), 4.5(c), 8.3 and 9.3(a).

 

1.105       “Royalty Receiving Party” means the Party that is entitled to
receive royalties from the other Party with respect to a Licensed Product
pursuant to Sections 2.6(a)(iii), 4.5(c), 8.3 and 9.3(a). 

 

1.106       “SEC” means the United States Securities and Exchange Commission.

 

1.107       “Secondary JAK Patent Rights” means all JAK Patent Rights and Joint
IP Covering the JAK Licensed Compounds and JAK Licensed Products (“Joint JAK
IP”) except for the Patent Rights that are designated as INCY0039 (the “INCY0039
Patent Rights”).  The INCY0039 Patent Rights that exist as of the Effective Date
are set forth as INCY0039 on Exhibit A-2.  

 

1.108       “Software Source Code” means all Incyte Know-How that are computer
programs and applications including implementation of algorithms, models and
methodologies, in each case in source code form (unless Incyte does not Control
the same in source code form and then in object code form), as well as
compilations of data, descriptions, library functions, flow charts,
architecture, database design, display screens and development tools and other
information, work product or tools used to design, plan, organize or develop any
of the foregoing that relate to the JAK Program or the c-MET Program or both.

 

1.109       “Supply Agreement” means a supply agreement entered into by Incyte
and Novartis as described in ARTICLE V.

 

1.110       “Terminated Program” means (a) with respect to the termination of
this Agreement with respect to a Program pursuant to Sections 9.2(a), 9.2(b) or
9.2(d), the Program subject to such termination; and (b) with respect to
termination of this Agreement in its entirety, both Programs.

 

1.111       “Third Party” means any Person other than a Party or any of its
Affiliates.

 

1.112       “Valid Claim”  means (a) a claim of an issued patent that has not
expired or been abandoned, or been revoked, held invalid or unenforceable by a
patent office, court or other

 

15

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*** Confidential material redacted and filed separately with the Commission.

 

governmental agency of competent jurisdiction in a final and non-appealable
judgment (or judgment from which no appeal was taken within the allowable time
period) or (b) a claim within a patent application that has not been revoked,
cancelled, withdrawn, held invalid or abandoned ***.

 

1.113       “Viable Compound” means a JAK Licensed Compound, Potential JAK
Back-Up Compound or JAK Candidate that has not failed to meet predetermined
efficacy or activity criteria established by unanimous agreement of the JSC and
where the patentability and freedom to operate of the JAK Licensed Compound,
Potential JAK Back-Up Compound or JAK Candidate appear favorable.

 

1.114       “Voting Stock” means securities of any class or series of a
corporation, limited liability company, association or other entity, the holders
of which are ordinarily, in the absence of contingencies, entitled to vote
generally in matters put before the shareholders or members of such corporation,
limited liability company, association or other entity.

 

1.115       Additional Definitions.  Each of the following definitions is set
forth in the section of this Agreement indicated below:

 

 

DEFINITION

 

SECTION

 

 

 

 

 

 

 

13D Group

 

11.6(b)

 

 

Agreement

 

Preamble

 

 

Auditee

 

8.6(f)

 

 

Audit Rights Holder

 

8.6(f)

 

 

Audit Team

 

8.6(a)

 

 

Bankruptcy Code

 

2.4

 

 

Breaching Party

 

9.2(b)

 

 

Buy-In Party

 

4.3(c)

 

 

Clinical Supply Agreement

 

5.1(b)

 

 

c-MET JDC

 

3.2

 

 

c-MET Licensed Back-Up Compound

 

1.14

 

 

c-MET Patent Rights

 

1.47

 

 

CoC Party

 

Exhibit H

 

 

Co-Detailing Right

 

6.3(a)

 

 

Combination Product

 

1.73(d)

 

 

Controlling Party

 

7.2(d)

 

 

***

 

***

 

 

Development Budget

 

4.3(a)(iii)

 

 

Development Plan

 

4.2(a)(ii)

 

 

Disclosing Party

 

12.1

 

 

Effective Date

 

Preamble

 

 

Exchange Act

 

11.6

 

 

***

 

***

 

 

Global Branding Strategy

 

6.5(a)

 

 

Global Safety Database

 

4.7(c)

 

 

16

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*** Confidential material redacted and filed separately with the Commission.

 

 

GMP

 

5.1(b)(ii)

 

 

Group Company

 

1.9(a)

 

 

INCY0039 Patent Rights

 

1.107

 

 

Incyte

 

Preamble

 

 

Incyte Indemnified Parties

 

10.1(a)

 

 

***

 

***

 

 

Initial Development Plan

 

4.2(a)(ii)

 

 

JAK Candidate

 

4.5(a)

 

 

JAK JDC

 

3.2

 

 

JAK Licensed Back-Up Compound

 

1.60

 

 

JAK Mark

 

6.5(b)(ii)

 

 

JAK Patent Rights

 

1.47

 

 

JCC

 

3.2

 

 

JIPC

 

3.2

 

 

Joint c-MET IP

 

7.2(b)

 

 

Joint Development Activity

 

4.3(a)(iii)

 

 

Joint IP

 

7.1(b)

 

 

Joint JAK IP

 

1.107

 

 

JPT

 

3.2

 

 

JSC

 

3.1(a)

 

 

***

 

***

 

 

***

 

***

 

 

Non-Breaching Party

 

9.2(b)

 

 

Non-CoC Party

 

Exhibit H

 

 

Non-Controlling Party

 

7.2(d)

 

 

Notice

 

14.6

 

 

Novartis

 

Preamble

 

 

Novartis Indemnified Parties

 

10.2(a)

 

 

Novartis Information Rights

 

4.1(c)(i)

 

 

Novartis JAK Territory

 

1.82

 

 

Payments

 

8.7

 

 

***

 

***

 

 

Pharmacovigilance Agreement

 

4.7(c)

 

 

Potential JAK Back-Up Compound

 

4.5(b)

 

 

Promotional Plan

 

6.3(a)

 

 

Receiving Party

 

12.1

 

 

Royalty Term

 

8.3(c)

 

 

Severed Clause

 

14.13

 

 

SOPs

 

3.2(a)(ii)

 

 

Term

 

9.1

 

 

Third-Party Infringement

 

7.3(a)

 

 

UCC

 

6.3(b)(iii)

 

 

 

 

 

 

 

1.116       Construction.  In construing this Agreement, unless expressly
specified otherwise:

(A)               REFERENCES TO SECTIONS, EXHIBITS AND SCHEDULES ARE TO SECTIONS
OF, AND SCHEDULES AND EXHIBITS TO, THIS AGREEMENT;

 

17

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(B)               EXCEPT WHERE THE CONTEXT OTHERWISE REQUIRES, USE OF EITHER
GENDER INCLUDES THE OTHER GENDER, AND USE OF THE SINGULAR INCLUDES THE PLURAL
AND VICE VERSA;

 

(C)               HEADINGS AND TITLES ARE FOR CONVENIENCE ONLY AND DO NOT AFFECT
THE INTERPRETATION OF THIS AGREEMENT;

 

(D)               ANY LIST OR EXAMPLES FOLLOWING THE WORD “INCLUDING” SHALL BE
INTERPRETED WITHOUT LIMITATION TO THE GENERALITY OF THE PRECEDING WORDS;

 

(E)               EXCEPT WHERE THE CONTEXT OTHERWISE REQUIRES, THE WORD “OR” IS
USED IN THE INCLUSIVE SENSE;

 

(F)                ALL REFERENCES TO “DOLLARS” OR “$” HEREIN SHALL MEAN U.S.
DOLLARS; AND

 

(G)               EACH PARTY REPRESENTS THAT IT HAS BEEN REPRESENTED BY LEGAL
COUNSEL IN CONNECTION WITH THIS AGREEMENT AND ACKNOWLEDGES THAT IT HAS
PARTICIPATED IN THE DRAFTING HEREOF. 

 

IN INTERPRETING AND APPLYING THE TERMS AND PROVISIONS OF THIS AGREEMENT, THE
PARTIES AGREE THAT NO PRESUMPTION WILL APPLY AGAINST THE PARTY WHICH DRAFTED
SUCH TERMS AND PROVISIONS.

 

ARTICLE II

LICENSES

 

2.1           Rights Granted by Incyte to Novartis.

 

(A)               C-MET LICENSE GRANT.   SUBJECT TO THE TERMS OF THIS AGREEMENT,
INCYTE HEREBY GRANTS NOVARTIS, DURING THE TERM, AN EXCLUSIVE (EVEN AS TO INCYTE
AND ITS AFFILIATES), ROYALTY-BEARING, NON-TRANSFERABLE (EXCEPT IN ACCORDANCE
WITH SECTION 14.3) LICENSE, WITH THE RIGHT TO SUBLICENSE (SUBJECT TO
SECTION 2.3), UNDER INCYTE IP AND INCYTE’S AND ITS AFFILIATES’ INTERESTS IN
JOINT IP, TO RESEARCH, DEVELOP, COMMERCIALIZE, MAKE, HAVE MADE, USE, OFFER FOR
SALE, SELL AND IMPORT C-MET LICENSED COMPOUNDS AND C-MET LICENSED PRODUCTS IN
THE NOVARTIS TERRITORY IN THE C-MET FIELD.

 

(B)               JAK LICENSE GRANT.  SUBJECT TO THE TERMS OF THIS AGREEMENT,
INCYTE HEREBY GRANTS NOVARTIS, DURING THE TERM, AN EXCLUSIVE (EVEN AS TO INCYTE
AND ITS AFFILIATES), ROYALTY-BEARING, NON-TRANSFERABLE (EXCEPT IN ACCORDANCE
WITH SECTION 14.3) LICENSE, WITH THE RIGHT TO SUBLICENSE (SUBJECT TO
SECTION 2.3), UNDER INCYTE IP AND INCYTE’S AND ITS AFFILIATES’ INTERESTS IN
JOINT IP, TO (I) RESEARCH, DEVELOP, COMMERCIALIZE, MAKE, HAVE MADE, USE, OFFER
FOR SALE, SELL AND IMPORT JAK LICENSED COMPOUNDS AND JAK LICENSED PRODUCTS IN
THE NOVARTIS JAK TERRITORY IN THE JAK FIELD AND (II) RESEARCH, DEVELOP, MAKE AND
HAVE MADE JAK LICENSED COMPOUNDS AND JAK LICENSED PRODUCTS IN THE INCYTE
TERRITORY FOR THE SOLE PURPOSE OF USING, OFFERING FOR SALE AND SELLING JAK
LICENSED PRODUCTS IN, AND IMPORTING JAK LICENSED COMPOUNDS AND JAK LICENSED
PRODUCTS INTO, THE NOVARTIS JAK TERRITORY IN THE JAK FIELD; PROVIDED HOWEVER,
THAT NOVARTIS MAY NOT, DIRECTLY OR INDIRECTLY, CONDUCT CLINICAL TRIALS OR OTHER
CLINICAL STUDIES, INCLUDING ANY INVESTIGATOR INITIATED STUDIES, IN THE INCYTE
TERRITORY WITHOUT THE PRIOR APPROVAL OF THE JSC.

 

2.2           Rights Granted by Novartis to Incyte.

 

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(A)                                              SUBJECT TO THE TERMS OF THIS
AGREEMENT, NOVARTIS HEREBY GRANTS INCYTE, DURING THE TERM, A NON-EXCLUSIVE
NON-TRANSFERABLE (EXCEPT IN ACCORDANCE WITH SECTION 14.3) LICENSE, WITH THE
RIGHT TO SUBLICENSE (SUBJECT TO SECTION 2.3), UNDER NOVARTIS IP, TO:
(I) RESEARCH, DEVELOP, COMMERCIALIZE, MAKE, HAVE MADE, USE, OFFER FOR SALE, SELL
AND IMPORT JAK LICENSED COMPOUNDS AND JAK LICENSED PRODUCTS IN THE JAK FIELD IN
THE INCYTE TERRITORY; AND (II) RESEARCH, DEVELOP, MAKE AND HAVE MADE JAK
LICENSED COMPOUNDS AND JAK LICENSED PRODUCTS IN THE NOVARTIS JAK TERRITORY FOR
THE SOLE PURPOSE OF USING, OFFERING FOR SALE AND SELLING JAK LICENSED PRODUCTS
IN, AND IMPORTING JAK LICENSED COMPOUNDS AND JAK LICENSED PRODUCTS INTO, THE
INCYTE TERRITORY IN THE JAK FIELD; PROVIDED HOWEVER, THAT INCYTE MAY NOT,
DIRECTLY OR INDIRECTLY, CONDUCT CLINICAL TRIALS OR OTHER CLINICAL STUDIES,
INCLUDING ANY INVESTIGATOR INITIATED STUDIES, IN THE NOVARTIS TERRITORY WITHOUT
THE PRIOR APPROVAL OF THE JSC.

 

(B)                                             SUBJECT TO THE TERMS OF THIS
AGREEMENT, NOVARTIS HEREBY GRANTS INCYTE, DURING THE TERM, A NON-EXCLUSIVE
NON-TRANSFERABLE (EXCEPT IN ACCORDANCE WITH SECTION 14.3) LICENSE, WITH THE
RIGHT TO SUBLICENSE (SUBJECT TO SECTION 2.3), UNDER NOVARTIS IMPROVEMENTS TO
RESEARCH, DEVELOP, MAKE, HAVE MADE, USE, OFFER FOR SALE, SELL AND IMPORT JAK
LICENSED COMPOUNDS (AS SUCH COMPOUNDS EXIST AS OF THE EFFECTIVE DATE) AND JAK
LICENSED PRODUCTS (AS SUCH COMPOUNDS EXIST AS OF THE EFFECTIVE DATE) IN
(I) TOPICAL FORMULATIONS OUTSIDE THE JAK FIELD WORLDWIDE; AND (II) NON-ORAL
FORMULATIONS FOR OPHTHALMIC INDICATIONS WORLDWIDE.

 

2.3                                 Sublicense Rights.  Each Party shall have
the right to grant sublicenses within the scope of the licenses under
Section 2.1 or 2.2, as applicable, solely to its Affiliates and to Third Parties
that are conducting collaborative research, Development and/or Commercialization
activities with such Party or its Affiliates with respect to Licensed Compounds
and Licensed Products; provided that any sublicense granted to Third Party
collaborators under this Agreement shall be pursuant to a written agreement that
subjects such sublicensee to all relevant restrictions and limitations set forth
in this Agreement, including the confidentiality provisions of ARTICLE XII.  If
either Party grants a sublicense to a Third Party as permitted by this
Section 2.3, then such Party shall provide the other Party prompt written notice
thereof and shall provide the other Party with an executed copy of any such
sublicense (redacted as necessary to protect confidential or commercially
sensitive information). Except as otherwise agreed by the Parties in writing,
each Party shall be jointly and severally responsible with its sublicensees to
the other Party for failure by its sublicensees to comply with this Agreement. 
In the event that (a) the sublicensee has failed to cure a material breach or
take such steps as would be considered reasonable to effectively cure such
breach under any such sublicense within *** after notice of such breach and
(b) such material breach also constitutes a breach of this Agreement, the
sublicensor shall terminate the sublicense at the request of the Party that is
not the sublicensor.

 

2.4                                 Section 365(n) of The Bankruptcy Code.  All
rights and licenses granted under or pursuant to any section of this Agreement,
including the licenses granted under this ARTICLE II and the rights granted
under Section 4.3(d), are and will otherwise be deemed to be for purposes of
Section 365(n) of the United States Bankruptcy Code (Title 11, U.S. Code), as
amended (the “Bankruptcy Code”), licenses of rights to “intellectual property”
as defined in Section 101(35A) of the Bankruptcy Code.  The Parties will retain
and may fully exercise all of their respective rights and elections under the
Bankruptcy Code.  Each Party agrees that the other Party, as licensee of such
rights under this Agreement, will retain and may fully exercise all of its
rights and elections under the Bankruptcy Code or any other provisions of
applicable Law outside the

 

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United States that provide similar protection for “intellectual property.”  The
Parties further agree that, in the event of the commencement of a bankruptcy
proceeding by or against a Party under the Bankruptcy Code or analogous
provisions of applicable Law outside the United States, the other Party will be
entitled to a complete duplicate of (or complete access to, as the other
(non-bankrupt) Party deems appropriate) such intellectual property and all
embodiments of such intellectual property, which, if not already in such Party’s
possession, will be promptly delivered to it upon such Party’s written request
thereof.  Any agreements supplemental hereto will be deemed to be “agreements
supplementary to” this Agreement for purposes of Section 365(n) of the
Bankruptcy Code.

 

2.5                                 Retained Rights.

 

(A)                                              NO IMPLIED LICENSES OR RIGHTS. 
EXCEPT AS EXPRESSLY PROVIDED IN SECTION 2.1, AND SUBJECT TO SECTION 2.6, ALL
RIGHTS IN AND TO THE INCYTE IP, INCYTE’S AND ITS AFFILIATES’ INTERESTS IN JOINT
IP AND ANY OTHER PATENT RIGHTS OR KNOW-HOW OF INCYTE AND ITS AFFILIATES, ARE
HEREBY RETAINED BY INCYTE AND ITS AFFILIATES.  EXCEPT AS EXPRESSLY PROVIDED IN
SECTION 2.2, AND SUBJECT TO SECTION 2.6, ALL RIGHTS IN AND TO THE NOVARTIS IP,
AND NOVARTIS’ AND ITS AFFILIATES’ INTERESTS IN JOINT IP AND ANY OTHER PATENT
RIGHTS OR KNOW-HOW OF NOVARTIS AND ITS AFFILIATES, ARE HEREBY RETAINED BY
NOVARTIS AND ITS AFFILIATES.

 

(B)                                             OTHER RETAINED RIGHTS. 
NOTWITHSTANDING THE EXCLUSIVE LICENSES GRANTED TO NOVARTIS PURSUANT TO
SECTION 2.1, INCYTE RETAINS THE RIGHT TO PRACTICE UNDER THE INCYTE IP AND JOINT
IP TO:

 

(I)                                     PERFORM (AND TO SUBLICENSE THIRD PARTIES
TO PERFORM) ITS OBLIGATIONS UNDER THIS AGREEMENT AND ANY SUPPLY AGREEMENT,
INCLUDING FOR THE PURPOSE OF PERFORMING ITS ACTIVITIES IN CONNECTION WITH THE
CLINICAL TRIALS AND ANY RELATED MANUFACTURE OF DRUG PRODUCT OR DRUG SUBSTANCE;
AND

 

(II)                                  MAKE, HAVE MADE, USE, AND TEST LICENSED
COMPOUNDS SOLELY FOR INTERNAL RESEARCH PURPOSES.  FOR PURPOSES OF CLARITY, THE
LICENSE GRANTED TO NOVARTIS IN SECTION 2.1 SHALL NOT REQUIRE INCYTE TO REMOVE
ANY LICENSED COMPOUNDS FROM INCYTE’S COMPOUND LIBRARY.

 

(C)                                              JAK2 INHIBITOR COMPOUNDS THAT
ARE NOT JAK LICENSED COMPOUNDS.

 

(I)                                     FOR PURPOSES OF CLARITY, THE PARTIES
ACKNOWLEDGE THAT THE LICENSE GRANT IN SECTION 2.1 DOES NOT INCLUDE ANY RIGHTS
UNDER INCYTE IP AND JOINT IP TO RESEARCH, DEVELOP, COMMERCIALIZE, MAKE, HAVE
MADE, USE, OFFER FOR SALE, SELL AND IMPORT JAK2 INHIBITOR COMPOUNDS THAT ARE NOT
JAK LICENSED COMPOUNDS, INCLUDING INCYTE’S COMPOUND INCB028050 AND, SUBJECT TO
SECTION 2.6(B)(I), INCYTE RETAINS ALL RIGHTS TO PRACTICE UNDER THE INCYTE IP AND
JOINT IP TO RESEARCH, DEVELOP, COMMERCIALIZE, MAKE, HAVE MADE, USE, OFFER FOR
SALE, SELL AND IMPORT JAK2 INHIBITOR COMPOUNDS THAT ARE NOT JAK LICENSED
COMPOUNDS (INCLUDING INCYTE’S COMPOUND INCB028050) FOR ALL USES WORLDWIDE.

 

(II)                                  NOTWITHSTANDING SECTIONS 2.5(C)(I) AND
4.5, INCYTE SHALL NOT RESEARCH, DEVELOP, COMMERCIALIZE, MAKE, HAVE MADE, USE,
OFFER FOR SALE, SELL AND IMPORT, NOR WILL

 

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*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.

 

IT ALLOW ITS AFFILIATES OR THIRD PARTY LICENSEES TO RESEARCH, DEVELOP,
COMMERCIALIZE, MAKE, HAVE MADE, USE, OFFER FOR SALE, SELL AND IMPORT, INCB028050
IN THE JAK FIELD.

 

2.6                                 Non-Compete.

 

(A)                                              C-MET INHIBITOR COMPOUNDS AND
C-MET LICENSED COMPOUNDS.

 

(I)                                     DURING THE C-MET PROGRAM TERM, INCYTE
AGREES NOT TO, AND SHALL CAUSE ITS AFFILIATES NOT TO, DIRECTLY OR INDIRECTLY,
INCLUDING THROUGH ANY OWNERSHIP INTEREST IN ANY OTHER ENTITY (OTHER THAN THROUGH
AN OWNERSHIP INTEREST OF *** OR LESS OF A PUBLIC COMPANY), DEVELOP OR
COMMERCIALIZE ANY C-MET INHIBITOR COMPOUNDS IN ANY FIELD IN ANY COUNTRY. 
NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS AGREEMENT SHALL PROHIBIT INCYTE
OR ITS AFFILIATES FROM DEVELOPING OR COMMERCIALIZING ANY C-MET EXCLUDED COMPOUND
IN ANY FIELD ANYWHERE IN THE WORLD.

 

(II)                                  DURING THE C-MET PROGRAM TERM, NOVARTIS
AGREES NOT TO, AND SHALL CAUSE ITS AFFILIATES NOT TO, DIRECTLY OR INDIRECTLY,
INCLUDING THROUGH ANY OWNERSHIP INTEREST IN ANY OTHER ENTITY (OTHER THAN THROUGH
AN OWNERSHIP INTEREST OF *** OR LESS OF A PUBLIC COMPANY), CONDUCT ANY
RANDOMIZED CLINICAL TRIAL WITH, OR COMMERCIALIZE, ANY C-MET INHIBITOR COMPOUND
THAT IS NOT A C-MET LICENSED COMPOUND.  NOTWITHSTANDING THE FOREGOING, NOTHING
IN THIS AGREEMENT SHALL PROHIBIT NOVARTIS OR ITS AFFILIATES FROM DEVELOPING OR
COMMERCIALIZING ANY C-MET EXCLUDED COMPOUND IN ANY FIELD ANYWHERE IN THE WORLD.

 

(III)                               IF NO LICENSED C-MET INHIBITOR COMPOUND HAS
BEEN COMMERCIALIZED BY NOVARTIS UNDER THIS AGREEMENT AND NOVARTIS OR ITS
AFFILIATES COMMENCE A RANDOMIZED CLINICAL TRIAL OF ANY C-MET INHIBITOR COMPOUND
OTHER THAN A C-MET EXCLUDED COMPOUND WITHIN *** AFTER THE TERMINATION OF
NOVARTIS’ LICENSE UNDER SECTION 2.1(A), THEN NOVARTIS SHALL PAY INCYTE A ***
ROYALTY ON NET SALES OF SUCH C-MET INHIBITOR COMPOUND UNTIL THE EXPIRATION OF
THE RELEVANT PATENT RIGHTS THAT COVER SUCH C-MET INHIBITOR COMPOUND.  FOR
PURPOSES OF CLARITY, NOTHING IN THIS SECTION 2.6(A)(III) SHALL BE CONSTRUED TO
EXTEND THE LICENSE GRANTS TO NOVARTIS UNDER SECTION 2.1 TO COVER SUCH C-MET
INHIBITOR COMPOUND.

 

(B)                                             JAK2 INHIBITOR COMPOUNDS AND JAK
LICENSED COMPOUNDS.

 

(I)                                     DURING THE JAK PROGRAM TERM, INCYTE
AGREES NOT TO, AND SHALL CAUSE ITS AFFILIATES NOT TO, DIRECTLY OR INDIRECTLY,
INCLUDING THROUGH ANY OWNERSHIP INTEREST IN ANY OTHER ENTITY (OTHER THAN THROUGH
AN OWNERSHIP INTEREST OF *** OR LESS OF A PUBLIC COMPANY), DEVELOP OR
COMMERCIALIZE ANY JAK2 INHIBITOR COMPOUNDS IN THE JAK FIELD ANYWHERE IN THE
WORLD, OTHER THAN AS EXPRESSLY PERMITTED UNDER THIS AGREEMENT (INCLUDING
SECTION 4.5).  NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS AGREEMENT SHALL
PROHIBIT INCYTE OR ITS AFFILIATES FROM DEVELOPING OR COMMERCIALIZING ANY JAK
EXCLUDED COMPOUND IN ANY FIELD ANYWHERE IN THE WORLD.

 

(II)                                  DURING THE JAK PROGRAM TERM, NOVARTIS
AGREES NOT TO, AND SHALL CAUSE ITS AFFILIATES NOT TO, DIRECTLY OR INDIRECTLY,
INCLUDING THROUGH ANY OWNERSHIP INTEREST IN ANY OTHER ENTITY (OTHER THAN THROUGH
AN OWNERSHIP INTEREST OF *** OR LESS OF A PUBLIC

 

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*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.

 

COMPANY), DEVELOP OR COMMERCIALIZE ANY JAK2 INHIBITOR COMPOUNDS IN THE JAK FIELD
ANYWHERE IN THE WORLD, OTHER THAN AS EXPRESSLY PERMITTED UNDER THIS AGREEMENT
(INCLUDING SECTION 4.5).  NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS
AGREEMENT SHALL PROHIBIT NOVARTIS OR ITS AFFILIATES FROM DEVELOPING OR
COMMERCIALIZING ANY JAK EXCLUDED COMPOUND IN ANY FIELD ANYWHERE IN THE WORLD.

 

(III)                               FOR THE AVOIDANCE OF DOUBT, NEITHER NOVARTIS
NOR ITS AFFILIATES WILL DEVELOP OR COMMERCIALIZE ANY JAK LICENSED COMPOUNDS
ANYWHERE IN THE WORLD FOR THE TREATMENT OF ANY INFLAMMATORY DISEASE.

 

(IV)                              NOTHING HEREIN SHALL LIMIT NOVARTIS’ OR ITS
AFFILIATES’ RIGHTS TO DEVELOP OR COMMERCIALIZE ANY PRODUCT OUTSIDE THE JAK FIELD
CONTAINING A COMPOUND WHOSE PRIMARY ACTIVITY IS RELATED TO JAK3 AS DEVELOPED OR
COMMERCIALIZED BY NOVARTIS OR ITS AFFILIATES OR SUBLICENSEES ***.

 

(V)                                 DURING THE JAK PROGRAM TERM, INCYTE MAY NOT
DEVELOP OR COMMERCIALIZE JAK LICENSED COMPOUNDS OUTSIDE THE JAK FIELD EXCEPT
THAT INCYTE MAY DEVELOP AND COMMERCIALIZE JAK LICENSED COMPOUNDS FOR USE IN
(A) TOPICAL FORMULATIONS OUTSIDE THE JAK FIELD WORLDWIDE, AND (B) NON-ORAL
FORMULATIONS FOR OPHTHALMIC INDICATIONS ANYWHERE IN THE WORLD.

 

(C)                                              JSC DESIGNATION AS EXCLUDED
COMPOUND.  IN THE EVENT THAT EITHER PARTY IDENTIFIES A C-MET INHIBITOR COMPOUND
(THAT IS NOT A C-MET EXCLUDED COMPOUND UNDER SECTION 1.11(A)) OR A JAK2
INHIBITOR COMPOUND (THAT IS NOT A JAK EXCLUDED COMPOUND UNDER SECTION 1.57(A))
THAT SUCH PARTY REASONABLY BELIEVES WOULD NOT COMPETE WITH A LICENSED PRODUCT,
INCLUDING BECAUSE (I) SUCH COMPOUND, WHEN TESTED IN VIVO, IS SHOWN TO HAVE ITS
PHARMACOLOGICAL EFFECT VIA A MECHANISM OTHER THAN VIA C-MET OR JAK2,
RESPECTIVELY, OR (II) SUCH COMPOUND WOULD BE REASONABLY EXPECTED TO SERVE A
DIFFERENT AND DISTINCT PATIENT POPULATION COMPARED TO EXISTING LICENSED
PRODUCTS, THEN SUCH PARTY MAY SCHEDULE A DISCUSSION ON THIS TOPIC FOR THE NEXT
SCHEDULED JSC MEETING. AT SUCH JSC MEETING, SUCH PARTY SHALL PRESENT THE DATA
SUPPORTING ITS CONTENTION THAT SUCH COMPOUND WOULD REASONABLY BE EXPECTED NOT TO
COMPETE WITH EXISTING LICENSED PRODUCTS AND THEREFORE FORMALLY REQUEST THAT SUCH
COMPOUND BE DESIGNATED EITHER A C-MET EXCLUDED COMPOUND OR A JAK EXCLUDED
COMPOUND. THE JSC SHALL, NO LATER THAN THE NEXT SCHEDULED JSC MEETING, DECIDE
WHETHER TO APPROVE SUCH REQUEST, WHICH DECISION SHALL BE APPROVED SOLELY BY
UNANIMOUS AGREEMENT OF THE JSC, PROVIDED THAT THE PARTIES SHALL CONSIDER SUCH
DECISIONS IN GOOD FAITH ON THE MERITS OF WHETHER CLAUSE (I) OR (II) ABOVE HAVE
BEEN SATISFIED. IN THE EVENT THAT EITHER PARTY IDENTIFIES A C-MET INHIBITOR
COMPOUND OR A JAK2 INHIBITOR COMPOUND THAT SUCH PARTY REASONABLY BELIEVES WOULD
SERVE A DIFFERENT AND DISTINCT PATIENT POPULATION COMPARED TO THE RESPECTIVE
LICENSED PRODUCT BUT ALSO IS EXPECTED TO SERVE SOME PORTION OF THE PATIENT
POPULATION SERVED BY EXISTING LICENSED PRODUCTS, THEN IN ADDITION TO PRESENTING
THE RELEVANT DATA ABOUT THAT COMPOUND, THE REQUESTING PARTY SHALL ALSO PROPOSE
AN APPROPRIATE ROYALTY RATE THAT WOULD FAIRLY COMPENSATE THE OTHER PARTY FOR THE
POTENTIAL ROYALTIES THAT IT WOULD BE EXPECTED TO FOREGO BASED ON THE LIKELY USE
OF SUCH COMPOUND IN LIEU OF THE RELEVANT LICENSED PRODUCT.

 

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ARTICLE III

GOVERNANCE

 

3.1                                 Joint Steering Committee.

 

(A)                                              ESTABLISHMENT.  THE PARTIES
SHALL ESTABLISH A JOINT STEERING COMMITTEE (“JSC”) WITHIN THIRTY (30) DAYS AFTER
THE EFFECTIVE DATE THAT WILL HAVE THE RESPONSIBILITY FOR THE OVERALL
COORDINATION AND OVERSIGHT OF THE PARTIES’ ACTIVITIES UNDER THIS AGREEMENT.  AS
SOON AS PRACTICABLE FOLLOWING THE EFFECTIVE DATE (BUT IN NO EVENT MORE THAN
THIRTY (30) DAYS FOLLOWING THE EFFECTIVE DATE), EACH PARTY SHALL DESIGNATE ITS
INITIAL THREE (3) REPRESENTATIVES ON THE JSC.  EACH PARTY’S REPRESENTATIVES AND
ANY SUBSTITUTE FOR A REPRESENTATIVE SHALL BE BOUND BY THE OBLIGATIONS OF
CONFIDENTIALITY SET FORTH IN ARTICLE XII. A REPRESENTATIVE FROM NOVARTIS SHALL
ACT AS THE CHAIRPERSON OF THE JSC.  THE CHAIRPERSON SHALL NOT HAVE ANY GREATER
AUTHORITY THAN ANY OTHER REPRESENTATIVE ON THE JSC AND SHALL CONDUCT THE
FOLLOWING ACTIVITIES OF THE JSC: (I) CALLING MEETINGS OF THE JSC; (II) PREPARING
AND ISSUING MINUTES OF EACH SUCH MEETING WITHIN THIRTY (30) DAYS THEREAFTER;
(III) ENSURING THAT ANY DECISION-MAKING DELEGATED TO THE JSC IS CARRIED OUT IN
ACCORDANCE WITH SECTION 3.5; AND (IV) PREPARING AND CIRCULATING AN AGENDA FOR
THE UPCOMING MEETING; PROVIDED THAT THE CHAIRPERSON SHALL INCLUDE ANY AGENDA
ITEMS PROPOSED BY INCYTE.  EACH PARTY SHALL BE FREE TO CHANGE ITS
REPRESENTATIVES ON NOTICE TO THE OTHER OR TO SEND A SUBSTITUTE REPRESENTATIVE TO
ANY JSC MEETING; PROVIDED, HOWEVER, THAT EACH PARTY SHALL ENSURE THAT AT ALL
TIMES DURING THE EXISTENCE OF THE JSC, ITS REPRESENTATIVES ON THE JSC ARE
APPROPRIATE IN TERMS OF EXPERTISE AND SENIORITY (INCLUDING AT LEAST ONE MEMBER
OF SENIOR MANAGEMENT) FOR THE THEN-CURRENT STAGE OF DEVELOPMENT AND
COMMERCIALIZATION OF THE LICENSED PRODUCTS AND HAVE THE AUTHORITY TO BIND SUCH
PARTY WITH RESPECT TO MATTERS WITHIN THE PURVIEW OF THE JSC.

 

(B)                                             RESPONSIBILITIES.  THE JSC SHALL
HAVE RESPONSIBILITY FOR:  (I) THE GENERAL OVERSIGHT OF THE COLLABORATION,
INCLUDING APPROVAL OF DEVELOPMENT BUDGETS; (II) PERIODIC REVIEW OF THE OVERALL
GOALS AND STRATEGY OF THE PROGRAMS; (III) ATTEMPTING TO RESOLVE ANY DISPUTES AND
TO CONSIDER ANY OTHER ISSUES BROUGHT TO ITS ATTENTION BY THE PARTIES;
(IV) ESTABLISHING THE EFFICACY AND ACTIVITY CRITERIA FOR VIABLE COMPOUNDS IN
ACCORDANCE WITH SECTION 1.113; AND (V) PERFORMING SUCH OTHER FUNCTIONS AS
APPROPRIATE TO FURTHER THE PURPOSES OF THIS AGREEMENT, AS MUTUALLY AGREED UPON
BY THE PARTIES IN WRITING.

 

3.2                                 Subcommittees.  The JSC may establish and
disband such subcommittees as deemed necessary by the JSC.  Each such
subcommittee shall consist of the same number of representatives designated by
each Party, which number shall be mutually agreed by the Parties.  Each Party
shall be free to change its representatives on notice to the other or to send a
substitute representative to any subcommittee meeting; provided, however, that
each Party shall ensure that at all times during the existence of any
subcommittee, its representatives on such subcommittee are appropriate in terms
of expertise and seniority for the then-current stage of Development and
Commercialization of the Licensed Product in the Field in the Territory and have
the authority to bind such Party with respect to matters within the purview of
the relevant subcommittee. Each Party’s representatives and any substitute for a
representative shall be bound by the obligations of confidentiality set forth in
ARTICLE XII.  Except as expressly provided in this Agreement, no subcommittee
shall have the authority to bind the Parties hereunder and each subcommittee
shall report to, and any decisions shall be made by, the JSC.  The initial
subcommittees of the JSC will

 

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be the Joint c-MET Development Committee (“c-MET JDC”), Joint JAK Development
Committee (“JAK JDC”), Joint Program Team (“JPT”), the Joint Commercialization
Committee (“JCC”) and the Joint Intellectual Property Committee (“JIPC”)

 

(A)                                              JOINT C-MET DEVELOPMENT
COMMITTEE.

 

(I)                                     THE C-MET JDC WILL HAVE THE
RESPONSIBILITY FOR THE OVERALL COORDINATION AND OVERSIGHT OF THE C-MET PROGRAM
IN THE C-MET FIELD IN THE NOVARTIS TERRITORY.  AS SOON AS PRACTICABLE FOLLOWING
THE EFFECTIVE DATE (BUT IN NO EVENT MORE THAN THIRTY (30) DAYS FOLLOWING THE
EFFECTIVE DATE), EACH PARTY SHALL DESIGNATE ITS INITIAL THREE
(3) REPRESENTATIVES ON THE C-MET JDC.  NOVARTIS SHALL APPOINT A PERSON FROM
AMONG ITS REPRESENTATIVES ON THE C-MET JDC TO SERVE AS THE CHAIRPERSON OF THE
C-MET JDC.  THE CHAIRPERSON SHALL NOT HAVE ANY GREATER AUTHORITY THAN ANY OTHER
REPRESENTATIVE ON THE C-MET JDC AND SHALL CONDUCT THE FOLLOWING ACTIVITIES OF
THE C-MET JDC: (A) CALLING MEETINGS OF THE C-MET JDC; (B) PREPARING AND ISSUING
MINUTES OF EACH SUCH MEETING WITHIN THIRTY (30) DAYS THEREAFTER; (C) PREPARING
AND CIRCULATING AN AGENDA FOR THE UPCOMING MEETING; PROVIDED THAT THE
CHAIRPERSON SHALL INCLUDE ANY AGENDA ITEMS PROPOSED BY INCYTE; AND (D) ENSURING
THAT ANY DECISION-MAKING DELEGATED TO THE C-MET JDC IS CARRIED OUT IN ACCORDANCE
WITH SECTION 3.5.

 

(II)                                  THE C-MET JDC SHALL HAVE RESPONSIBILITY
FOR (A) OVERSEEING THE INITIAL TRANSFER OF INFORMATION AND DESIGNATED ACTIVITIES
FROM INCYTE TO NOVARTIS RELATING TO THE C-MET PROGRAM; (B) OVERSEEING THE
SUBSEQUENT FLOW AND TRANSFER OF INFORMATION BETWEEN THE PARTIES RELATED TO THE
C-MET PROGRAM PURSUANT TO SECTION 4.1(B); (C) OVERSEEING, REVIEWING AND
COORDINATING THE C-MET PROGRAM; (D) SUBJECT TO UNANIMOUS APPROVAL BY THE JSC,
DEFINING THE EXACT ASSAY CONDITIONS FOR C-MET TESTING ACTIVITY AND OVERSEEING
THE EXCHANGE OF STANDARD OPERATING PROCEDURES (“SOPS”) IN CONNECTION WITH THE
SAME; (E) APPROVING C-MET LICENSED BACK-UP COMPOUND(S) SELECTED BY NOVARTIS FOR
FURTHER DEVELOPMENT; AND (F) AS APPLICABLE, OVERSEEING, REVIEWING AND
COORDINATING THE WORK BEING DONE UNDER THE DEVELOPMENT PLANS.

 

(B)                                             JOINT JAK DEVELOPMENT COMMITTEE.

 

(I)                                     THE JAK JDC WILL HAVE THE RESPONSIBILITY
FOR THE OVERALL COORDINATION AND OVERSIGHT OF THE JAK PROGRAM IN THE JAK FIELD
WORLDWIDE.  AS SOON AS PRACTICABLE FOLLOWING THE EFFECTIVE DATE (BUT IN NO EVENT
MORE THAN THIRTY (30) DAYS FOLLOWING THE EFFECTIVE DATE), EACH PARTY SHALL
DESIGNATE ITS INITIAL THREE (3) REPRESENTATIVES ON THE JAK JDC.  NOVARTIS AND
INCYTE SHALL EACH APPOINT A PERSON FROM AMONG ITS REPRESENTATIVES ON THE JAK JDC
TO SERVE AS THE CO-CHAIRPERSON OF THE JAK JDC.  THE CO-CHAIRPERSONS SHALL NOT
HAVE ANY GREATER AUTHORITY THAN ANY OTHER REPRESENTATIVE ON THE JAK JDC AND
SHALL CONDUCT THE FOLLOWING ACTIVITIES OF THE JAK JDC: (A) CALLING MEETINGS OF
THE JAK JDC; (B) PREPARING AND ISSUING MINUTES OF EACH SUCH MEETING WITHIN
THIRTY (30) DAYS THEREAFTER; (C) PREPARING AND CIRCULATING AN AGENDA FOR THE
UPCOMING MEETING; AND (D) ENSURING THAT ANY DECISION-MAKING DELEGATED TO THE JAK
JDC IS CARRIED OUT IN ACCORDANCE WITH SECTION 3.5.

 

(II)                                  THE JAK JDC SHALL HAVE RESPONSIBILITY FOR
(A) OVERSEEING THE INITIAL TRANSFER OF INFORMATION AND DESIGNATED ACTIVITIES
FROM INCYTE TO NOVARTIS RELATING TO THE JAK PROGRAM; (B) OVERSEEING THE
SUBSEQUENT FLOW AND TRANSFER OF INFORMATION BETWEEN THE PARTIES RELATED TO THE
JAK PROGRAM PURSUANT TO SECTION 4.1(B); (C) OVERSEEING, REVIEWING AND

 

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COORDINATING THE JAK PROGRAM; (D) SUBJECT TO UNANIMOUS APPROVAL BY THE JSC,
DEFINING THE EXACT ASSAY CONDITIONS FOR JAK TESTING ACTIVITY AND OVERSEEING THE
EXCHANGE OF SOPS IN CONNECTION WITH THE SAME; (E) APPROVING THE JAK LICENSED
BACK-UP COMPOUND(S) SELECTED BY THE JPT FOR FURTHER DEVELOPMENT; (F) AS
APPLICABLE, OVERSEEING, REVIEWING AND COORDINATING THE WORK BEING DONE UNDER THE
DEVELOPMENT PLANS; AND (G) SELECTING INDICATIONS FOR DEVELOPMENT FOR THE JAK
PROGRAM.

 

(C)                                              JOINT PROGRAM TEAM. 

 

(I)                                     THE JPT SHALL BE THE PRINCIPAL
ORGANIZATION THROUGH WHICH THE DEVELOPMENT OF THE JAK PROGRAM IS PLANNED,
ADMINISTERED AND EVALUATED.  AS SOON AS PRACTICABLE FOLLOWING THE EFFECTIVE DATE
(BUT IN NO EVENT MORE THAN THIRTY (30) DAYS FOLLOWING THE EFFECTIVE DATE), EACH
PARTY SHALL DESIGNATE ITS INITIAL THREE (3) REPRESENTATIVES ON THE JPT.  THE JPT
SHALL BE COMPOSED OF REPRESENTATIVES FROM INCYTE’S AND NOVARTIS’S VARIOUS
FUNCTIONAL GROUPS INVOLVED IN DEVELOPMENT OF THE JAK LICENSED PRODUCT, NAMELY
CLINICAL DEVELOPMENT AND MEDICAL AFFAIRS, DRUG REGULATORY AFFAIRS, EXPLORATORY
DEVELOPMENT, MARKETING AND TECHNICAL RESEARCH AND DEVELOPMENT.  NOVARTIS AND
INCYTE SHALL EACH APPOINT A PERSON FROM AMONG ITS REPRESENTATIVES ON THE JPT TO
SERVE AS THE CO-CHAIRPERSON OF THE JPT.  THE CO-CHAIRPERSONS SHALL NOT HAVE ANY
GREATER AUTHORITY THAN ANY OTHER REPRESENTATIVE ON THE JPT AND SHALL CONDUCT THE
FOLLOWING ACTIVITIES OF THE JPT: (A) CALLING MEETINGS OF THE JPT; (B) PREPARING
AND ISSUING MINUTES OF EACH SUCH MEETING WITHIN THIRTY (30) DAYS THEREAFTER;
(C) PREPARING AND CIRCULATING AN AGENDA FOR THE UPCOMING MEETING; AND
(D) ENSURING THAT ANY DECISION-MAKING DELEGATED TO THE JPT IS CARRIED OUT IN
ACCORDANCE WITH SECTION 3.5.

 

(II)                                  THE JPT SHALL HAVE RESPONSIBILITY FOR:
(A) SELECTING THE JAK LICENSED BACK-UP COMPOUNDS FOR APPROVAL BY THE JAK JDC;
(B) REVIEWING THE DEVELOPMENT PLANS PREPARED BY NOVARTIS PURSUANT TO
SECTION 4.2(A)(II); (C) AMENDING THE DEVELOPMENT PLAN TO INCLUDE ANY JOINT
DEVELOPMENT ACTIVITIES IN ACCORDANCE WITH SECTION 4.3(A); AND (D) OVERSEEING THE
OVERALL JAK PROGRAM.

 

(D)                                             JOINT COMMERCIALIZATION
COMMITTEE.

 

(I)                                     THE JCC SHALL OVERSEE COMMERCIALIZATION
OF JAK LICENSED PRODUCTS IN THE FIELD WORLDWIDE.  AS SOON AS PRACTICABLE
FOLLOWING THE EFFECTIVE DATE (BUT IN NO EVENT MORE THAN THIRTY (30) DAYS
FOLLOWING THE EFFECTIVE DATE), EACH PARTY SHALL DESIGNATE ITS INITIAL THREE
(3) REPRESENTATIVES ON THE JCC.  THE JCC SHALL BE COMPOSED OF APPROPRIATE AND
KEY EXECUTIVES OF NOVARTIS TOGETHER WITH AN EQUAL NUMBER OF APPROPRIATE AND KEY
EXECUTIVES FROM INCYTE.  NOVARTIS AND INCYTE SHALL EACH APPOINT A PERSON FROM
AMONG ITS REPRESENTATIVES ON THE JCC TO SERVE AS THE CO-CHAIRPERSON OF THE JCC. 
THE CO-CHAIRPERSONS SHALL NOT HAVE ANY GREATER AUTHORITY THAN ANY OTHER
REPRESENTATIVE ON THE JCC AND SHALL CONDUCT THE FOLLOWING ACTIVITIES OF THE JCC:
(A) CALLING MEETINGS OF THE JCC; (B) PREPARING AND ISSUING MINUTES OF EACH SUCH
MEETING WITHIN THIRTY (30) DAYS THEREAFTER; (C) PREPARING AND CIRCULATING AN
AGENDA FOR THE UPCOMING MEETING; AND (D) ENSURING THAT ANY DECISION-MAKING
DELEGATED TO THE JCC IS CARRIED OUT IN ACCORDANCE WITH SECTION 3.5.

 

(II)                                  THE JCC SHALL BE RESPONSIBLE FOR:
(A) OVERSEEING, REVIEWING AND COORDINATING THE COMMERCIALIZATION OF JAK LICENSED
PRODUCTS IN THE FIELD WORLDWIDE; (B) 

 

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DEVELOPING AND OVERSEEING THE GLOBAL BRANDING STRATEGY; (C) SETTING OVERALL
STRATEGIC OBJECTIVES AND PLANS RELATED TO COMMERCIALIZATION OF JAK LICENSED
PRODUCTS IN THE FIELD WORLDWIDE; (D) REVIEWING, COMMENTING ON AND APPROVING THE
PROMOTIONAL PLAN; (E) REVIEWING COMMERCIALIZATION ISSUES FOR JAK LICENSED
PRODUCTS IN THE FIELD IN THE NOVARTIS TERRITORY THAT WILL HAVE AN IMPACT ON
COMMERCIALIZATION OF JAK LICENSED PRODUCTS IN THE FIELD IN THE INCYTE TERRITORY;
(F) REVIEWING COMMERCIALIZATION ISSUES FOR JAK LICENSED PRODUCTS IN THE FIELD IN
THE INCYTE TERRITORY THAT WILL HAVE AN IMPACT ON COMMERCIALIZATION OF JAK
LICENSED PRODUCTS IN THE FIELD IN THE NOVARTIS TERRITORY; (G) PROVIDING A FORUM
FOR THE PARTIES TO DISCUSS THE COMMERCIALIZATION OF JAK LICENSED PRODUCTS IN THE
FIELD WORLDWIDE; AND (H) SUCH OTHER  RESPONSIBILITIES AS MAY BE ASSIGNED TO THE
JCC PURSUANT TO THIS AGREEMENT OR AS MAY BE MUTUALLY AGREED UPON BY THE PARTIES
FROM TIME TO TIME.

 

(E)                                              JOINT INTELLECTUAL PROPERTY
COMMITTEE.

 

(I)                                     THE JIPC SHALL HAVE THE RESPONSIBILITY
FOR OVERSIGHT RELATING TO THE FILING, PROSECUTION AND MAINTENANCE OF JAK PATENT
RIGHTS UNDER SECTION 7.2(C).  AS SOON AS PRACTICABLE FOLLOWING THE EFFECTIVE
DATE (BUT IN NO EVENT MORE THAN THIRTY (30) DAYS FOLLOWING THE EFFECTIVE DATE),
EACH PARTY SHALL DESIGNATE ITS TWO (2) REPRESENTATIVES ON THE JIPC.  A
REPRESENTATIVE OF INCYTE SHALL ACT AS THE CHAIRPERSON OF THE JIPC.  THE
CHAIRPERSON SHALL NOT HAVE ANY GREATER AUTHORITY THAN ANY OTHER REPRESENTATIVE
ON THE JIPC AND SHALL CONDUCT THE FOLLOWING ACTIVITIES OF THE JIPC:  (A) CALLING
MEETINGS OF THE JIPC AT LEAST EVERY QUARTER; (B) PREPARING AND ISSUING MINUTES
OF EACH SUCH MEETING WITHIN THIRTY (30) DAYS THEREAFTER; (C) PREPARING AND
CIRCULATING AN AGENDA FOR THE UPCOMING MEETING, PROVIDED THAT THE CHAIRPERSON
SHALL INCLUDE ANY AGENDA ITEMS PROPOSED BY NOVARTIS; AND (D) ENSURING THAT ANY
DECISION-MAKING DELEGATED TO THE JIPC IS CARRIED OUT IN ACCORDANCE WITH
SECTION 3.5.

 

(II)                                  THE JIPC SHALL HAVE RESPONSIBILITY FOR THE
FOLLOWING WITH RESPECT TO JAK PATENT RIGHTS UNDER SECTION 7.2(C):  (A) ON AN
APPLICATION BY-APPLICATION BASIS, DETERMINING WHAT CLAIMS WILL BE PROSECUTED AND
WHAT CLAIMS OR APPLICATIONS WILL BE ABANDONED; AND (B) CONDUCTING PERIODIC
PORTFOLIO REVIEWS TO MAXIMIZE THE STRENGTH OF THE PATENT PORTFOLIO AND COST
EFFECTIVENESS OF THE PREPARATION, FILING, PROSECUTION AND MAINTENANCE OF JAK
PATENT RIGHTS.

 

(III)                               SUBJECT TO JIPC DISCUSSIONS, INCYTE SHALL
PROMPTLY FILE ANY U.S. PRIORITY APPLICATIONS FOR PATENT RIGHTS COVERING THE JAK
LICENSED BACK-UP COMPOUNDS.

 

3.3                                 Committee Meetings.

 

(A)                                              COMMENCING IN THE FIRST
CALENDAR QUARTER OF 2010, THE JSC AND EACH OF THE SUBCOMMITTEES SHALL EACH HOLD
AT LEAST ONE (1) MEETING PER CALENDAR QUARTER AT SUCH TIMES DURING SUCH CALENDAR
QUARTER AS THE CHAIRPERSON ELECTS TO DO SO.  EXCEPT WHERE A PARTY FAILS TO
APPOINT A MEMBER OR MEMBERS TO THE JSC OR ITS SUBCOMMITTEES OR FAILS TO
PARTICIPATE IN MEETINGS OF THE JSC OR ITS SUBCOMMITTEES PURSUANT TO SECTION 3.6,
MEETINGS OF THE JSC AND THE SUBCOMMITTEES, RESPECTIVELY, SHALL BE EFFECTIVE ONLY
IF AT LEAST ONE (1) REPRESENTATIVE OF EACH PARTY IS PRESENT OR PARTICIPATING. 
THE JSC AND ITS SUBCOMMITTEES MAY MEET EITHER (I) IN PERSON AT EITHER PARTY’S
FACILITIES OR AT SUCH LOCATIONS AS THE PARTIES MAY OTHERWISE AGREE OR (II) BY
AUDIO OR VIDEO TELECONFERENCE; PROVIDED THAT NO LESS THAN ONE (1) MEETING DURING
EACH CALENDAR YEAR SHALL BE CONDUCTED IN PERSON.  OTHER REPRESENTATIVES OF EACH
PARTY INVOLVED WITH THE LICENSED PRODUCT

 

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MAY ATTEND MEETINGS AS NON-VOTING PARTICIPANTS, SUBJECT TO THE CONFIDENTIALITY
PROVISIONS SET FORTH IN ARTICLE XII.  ADDITIONAL MEETINGS OF THE JSC AND ITS
SUBCOMMITTEES MAY ALSO BE HELD WITH THE CONSENT OF EACH PARTY, OR AS REQUIRED
UNDER THIS AGREEMENT, AND NEITHER PARTY SHALL UNREASONABLY WITHHOLD ITS CONSENT
TO HOLD SUCH ADDITIONAL MEETINGS.  EACH PARTY SHALL BE RESPONSIBLE FOR ALL OF
ITS OWN EXPENSES INCURRED IN CONNECTION WITH PARTICIPATING IN ALL SUCH MEETINGS.

 

(B)                                             AT THE FIRST MEETING OF EACH OF
THE JSC, C-MET JDC AND JAK JDC, SUCH COMMITTEE SHALL ESTABLISH, AS APPLICABLE,
THE EFFICACY AND ACTIVITY CRITERIA FOR VIABLE COMPOUNDS, THE ASSAY CONDITIONS
FOR C-MET TESTING ACTIVITY AND THE ASSAY CONDITIONS FOR JAK TESTING ACTIVITY.

 

3.4                                 Authority.  The JSC and any subcommittee
shall have only the powers assigned expressly to it in this ARTICLE III and
elsewhere in this Agreement, and shall not have any power to amend, modify or
waive compliance with this Agreement.  In furtherance thereof, each Party shall
retain the rights, powers and discretion granted to it under this Agreement and
no such rights, powers or discretion shall be delegated or vested in the JSC or
any subcommittee unless such delegation or vesting of rights is expressly
provided for in this Agreement or the Parties expressly so agree in writing.

 

3.5                                 Decisions.

 

(A)                                              INITIAL DISPUTE RESOLUTION
PROCEDURES.  SUBJECT TO THE PROVISIONS OF THIS SECTION 3.5, ACTIONS TO BE TAKEN
BY THE JSC AND EACH OF THE SUBCOMMITTEES SHALL BE TAKEN ONLY FOLLOWING A
UNANIMOUS VOTE, WITH EACH PARTY HAVING ONE (1) VOTE.  IF ANY SUBCOMMITTEE FAILS
TO REACH UNANIMOUS AGREEMENT ON A MATTER BEFORE IT FOR DECISION FOR A PERIOD IN
EXCESS OF THIRTY (30) DAYS, THE MATTER SHALL BE REFERRED TO THE JSC.

 

(B)                                             FINAL DECISION-MAKING. IF THE
JSC FAILS TO REACH UNANIMOUS AGREEMENT ON A MATTER BEFORE IT FOR DECISION FOR A
PERIOD IN EXCESS OF THIRTY (30) DAYS, THE FOLLOWING PROVISIONS SHALL APPLY:

 

(I)                                     THE JSC REPRESENTATIVES APPOINTED BY
NOVARTIS SHALL HAVE THE DECIDING VOTE ON ANY MATTER INVOLVING (A) THE
DEVELOPMENT OR COMMERCIALIZATION OF ANY C-MET LICENSED COMPOUND AND C-MET
LICENSED PRODUCT (INCLUDING SELECTION OF INDICATIONS); (B) THE DEVELOPMENT OR
COMMERCIALIZATION OF ANY JAK LICENSED COMPOUND OR JAK LICENSED PRODUCT IN THE
JAK FIELD (INCLUDING SELECTION OF INDICATIONS) IN THE NOVARTIS JAK TERRITORY;
(C) WHETHER A POTENTIAL JAK BACK-UP COMPOUND IS DEVELOPED IN THE JAK FIELD IN
THE NOVARTIS JAK TERRITORY IN A RANDOMIZED CLINICAL TRIAL AND BEYOND IN
ACCORDANCE WITH SECTION 4.5 AND (D) ANY MATTER WITHIN THE SCOPE OF
RESPONSIBILITY OF THE JIPC PERTAINING TO THE SECONDARY JAK PATENT RIGHTS IN THE
NOVARTIS JAK TERRITORY.  INCYTE SHALL HAVE THE RIGHT TO APPEAL ANY SUCH DECISION
OF THE JSC TO THE NOVARTIS EXECUTIVE OFFICER OR A DESIGNEE OF THE NOVARTIS
EXECUTIVE OFFICER WITH DECISION-MAKING AUTHORITY FOR RESOLUTION. IN SUCH CASE,
THE NOVARTIS EXECUTIVE OFFICER OR DESIGNEE SHALL HAVE THE FINAL DECISION-MAKING
AUTHORITY ON SUCH ISSUE.

 

(II)                                  THE JSC REPRESENTATIVES APPOINTED BY
INCYTE SHALL HAVE THE DECIDING VOTE ON ANY MATTER INVOLVING (A) THE DEVELOPMENT
OR COMMERCIALIZATION OF JAK LICENSED COMPOUND OR JAK LICENSED PRODUCT IN THE JAK
FIELD (INCLUDING SELECTION OF

 

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*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.

 

INDICATIONS) IN THE INCYTE TERRITORY; (B) THE DEVELOPMENT ACTIVITIES DESCRIBED
IN SECTION 4.2(B) UNTIL SUCH TIME AS NOVARTIS ASSUMES RESPONSIBILITY FOR SUCH
ACTIVITIES; (C) WHETHER A POTENTIAL JAK BACK-UP COMPOUND IS DEVELOPED IN THE JAK
FIELD IN THE INCYTE TERRITORY IN A RANDOMIZED CLINICAL TRIAL AND BEYOND IN
ACCORDANCE WITH SECTION 4.5; AND (D) ANY MATTER WITHIN THE SCOPE OF
RESPONSIBILITY OF THE JIPC PERTAINING TO (X) THE INCY0039 PATENT RIGHTS
WORLDWIDE AND (Y) SECONDARY JAK PATENT RIGHTS IN THE INCYTE TERRITORY.  NOVARTIS
SHALL HAVE THE RIGHT TO APPEAL ANY SUCH DECISION OF THE JSC TO THE INCYTE
EXECUTIVE OFFICER OR A DESIGNEE OF THE INCYTE EXECUTIVE OFFICER WITH
DECISION-MAKING AUTHORITY FOR RESOLUTION. IN SUCH CASE, THE INCYTE EXECUTIVE
OFFICER OR DESIGNEE SHALL HAVE THE FINAL DECISION-MAKING AUTHORITY ON SUCH
ISSUE.

 

(C)                                              EXCEPTIONS.  NOTWITHSTANDING
THE FOREGOING, NEITHER PARTY SHALL EXERCISE ITS RIGHT TO FINALLY RESOLVE A
DISPUTE PURSUANT TO SECTION 3.5(B):  (I) IN A MANNER THAT EXCUSES SUCH PARTY
FROM ANY OF ITS OBLIGATIONS SPECIFICALLY ENUMERATED UNDER THIS AGREEMENT,
(II) IN A MANNER THAT NEGATES ANY CONSENT RIGHTS OR OTHER RIGHTS SPECIFICALLY
ALLOCATED TO THE OTHER PARTY UNDER THIS AGREEMENT; (III) TO INCREASE DEVELOPMENT
COSTS FOR THE OTHER PARTY FOR A GIVEN CALENDAR YEAR BY MORE THAN *** ABOVE THE
THEN CURRENT DEVELOPMENT BUDGET FOR THE CALENDAR YEAR; (IV) TO RESOLVE ANY
DISPUTE REGARDING WHETHER A PARTY MAY CONDUCT DEVELOPMENT OR COMMERCIALIZATION
ACTIVITIES IN THE OTHER PARTY’S TERRITORY; (V) TO ESTABLISH FTE RATES FOR ANY
DEVELOPMENT ACTIVITIES; (VI) TO RESOLVE ANY DISPUTE REGARDING WHETHER A
MILESTONE EVENT SET FORTH IN SECTION 8.2 HAS BEEN ACHIEVED; OR (VII) IN A MANNER
THAT WOULD REQUIRE THE OTHER PARTY TO PERFORM ANY ACT THAT IT REASONABLY
BELIEVES TO BE INCONSISTENT WITH ANY LAW OR ANY APPROVAL, ORDER, POLICY OR
GUIDELINES OF A REGULATORY AUTHORITY.

 

(D)                                             UNANIMOUS AGREEMENT.  IF THE
PROVISIONS OF THIS AGREEMENT (OTHER THAN SECTION 3.5(A)) SPECIFY THAT UNANIMOUS
AGREEMENT OF THE JSC OR ANY SUBCOMMITTEE IS REQUIRED FOR ANY MATTER, THEN
NEITHER PARTY MAY EXERCISE A DECIDING VOTE UNDER THE PROVISIONS OF
SECTION 3.5(B) WITH RESPECT TO SUCH MATTER.

 

3.6                                 Committee Membership.

 

(A)                                              APPOINTMENT IS A RIGHT.  THE
APPOINTMENT OF MEMBERS OF THE JSC AND ANY SUBCOMMITTEES OF THE JSC IS A RIGHT OF
EACH PARTY AND NOT AN OBLIGATION AND SHALL NOT BE A “DELIVERABLE” AS REFERENCED
IN ANY EXISTING AUTHORITATIVE ACCOUNTING LITERATURE.  EACH PARTY SHALL BE FREE
TO DETERMINE NOT TO APPOINT MEMBERS TO THE JSC OR ANY SUBCOMMITTEE OF THE JSC.

 

(B)                                             CONSEQUENCE OF NON-APPOINTMENT. 
IF A PARTY DOES NOT APPOINT MEMBERS OF THE JSC OR ANY SUBCOMMITTEE OF THE JSC,
IT SHALL NOT BE A BREACH OF THIS AGREEMENT, NOR SHALL ANY CONSIDERATION BE
REQUIRED TO BE RETURNED, AND UNLESS AND UNTIL SUCH MEMBERS ARE APPOINTED, THE
PARTY THAT HAS MADE THE REQUISITE APPOINTMENTS MAY UNILATERALLY DISCHARGE THE
ROLES OF THE JSC OR ANY SUBCOMMITTEE THEREOF FOR WHICH MEMBERS WERE NOT
APPOINTED, PROVIDED THAT (I) NEITHER PARTY SHALL UNILATERALLY DISCHARGE THE
ROLES OF THE JSC OR ANY SUBCOMMITTEE THEREOF AS PERMITTED UNDER THIS
SECTION 3.6(B) UNLESS THE OTHER PARTY HAS NOT APPOINTED ANY MEMBERS WITHIN
THIRTY (30) DAYS AFTER THE FIRST PARTY HAS COMPLETED ITS APPOINTMENT OF ITS
MEMBERS, AND (II) THE RESPONSIBILITY OF THE JIPC SHALL BE CARRIED OUT THROUGH
BILATERAL MEETINGS OF REPRESENTATIVES OF INCYTE AND NOVARTIS, WITH ANY DISPUTED
MATTERS RESOLVED IN ACCORDANCE WITH SECTIONS 3.5(B)(I)(D) AND 3.5(B)(II)(D).

 

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*** Confidential material redacted and filed separately with the Commission.

 

ARTICLE IV

DEVELOPMENT; REGULATORY MATTERS

 

4.1                                 Information Transfer.

 

(A)                                              INITIAL INFORMATION TRANSFER TO
NOVARTIS.  (I) WITHIN A REASONABLE PERIOD NOT TO EXCEED *** AFTER THE EFFECTIVE
DATE, INCYTE SHALL MAKE AVAILABLE TO NOVARTIS, IN A MUTUALLY-AGREED UPON FORMAT
AND WITHOUT FURTHER FINANCIAL CONSIDERATION, THE MATERIAL CLINICAL DATA AND
MANUFACTURING KNOW-HOW INCLUDED IN THE INCYTE KNOW-HOW AND THAT IS DESCRIBED IN
EXHIBIT B, AND (II) FROM THE EFFECTIVE DATE THROUGH ***, INCYTE SHALL MAKE ITS
RELEVANT SCIENTIFIC AND TECHNICAL PERSONNEL REASONABLY AVAILABLE TO NOVARTIS AT
INCYTE’S OFFICES, AT REASONABLE TIMES DURING INCYTE’S NORMAL BUSINESS HOURS AND
UPON REASONABLE PRIOR NOTICE, TO ANSWER ANY QUESTIONS OR PROVIDE INSTRUCTION AS
REASONABLY REQUESTED BY NOVARTIS CONCERNING THE INFORMATION DELIVERED PURSUANT
TO THIS SECTION 4.1.

 

(B)                                             CONTINUING INFORMATION
TRANSFER.  ON AN ONGOING BASIS DURING THE JAK PROGRAM TERM, ON A *** BASIS (OR
SUCH MORE FREQUENT BASIS AS DETERMINED BY THE JAK JDC), EACH PARTY SHALL MAKE
AVAILABLE TO THE OTHER PARTY, IN A MUTUALLY AGREED-UPON FORMAT, (I) MATERIAL
CLINICAL DATA, (II) MANUFACTURING KNOW-HOW INCLUDED IN THE INCYTE KNOW-HOW OR
NOVARTIS KNOW-HOW, AS APPLICABLE, (III) SOFTWARE TOOLS USED BY INCYTE OR
NOVARTIS, AS APPLICABLE, TO ANALYZE DATA ARISING FROM THE JAK PROGRAM, AND
(IV) SUCH OTHER ASPECTS OF THE INCYTE KNOW-HOW OR NOVARTIS KNOW-HOW, AS
APPLICABLE, AS SHALL BE REASONABLY REQUESTED BY THE OTHER PARTY.

 

(C)                                              ACCESS TO INFORMATION UNDER
INCYTE CLINICAL AND SUPPLY AGREEMENTS.

 

(I)                                     AS PROMPTLY AS PRACTICABLE FOLLOWING THE
EFFECTIVE DATE, INCYTE ***, “NOVARTIS INFORMATION RIGHTS”).  WITHOUT LIMITING
THE FOREGOING, INCYTE *** THE NOVARTIS INFORMATION RIGHTS.  INCYTE SHALL ***. 
IF *** THE NOVARTIS INFORMATION RIGHTS ***, NOVARTIS SHALL ***.  INCYTE SHALL
*** TO THE EXTENT *** THE NOVARTIS INFORMATION RIGHTS ***.

 

(II)                                  SUBJECT TO THE EXCEPTION SET FORTH IN
SUBSECTION (IV) AND UNLESS AND TO THE EXTENT THAT NOVARTIS PREVIOUSLY AGREES IN
WRITING, INCYTE SHALL NOT ENTER INTO A ***,

 

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*** Confidential material redacted and filed separately with the Commission.

 

IN EACH CASE ***, UNLESS SUCH ***.  AS USED ABOVE, THE TERM ***.

 

(III)                               NOVARTIS SHALL EXERCISE THE NOVARTIS
INFORMATION RIGHTS ONLY UNDER CIRCUMSTANCES IN WHICH SPECIFIED INCYTE KNOW-HOW
THAT WOULD BE ENCOMPASSED WITHIN THE NOVARTIS INFORMATION RIGHTS (INCLUDING
INFORMATION THAT WOULD BE OBTAINED THROUGH ANY AUDIT, INSPECTION, COLLECTION AND
RETENTION OF PHYSICAL SAMPLES, INTERVIEW OF PERSONNEL AND ATTENDANCE AND
PARTICIPATION AT MEETINGS) HAS NOT BEEN PROVIDED BY INCYTE PURSUANT TO
SECTION 4.1(B) AND NOVARTIS HAS REQUESTED SUCH INFORMATION IN WRITING BUT HAS
BEEN UNABLE TO OBTAIN SUCH INFORMATION PROMPTLY THROUGH EXERCISE OF ITS OTHER
RIGHTS HEREUNDER.  IN THE EVENT THAT NOVARTIS OBTAINS INCYTE KNOW-HOW THROUGH
THE EXERCISE OF NOVARTIS INFORMATION RIGHTS, NOVARTIS SHALL LIMIT ITS USE OF
SUCH INCYTE KNOW-HOW TO THE JAK PROGRAM IN THE JAK FIELD AND IN THE NOVARTIS JAK
TERRITORY.

 

(IV)                              THE PROVISIONS OF SUBSECTION (II) SHALL NOT
APPLY TO ANY INCYTE KNOW-HOW ARISING OUT OF AGREEMENTS WITH THIRD PARTIES TO THE
EXTENT RELATING TO A CLINICAL TRIAL OR OTHER DEVELOPMENT ACTIVITIES THAT ARE THE
SUBJECT OF A PROPOSAL BY INCYTE UNDER SECTION 4.3(A) ON WHICH NOVARTIS ELECTS
NOT TO COLLABORATE WITH INCYTE, UNLESS AND UNTIL NOVARTIS EXERCISES ITS BUY-IN
RIGHTS WITH RESPECT TO SUCH CLINICAL TRIAL OR DEVELOPMENT ACTIVITY UNDER
SECTION 4.3(C).

 

(D)                                             SOFTWARE SOURCE CODE.  FOLLOWING
THE EFFECTIVE DATE, INCYTE SHALL UPON REQUEST BY NOVARTIS AND IN ANY EVENT NO
LESS FREQUENTLY THAN EVERY *** TRANSFER TO NOVARTIS ANY SOFTWARE SOURCE CODE
THAT HAS NOT PREVIOUSLY BEEN PROVIDED TO NOVARTIS, INCLUDING UPDATES AND BUG
FIXES TO PREVIOUSLY PROVIDED SOFTWARE SOURCE CODE.

 

(E)                                              RIGHT OF REFERENCE OR USE. 
INCYTE HEREBY GRANTS TO NOVARTIS, SOLELY FOR THE PURPOSES SET FORTH IN THIS
AGREEMENT, A RIGHT OF REFERENCE OR USE TO ANY AND ALL REGULATORY DOCUMENTATION
CONTROLLED BY INCYTE RELATING TO LICENSED PRODUCTS AND EXISTING AS OF THE
EFFECTIVE DATE OR GENERATED FROM ANY CLINICAL TRIAL COMMENCED BY INCYTE PRIOR TO
THE EFFECTIVE DATE, AND AGREES TO SIGN, AND CAUSE ITS AFFILIATES TO SIGN, ANY
INSTRUMENTS REASONABLY REQUESTED BY NOVARTIS IN ORDER TO EFFECT SUCH GRANT. 
NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 4.1 IS INTENDED TO IMPLY
THE EXISTENCE OF ANY PARTICULAR DATA, INFORMATION, DRUG MASTER FILE OR OTHER
REGULATORY DOCUMENTATION.

 

(F)                                                APPLICABILITY OF BANKRUPTCY
CODE.  FOR THE AVOIDANCE OF DOUBT, RIGHTS GRANTED UNDER THIS ARTICLE IV SHALL BE
DEEMED TO BE LICENSE OF RIGHTS TO “INTELLECTUAL PROPERTY” AS DEFINED IN
SECTION 101 (35A) OF THE BANKRUPTCY CODE AND SHALL OTHERWISE BE SUBJECT TO
SECTION 2.4.

 

4.2                                 Conduct of Development Activities.

 

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(A)                                              GENERALLY.

 

(I)                                     FROM AND AFTER THE EFFECTIVE DATE,
(A) NOVARTIS WILL, SUBJECT TO THE TERMS OF THIS AGREEMENT, BE RESPONSIBLE, AT
ITS EXPENSE, FOR THE DEVELOPMENT OF (1) THE C-MET LICENSED PRODUCTS IN THE C-MET
FIELD IN THE NOVARTIS TERRITORY AND (2) THE JAK LICENSED PRODUCTS IN THE JAK
FIELD IN THE NOVARTIS JAK TERRITORY; AND (B) INCYTE WILL REMAIN RESPONSIBLE, AT
ITS EXPENSE, FOR THE DEVELOPMENT OF THE JAK LICENSED PRODUCTS IN THE JAK FIELD
IN THE INCYTE TERRITORY.  WHILE THE PARTIES MAY CHOOSE, AT THEIR SOLE
DISCRETION, TO WORK TOGETHER ON PARTICULAR PROJECTS, EXCEPT AS OTHERWISE
PROVIDED IN THIS AGREEMENT, THE PARTIES WILL OPERATE INDEPENDENTLY IN THEIR
ACTIVITIES FOR THEIR RESPECTIVE DEVELOPMENT AND COMMERCIALIZATION OF THE
LICENSED PRODUCTS, BUT WILL PROVIDE ACCESS TO CERTAIN INFORMATION RELATED TO THE
DEVELOPMENT OF C-MET LICENSED PRODUCTS TO THE C-MET JDC, THE JSC AND TO EACH
OTHER AS EXPRESSLY DESCRIBED IN THIS AGREEMENT AND CERTAIN INFORMATION RELATED
TO THE DEVELOPMENT AND COMMERCIALIZATION OF JAK LICENSED PRODUCTS TO THE JAK
JDC, THE JPT, THE JCC, THE JSC AND TO EACH OTHER AS EXPRESSLY DESCRIBED IN THIS
AGREEMENT.

 

(II)                                  THE DEVELOPMENT OF LICENSED PRODUCTS SHALL
BE GOVERNED BY DEVELOPMENT PLANS THAT DESCRIBE THE PROPOSED OVERALL PROGRAM OF
DEVELOPMENT FOR C-MET LICENSED PRODUCTS AND JAK LICENSED PRODUCTS (THE
“DEVELOPMENT PLANS”).  THE INITIAL DEVELOPMENT PLANS ARE ATTACHED HERETO AS
EXHIBITS D-1 AND D-2 RESPECTIVELY (COLLECTIVELY, THE “INITIAL DEVELOPMENT
PLAN”).  NOVARTIS SHALL HAVE THE SOLE RIGHT AND RESPONSIBILITY FOR PREPARING THE
DEVELOPMENT PLAN FOR EACH LICENSED PRODUCT IN THE FIELD IN THE NOVARTIS
TERRITORY.  EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT (INCLUDING AS
PROVIDED IN SECTIONS 4.2(B) AND 4.3), WITH RESPECT TO LICENSED PRODUCT IN THE
FIELD IN THE NOVARTIS TERRITORY, ALL DECISIONS WITH RESPECT TO THE CREATION,
MODIFICATION AND IMPLEMENTATION OF THE INITIAL DEVELOPMENT PLAN, ALL OTHER
DEVELOPMENT PLANS AND ALL DEVELOPMENT ACTIVITIES SHALL BE MADE BY NOVARTIS IN
ITS SOLE DISCRETION; PROVIDED THAT NOVARTIS WILL PRESENT A DRAFT DEVELOPMENT
PLAN FOR EACH LICENSED PRODUCT AND ANY MATERIAL CHANGES TO THE INITIAL
DEVELOPMENT PLAN TO, AS APPLICABLE, THE C-MET JDC OR THE JAK JDC AND WILL GIVE
DUE CONSIDERATION TO ANY COMMENTS OF INCYTE THERETO.

 

(III)                               NOTWITHSTANDING THE FOREGOING, PRIOR TO
COMMENCING ANY CLINICAL TRIAL OR OTHER CLINICAL STUDY AS PART OF THE JAK
PROGRAM, THE PARTY THAT PROPOSES TO CONDUCT SUCH CLINICAL TRIAL OR OTHER
CLINICAL STUDY SHALL FIRST SUBMIT TO THE JPT THE PROPOSED PROTOCOL FOR SUCH
PROPOSED CLINICAL TRIAL OR CLINICAL STUDY AND A WRITTEN SUMMARY, IN A FORM
MUTUALLY AGREED BY THE PARTIES, OF SUCH CLINICAL TRIAL OR CLINICAL STUDY FOR
REVIEW BY THE JPT; PROVIDED THAT NEITHER PARTY MAY PROCEED WITH SUCH CLINICAL
TRIAL OR CLINICAL STUDY IF THE OTHER PARTY REASONABLY DETERMINES THAT THE
CLINICAL TRIAL OR CLINICAL STUDY IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE
IMPACT ON THE DEVELOPMENT AND/OR COMMERCIALIZATION OF JAK LICENSED PRODUCTS IN
ITS TERRITORY. NOTWITHSTANDING THE FOREGOING, ANY DISPUTES REGARDING WHETHER AN
ACTIVITY IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE IMPACT ON THE
DEVELOPMENT AND/OR COMMERCIALIZATION OF JAK LICENSED PRODUCTS IN A PARTY’S
TERRITORY SHALL BE RESOLVED IN ACCORDANCE WITH SECTION 3.5.

 

(IV)                              NOVARTIS SHALL USE COMMERCIALLY REASONABLE
EFFORTS TO (A) CONDUCT THE STUDIES AND DEVELOPMENT ACTIVITIES DESCRIBED IN
EXHIBIT D; AND (B) DEVELOP LICENSED COMPOUNDS AND LICENSED PRODUCTS IN
ACCORDANCE WITH THE APPLICABLE DEVELOPMENT PLAN.

 

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(V)                                 INCYTE SHALL USE COMMERCIALLY REASONABLE
EFFORTS TO CONDUCT STUDY 351 IN ACCORDANCE WITH THE PROTOCOL EXISTING ON THE
EFFECTIVE DATE.

 

(B)                                             SPECIFIC INCYTE C-MET LICENSED
COMPOUND DEVELOPMENT RESPONSIBILITIES.  NOTWITHSTANDING ANYTHING TO THE CONTRARY
ABOVE, INCYTE WILL BE RESPONSIBLE AND SHALL BEAR ALL COSTS FOR THE CONDUCT OF
THE STUDIES DESCRIBED IN EXHIBIT E.  FOR THE AVOIDANCE OF DOUBT, NOVARTIS SHALL
BE RESPONSIBLE FOR CONDUCTING AND SHALL BEAR ALL COSTS FOR ALL C-MET DEVELOPMENT
ACTIVITIES OTHER THAN THE STUDIES DESCRIBED IN EXHIBIT E AND AS PROVIDED IN
SECTION 4.4.

 

(C)                                              STUDIES 352 AND 351.

 

(I)                                     THE PARTIES ACKNOWLEDGE THAT (A) INCYTE
SHALL BE RESPONSIBLE FOR CONDUCTING AND SHALL BEAR THE OUT-OF-POCKET COSTS FOR
THE TOXICOLOGY STUDIES AS DESCRIBED IN EXHIBIT F-1; (B) NOVARTIS SHALL BEAR THE
OUT-OF-POCKET COSTS FOR THE TOXICOLOGY STUDIES AS DESCRIBED IN EXHIBIT F-1; AND
(C) NOVARTIS SHALL BE RESPONSIBLE FOR CONDUCTING AND SHALL BEAR ALL
OUT-OF-POCKET COSTS FOR THE CLINICAL TRIAL AS DESCRIBED IN EXHIBIT F-2, IN
ADDITION TO ALL DEVELOPMENT COSTS INCURRED BY NOVARTIS WITH RESPECT TO STUDY 352
AFTER THE EFFECTIVE DATE OF THE AGREEMENT.  A PARTY SEEKING REIMBURSEMENT OF
OUT-OF-POCKET COSTS HEREUNDER SHALL SUBMIT AN ITEMIZED INVOICE TOGETHER WITH
REASONABLE BACK-UP DOCUMENTATION, AND THE OTHER PARTY SHALL PAY SUCH INVOICE
WITHIN *** OF RECEIPT.  EACH PARTY SHALL HAVE THE RIGHT TO POSSESS, RETAIN AND
USE ALL CLINICAL DATA AND RELATED REGULATORY DOCUMENTATION CONTROLLED BY EITHER
PARTY AND GENERATED IN THE COURSE OF STUDIES 352 AND 351 (WHICH STUDIES ARE
DESCRIBED IN EXHIBIT D AND FOR WHICH THE COSTS ARE DESCRIBED IN EXHIBIT F) IN
ORDER TO DEVELOP, OBTAIN REGULATORY APPROVAL FOR AND COMMERCIALIZE LICENSED
PRODUCT IN THE FIELD IN SUCH PARTY’S TERRITORY, IN ACCORDANCE WITH THE TERMS OF
THIS AGREEMENT.  EACH PARTY SHALL DISCLOSE TO THE OTHER PARTY ON A QUARTERLY
BASIS (AND WITHOUT FURTHER FINANCIAL CONSIDERATION) ALL CLINICAL DATA (INCLUDING
THE DATA FROM INTERIM REVIEWS), INTERNAL AND EXTERNAL REPORTS, AND RELATED
REGULATORY DOCUMENTATION CONTROLLED BY SUCH PARTY AND GENERATED IN THE COURSE OF
SUCH CLINICAL TRIALS AND HEREBY GRANTS TO THE OTHER PARTY A RIGHT OF REFERENCE
OR USE TO ANY AND ALL SUCH CLINICAL DATA, REPORTS AND REGULATORY DOCUMENTATION,
AND AGREES TO SIGN, AND CAUSE ITS AFFILIATES TO SIGN, ANY INSTRUMENTS REASONABLY
REQUESTED BY SUCH OTHER PARTY IN ORDER TO EFFECT SUCH GRANT.

 

(II)                                  INCYTE SHALL MAKE AVAILABLE TO NOVARTIS,
AT NOVARTIS’ EXPENSE, ALL MATERIAL CLINICAL DATA GENERATED IN THE COURSE OF
STUDY 351 AS REQUIRED BY NOVARTIS TO SUPPORT NOVARTIS’ REGISTRATION OF
INCB018424 FOR THE INDICATION OF MYELOFIBROSIS AS WELL AS FOR ANY SUBSEQUENT
NEEDS RELATED TO THE DEVELOPMENT OF JAK LICENSED COMPOUNDS, INCLUDING SAFETY
UPDATES, AND RESPONSES TO REQUESTS FROM REGULATORY AUTHORITIES, AND NOVARTIS
SHALL MAKE AVAILABLE TO INCYTE, AT INCYTE’S EXPENSE, ALL MATERIAL CLINICAL DATA
GENERATED IN THE COURSE OF STUDY 352 AS REQUIRED BY INCYTE TO SUPPORT INCYTE’S
REGISTRATION OF INCB018424 FOR THE INDICATION OF MYELOFIBROSIS AS WELL AS FOR
ANY SUBSEQUENT NEEDS RELATED TO THE DEVELOPMENT OF JAK LICENSED COMPOUNDS,
INCLUDING SAFETY UPDATES, AND RESPONSES TO REQUESTS FROM REGULATORY
AUTHORITIES.  ***. INCYTE SHALL PROVIDE NOVARTIS

 

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WITH AT LEAST *** PRIOR NOTICE FROM THE DATE OF DATA CUT-OFF.  NOVARTIS SHALL
PROVIDE SUCH DATA SET WITHIN *** FOLLOWING THE DATE OF DATA CUT-OFF AND SHALL
ALSO PROVIDE INCYTE WITH ***. AT ITS OWN DISCRETION, NOVARTIS MAY ALSO CHOOSE TO
PROVIDE BY THIS SAME DATE, THE TABLES, LISTINGS AND FIGURES FOR SUCH STUDY,
PROVIDED THAT ALL ANALYSES DEFINED IN THE PROTOCOL HAVE BEEN PERFORMED AS
DEFINED IN SUCH STUDY’S STATISTICAL ANALYSIS PLAN.  THE STATISTICAL ANALYSIS
PLAN FOR STUDY 352 SHALL BE THE RESPONSIBILITY OF NOVARTIS, BUT MAY BE REVIEWED
UPON REQUEST BY INCYTE.  THE STATISTICAL ANALYSIS PLAN FOR STUDY 351 SHALL BE
THE RESPONSIBILITY OF INCYTE, BUT MAY BE REVIEWED UPON REQUEST BY
NOVARTIS. UNLESS OTHERWISE AGREED BY BOTH PARTIES, INCYTE SHALL PROVIDE TO
NOVARTIS A FINAL CLINICAL STUDY REPORT OF STUDY 351 WITHIN *** OF THE LAST
PATIENT’S LAST VISIT TO BE INCLUDED IN THE DATABASE FOR THE CLINICAL STUDY
REPORT AND UNLESS OTHERWISE AGREED BY BOTH PARTIES, NOVARTIS SHALL PROVIDE TO
INCYTE A FINAL CLINICAL STUDY REPORT OF STUDY 352 WITHIN *** OF THE LAST
PATIENT’S LAST VISIT TO BE INCLUDED IN THE DATABASE FOR THE CLINICAL STUDY
REPORT.  FOLLOWING SUBMISSION TO REGULATORY AUTHORITIES, IF THE REGULATORY
AUTHORITY REQUESTS A SAFETY UPDATE, THE PARTY PROVIDING SUCH DATA SET SHALL
PROVIDE AN ELECTRONIC DATA SET TO THE REQUESTING PARTY AT THE REQUESTING PARTY’S
COST AND EXPENSE NOT MORE THAN *** DAYS AFTER RECEIPT OF A WRITTEN REQUEST FROM
THE REQUESTING PARTY.

 

4.3                                 Development Activity Proposals.

 

(A)                                              JOINT DEVELOPMENT ACTIVITIES.

 

(I)                                     EITHER PARTY MAY AT ANY TIME SUBMIT TO
THE JPT A PROPOSAL TO COLLABORATE WITH THE OTHER PARTY TO CONDUCT CLINICAL
TRIALS OR OTHER DEVELOPMENT ACTIVITIES IN CONNECTION WITH THE DEVELOPMENT OF A
JAK LICENSED PRODUCT; PROVIDED THAT SUCH PROPOSAL IS SUBMITTED IN WRITING AS FAR
IN ADVANCE AS REASONABLY PRACTICABLE AND IN ANY EVENT NOT LATER THAN THREE
(3) MONTHS BEFORE THE PLANNED FPFV.  SUCH PROPOSAL SHALL CONTAIN, AT A MINIMUM,
INFORMATION SUPPORTING THE RATIONALE FOR THE PROPOSED ACTIVITY RELATED TO THE
JAK LICENSED PRODUCT FROM A SCIENTIFIC, REGULATORY AND COMMERCIAL STANDPOINT, AS
WELL AS AN ESTIMATED DEVELOPMENTAL CRITICAL PATH AND AN ESTIMATE OF THE COST OF
SUCH DEVELOPMENT.

 

(II)                                  AT ANY TIME DURING THE PERIOD BETWEEN WHEN
THE PROPOSAL HAS BEEN PRESENTED TO THE JPT AND THE JPT HAS APPROVED THE CLINICAL
TRIAL OR DEVELOPMENT ACTIVITY, AND PRIOR TO SIX (6) MONTHS AFTER SUCH PROPOSAL
IS RECEIVED BY THE JPT, THE OTHER PARTY MAY ELECT TO PARTICIPATE IN SUCH
CLINICAL TRIAL OR OTHER DEVELOPMENT ACTIVITY.

 

(III)                               IN THE EVENT (A) THE JPT DETERMINES THAT
SUCH CLINICAL TRIAL OR DEVELOPMENT ACTIVITY MAY SUPPORT THE WORLDWIDE
DEVELOPMENT OF JAK LICENSED PRODUCTS; (B) THE JPT APPROVES SUCH PROPOSAL; AND
(C) THE PARTIES AGREE TO COLLABORATE TO CONDUCT SUCH CLINICAL TRIAL OR OTHER
DEVELOPMENT ACTIVITY WITH RESPECT TO JAK LICENSED PRODUCTS (THE “JOINT
DEVELOPMENT ACTIVITY”), THEN THE PARTIES SHALL, THROUGH THE JPT, AMEND THE
DEVELOPMENT PLAN FOR JAK LICENSED PRODUCTS TO INCLUDE A DETAILED DESCRIPTION OF
THE JOINT DEVELOPMENT ACTIVITY TO BE UNDERTAKEN BY THE PARTIES AND DEVELOP A
DETAILED ANNUAL BUDGET FOR ALL DEVELOPMENT COSTS FOR SUCH ACTIVITIES TO BE
INCLUDED IN THE APPLICABLE DEVELOPMENT PLAN (THE “DEVELOPMENT BUDGET”).  EACH
PARTY SHALL USE COMMERCIALLY REASONABLE EFFORTS TO PERFORM THE OBLIGATIONS
ALLOCATED TO SUCH PARTY UNDER A DEVELOPMENT PLAN FOR A JOINT DEVELOPMENT
ACTIVITY.  *** DEVELOPMENT COSTS

 

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SET FORTH IN THE APPLICABLE DEVELOPMENT BUDGET *** SET FORTH IN THE APPLICABLE
DEVELOPMENT BUDGET).  AT THE TIME SUCH DEVELOPMENT PLAN AND DEVELOPMENT BUDGET
IS CREATED BY THE JPT AND APPROVED BY THE JSC, THE PARTIES SHALL AGREE UPON A
QUARTERLY REPORTING AND PAYMENT STRUCTURE TO IMPLEMENT THE COST SHARING SET
FORTH IN THE PRECEDING SENTENCE.  IN THE EVENT EITHER PARTY FAILS TO TIMELY MAKE
AN UNDISPUTED PAYMENT UNDER THE AGREED UPON PAYMENT PLAN, THE PAYMENT AMOUNT
SHALL BE REFLECTED AS A CREDIT AGAINST THE MONIES DUE BY THE OTHER PARTY UNDER
ARTICLE VIII, OR, IF NO SUCH CREDIT IS AVAILABLE AS NO SUCH MONIES ARE DUE,
SHALL BE PAID WITHIN *** AFTER INVOICE.

 

(B)                                             RIGHT TO PROCEED WITH
DEVELOPMENT ACTIVITY.  IF THE OTHER PARTY DECLINES OR DOES NOT ELECT TO
PARTICIPATE IN SUCH PROPOSED DEVELOPMENT ACTIVITY PRIOR TO THE PLANNED FPFV (SO
LONG AS SUCH FPFV DOES NOT OCCUR LESS THAN THREE (3) MONTHS AFTER RECEIPT BY THE
JPT OF A WRITTEN PROPOSAL IN ACCORDANCE WITH SECTION 4.3(A)(I)), THE SUBMITTING
PARTY MAY PROCEED WITH SUCH CLINICAL TRIAL OR DEVELOPMENT ACTIVITY FOR ITS
TERRITORY; PROVIDED THAT NEITHER PARTY MAY PROCEED WITH SUCH CLINICAL TRIAL OR
DEVELOPMENT ACTIVITY IF A PARTY REASONABLY DETERMINES THAT THE ACTIVITY IS
REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE IMPACT ON THE DEVELOPMENT AND/OR
COMMERCIALIZATION OF JAK LICENSED PRODUCTS IN ITS TERRITORY.  ANY DISPUTES
REGARDING WHETHER AN ACTIVITY IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE
IMPACT ON THE DEVELOPMENT AND/OR COMMERCIALIZATION OF JAK LICENSED PRODUCTS IN A
PARTY’S TERRITORY SHALL BE RESOLVED IN ACCORDANCE WITH SECTION 3.5.

 

(C)                                              BUY-IN RIGHT.

 

(I)                                     IF A PARTY FAILS TO ELECT TO PARTICIPATE
IN A CLINICAL TRIAL OR DEVELOPMENT ACTIVITY PURSUED BY THE OTHER PARTY PURSUANT
TO SECTION 4.3(B) WITHIN THE *** PERIOD FOLLOWING RECEIPT BY THE JPT OF A
WRITTEN PROPOSAL IN ACCORDANCE WITH SECTION 4.3(A)(I) RELATING THERETO, SUCH
PARTY (THE “BUY-IN PARTY”) MAY OBTAIN ACCESS TO AND USE OF THE CLINICAL DATA
GENERATED PURSUANT TO THE RELEVANT CLINICAL TRIAL OR DEVELOPMENT ACTIVITY IN
ACCORDANCE WITH THE FOLLOWING PROCEDURE:  AT LEAST ON A *** BASIS, THE PARTY
PARTICIPATING IN A CLINICAL TRIAL OR DEVELOPMENT ACTIVITY PURSUANT TO
SECTION 4.3(B) SHALL UPDATE THE BUY-IN PARTY ON THE STATUS OF SUCH CLINICAL
TRIAL OR DEVELOPMENT ACTIVITY, INCLUDING A SUMMARY OF RELEVANT DATA.  AT ANY
TIME, THE BUY-IN PARTY MAY PROVIDE THE OTHER PARTY WITH NOTICE OF ITS ELECTION
TO PARTICIPATE IN SUCH CLINICAL TRIAL OR DEVELOPMENT ACTIVITY, AND PROMPTLY
THEREAFTER THE OTHER PARTY SHALL PROVIDE THE BUY-IN PARTY WITH AN INVOICE FOR
*** OF THE DEVELOPMENT COSTS INCURRED BY THE OTHER PARTY IN THE GENERATION OF
SUCH CLINICAL DATA AS OF THE DATE OF THE BUY-IN PARTY’S WRITTEN REQUEST, WHICH
INVOICE THE BUY-IN PARTY SHALL PAY WITHIN *** AFTER RECEIPT.  THEREAFTER, TO THE
EXTENT THE DEVELOPMENT ACTIVITY HAS NOT BEEN COMPLETED, THE BUY-IN PARTY SHALL
BE RESPONSIBLE FOR *** OF THE DEVELOPMENT COSTS INCURRED BY THE OTHER PARTY. 
SUCH PAYMENT SHALL ENTITLE THE BUY-IN PARTY TO USE ONLY THE DATA SO PAID FOR. 
THE OTHER PARTY SHALL, AS APPLICABLE, PROVIDE COPIES OF, AND/OR A RIGHT OF
REFERENCE OR USE OF, THE REQUESTED CLINICAL DATA TO THE BUY-IN PARTY PROMPTLY
AFTER RECEIPT OF THE INVOICED AMOUNT.

 

(II)                                  IN THE EVENT NOVARTIS IS THE BUY-IN PARTY
AND HAS EXERCISED THE BUY-IN RIGHT WITH RESPECT TO A CLINICAL TRIAL THAT WOULD
QUALIFY FOR A MILESTONE SET FORTH IN SECTION

 

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8.2, THEN IN ADDITION TO THE DEVELOPMENT COSTS SET FORTH IN
SECTION 4.3(A)(I) ABOVE, INCYTE SHALL INVOICE NOVARTIS FOR THE APPLICABLE
MILESTONE PAYMENT(S) SET FORTH IN SECTION 8.2 AND NOVARTIS SHALL PAY SUCH
MILESTONE PAYMENT(S) IN ACCORDANCE WITH SECTION 8.2(I).

 

(III)                               FOR THE AVOIDANCE OF DOUBT, THE BUY-IN RIGHT
PURSUANT TO THIS SECTION 4.3(C) DOES NOT INCLUDE THE RIGHT TO OPERATIONAL
PARTICIPATION IN THE CONDUCT OF THE CLINICAL TRIAL OR DEVELOPMENT ACTIVITY
UNLESS, AT THE SOLE DISCRETION OF THE PARTY THAT INITIATED THE CLINICAL TRIAL OR
DEVELOPMENT ACTIVITY, SUCH PARTY GRANTS OPERATIONAL PARTICIPATION TO THE BUY-IN
PARTY.

 

(IV)                              IN THE EVENT THE BUY-IN PARTY FAILS TO MEET
ANY PAYMENT OBLIGATION PURSUANT TO THIS SECTION 4.3(C), AND SUCH FAILURE
CONTINUES FOR *** AFTER THE ORIGINAL DUE DATE OF THE PAYMENT, UNTIL SUCH
DELINQUENCY IS CURED, THE DATA GENERATED PURSUANT TO THE CLINICAL TRIAL OR
DEVELOPMENT ACTIVITY SHALL NOT BE SHARED WITH THE BUY-IN PARTY.  IN THE EVENT
SUCH DELINQUENCY IS NOT CURED WITHIN ***, THE BUY-IN PARTY’S NOTICE OF ELECTION
TO PARTICIPATE SHALL BE CONSIDERED VOID.

 

(D)                                             RIGHTS TO DATA AND
DOCUMENTATION.  WITH RESPECT TO ANY JOINT DEVELOPMENT ACTIVITIES:

 

(I)                                     SUBJECT TO SECTION 4.3(C), EACH PARTY
SHALL HAVE THE RIGHT TO POSSESS, RETAIN AND USE ALL CLINICAL AND NON-CLINICAL
DATA AND RELATED REGULATORY DOCUMENTATION CONTROLLED BY EITHER PARTY AND
GENERATED IN THE COURSE OF SUCH DEVELOPMENT ACTIVITIES IN ORDER TO DEVELOP,
OBTAIN REGULATORY APPROVAL FOR AND COMMERCIALIZE JAK LICENSED PRODUCTS IN THE
JAK FIELD IN SUCH PARTY’S TERRITORY IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT.  FOR THE AVOIDANCE OF DOUBT, NOVARTIS’ RIGHT TO POSSESS, RETAIN AND
USE PRE-CLINICAL AND CLINICAL DATA RELATED TO JAK LICENSED COMPOUNDS AND JAK
LICENSED PRODUCTS AND CONTROLLED BY INCYTE THAT EXIST AS OF THE EFFECTIVE DATE
OR THAT ARE GENERATED FROM STUDY INCB018424-256 FOR ALL POLYCYTHEMIA VERA
FILINGS TO A REGULATORY AUTHORITY FOR JAK LICENSED COMPOUNDS AND JAK LICENSED
PRODUCTS, SHALL NOT BE SUBJECT TO SECTION 4.3(C);

 

(II)                                  EACH PARTY HEREBY GRANTS TO THE OTHER
PARTY A RIGHT OF REFERENCE OR USE TO ANY AND ALL SUCH REGULATORY DOCUMENTATION,
AND AGREES TO SIGN, AND CAUSE ITS AFFILIATES TO SIGN, FROM TIME TO TIME,
PROMPTLY UPON REQUEST, ANY INSTRUMENTS REASONABLY REQUESTED BY SUCH OTHER PARTY
IN ORDER TO EFFECT SUCH GRANT;

 

(III)                               EACH PARTY SHALL MAINTAIN COMPLETE AND
ACCURATE RECORDS OF ALL RESULTS, DATA, DEVELOPMENT COSTS AND DEVELOPMENTS MADE
PURSUANT TO ITS EFFORTS UNDER THE DEVELOPMENT PLAN.  SUCH RECORDS SHALL
APPROPRIATELY REFLECT ALL WORK DONE AND RESULTS ACHIEVED IN THE PERFORMANCE OF
DEVELOPMENT ACTIVITIES IN SUFFICIENT DETAIL AND IN GOOD SCIENTIFIC MANNER
APPROPRIATE FOR PATENT AND REGULATORY PURPOSES; AND

 

(IV)                              IN ANY AGREEMENT BETWEEN EITHER PARTY AND A
CLINICAL RESEARCH ORGANIZATION RELATED TO A JOINT DEVELOPMENT ACTIVITY, THE
CONTRACTING PARTY SHALL USE REASONABLE EFFORTS TO NAME THE OTHER PARTY AS A
THIRD PARTY BENEFICIARY FOR THE PURPOSE OF RECEIVING DATA DERIVED FROM CLINICAL
TRIALS RELATED TO SUCH JOINT DEVELOPMENT ACTIVITY FROM SUCH CLINICAL RESEARCH
ORGANIZATION IN THE EVENT OF A BANKRUPTCY EVENT OF SUCH PARTY.

 

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4.4                                 c-MET Licensed Compound Co-Development
Option.

 

(A)                                              WITHIN *** PRIOR TO THE
ANTICIPATED INITIATION OF A PHASE III STUDY FOR THE C-MET LICENSED COMPOUND
INCB28060, NOVARTIS SHALL NOTIFY INCYTE OF SUCH ANTICIPATED INITIATION AND SHALL
PROVIDE INCYTE WITH THE FOLLOWING INFORMATION:  ALL MATERIAL PRE-CLINICAL AND
CLINICAL DATA AND RELATED ANALYSIS AND REGULATORY INFORMATION SUBMITTED TO ANY
REGULATORY AUTHORITIES PRIOR TO THE APPLICABLE TIME-PERIOD MENTIONED ABOVE, AND
NOVARTIS’ THEN CURRENT DEVELOPMENT PLANS AND BUDGETS WITH RESPECT TO SUCH C-MET
LICENSED COMPOUND.  INCYTE SHALL HAVE THE OPTION, EXERCISABLE BY (A) PROVIDING
NOVARTIS WRITTEN NOTICE WITHIN *** AFTER RECEIPT OF SUCH INFORMATION AND
(B) CO-FUNDING *** OF NOVARTIS’ GLOBAL DEVELOPMENT COSTS FOR SUCH C-MET LICENSED
COMPOUND INCURRED AFTER THE DATE OF SUCH NOTICE.

 

(B)                                             IF INCYTE TIMELY DELIVERS SUCH
NOTICE, WITHIN *** FOLLOWING THE END OF EACH CALENDAR QUARTER AFTER INCYTE HAS
DELIVERED SUCH NOTICE, NOVARTIS SHALL PREPARE AND DELIVER TO INCYTE A QUARTERLY
REPORT DETAILING ITS DEVELOPMENT COSTS INCURRED DURING SUCH PERIOD WITH RESPECT
TO SUCH C-MET LICENSED COMPOUND.  NOVARTIS SHALL SUBMIT ANY SUPPORTING
INFORMATION REASONABLY REQUESTED BY INCYTE RELATED TO SUCH DEVELOPMENT COSTS
INCLUDED IN ITS REPORT WITHIN *** AFTER ITS RECEIPT OF SUCH REQUEST.  NOVARTIS
SHALL ISSUE AN INVOICE TO INCYTE FOR *** OF THE DEVELOPMENT COSTS IDENTIFIED IN
SUCH REPORT. INCYTE SHALL PAY ALL AMOUNTS PAYABLE UNDER ANY SUCH INVOICE WITHIN
*** AFTER ITS RECEIPT OF SUCH INVOICE.  INCYTE SHALL HAVE THE RIGHT TO AUDIT THE
RECORDS OF NOVARTIS WITH RESPECT TO ANY PURPORTED DEVELOPMENT COSTS INCLUDED IN
SUCH REPORTS, IN ACCORDANCE WITH SECTION 8.6.

 

(C)                                              IF INCYTE PAYS ALL DEVELOPMENT
COSTS INVOICED FOR SUCH C-MET LICENSED COMPOUND AS DESCRIBED ABOVE, THE ROYALTY
RATES SET FORTH IN SECTION 8.3(A) PAYABLE ON ANY C-MET LICENSED PRODUCT THAT
CONTAINS INCB28060 SHALL *** WILL BE ***.  FOR PURPOSES OF CLARITY, THE ROYALTY
RATE SHALL NOT BE CHANGED UNLESS AND UNTIL PAYMENT OF ALL SUCH DEVELOPMENT COSTS
HAVE BEEN RECEIVED IN CASH BY NOVARTIS.

 

4.5                                 Potential JAK Back-Up Compounds.

 

(A)                                              EITHER PARTY OR ITS AFFILIATES
MAY DEVELOP A JAK2 INHIBITOR COMPOUND (THAT IS NOT A JAK EXCLUDED COMPOUND OR
INCYTE’S COMPOUND INCB028050) IN THE JAK FIELD UP TO THE POINT OF, BUT NOT
INCLUDING, A RANDOMIZED CLINICAL TRIAL.  THE PARTY OR ITS AFFILIATES DEVELOPING
SUCH JAK2 INHIBITOR COMPOUND SHALL BE SOLELY RESPONSIBLE FOR THE COST OF
DEVELOPMENT TO SUCH POINT.  A PARTY SHALL PROVIDE WRITTEN NOTICE TO THE OTHER IF
SUCH PARTY OR ITS AFFILIATES DEVELOPS A JAK2 INHIBITOR COMPOUND (THAT IS NOT A
JAK EXCLUDED COMPOUND OR INCYTE’S COMPOUND INCB028050) PRIOR TO PROCEEDING TO
THE FIRST CLINICAL USE OF SUCH COMPOUND IN A HUMAN (A “JAK CANDIDATE”).

 

(B)                                             IF A PARTY ELECTS TO PROPOSE TO
THE JSC THAT A JAK CANDIDATE PROCEED TO A RANDOMIZED CLINICAL TRIAL, SUCH PARTY
SHALL PROVIDE WRITTEN NOTICE TO THE JSC IDENTIFYING SUCH JAK CANDIDATE (A
“POTENTIAL JAK BACK-UP COMPOUND”).  THE SUBMITTING PARTY SHALL INCLUDE

 

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WITH SUCH WRITTEN NOTICE INFORMATION SUPPORTING THE RATIONALE FOR PROCEEDING TO
A RANDOMIZED CLINICAL TRIAL WITH RESPECT TO SUCH POTENTIAL JAK BACK-UP LICENSED
COMPOUND FROM A SCIENTIFIC, REGULATORY AND COMMERCIAL STANDPOINT, AS WELL AS AN
ESTIMATED DEVELOPMENTAL CRITICAL PATH AND AN ESTIMATE OF THE COST OF SUCH
DEVELOPMENT.  SUCH POTENTIAL JAK BACK-UP COMPOUND MAY BE FURTHER DEVELOPED
EITHER IF:

 

(I)                                     THE JSC DETERMINES THAT THE DEVELOPMENT
OF INCB018424 HAS FAILED, WHETHER DUE TO UNACCEPTABLE SAFETY OR TOLERABILITY,
FAILURE TO MEET THE PRIMARY EFFICACY ENDPOINT, OR AN ADVERSE REGULATORY
AUTHORITY ACTION; OR

 

(II)                                  THE JSC DETERMINES TO CONDUCT SUCH
DEVELOPMENT FOR LIFE CYCLE MANAGEMENT PURPOSES WITH RESPECT TO INCB018424
FOLLOWING RECEIPT OF REGULATORY APPROVAL FOR THE FIRST JAK LICENSED PRODUCT THAT
CONTAINS INCB018424; OR

 

(III)                               THE PARTIES OTHERWISE EXPLICITLY AGREE TO
THE DEVELOPMENT OF SUCH POTENTIAL JAK BACK-UP COMPOUND.

 

(C)                                              IF A POTENTIAL JAK BACK-UP
COMPOUND IS FURTHER DEVELOPED IN ACCORDANCE WITH SECTION 4.5(B), THE FOLLOWING
PROVISIONS SHALL APPLY, AS APPLICABLE:

 

(I)                                     IF BOTH PARTIES AGREE TO PARTICIPATE IN
THE DEVELOPMENT OF SUCH POTENTIAL JAK BACK-UP COMPOUND PRIOR TO FPFV OF A
RANDOMIZED CLINICAL TRIAL, SUCH POTENTIAL JAK BACK-UP COMPOUND WILL BE DEEMED TO
BE A JAK LICENSED COMPOUND FOR ALL PURPOSES UNDER THIS AGREEMENT, INCLUDING WITH
RESPECT TO ARTICLE II AND ARTICLE VIII (INCLUDING NOVARTIS’ OBLIGATIONS
THEREUNDER TO PAY DEVELOPMENT MILESTONES, REGULATORY MILESTONES, SALES
MILESTONES AND ROYALTIES ***), EXCEPT AS SET FORTH IN SUBSECTION (III) BELOW.

 

(II)                                  IF EITHER PARTY DECLINES TO PARTICIPATE IN
THE DEVELOPMENT OF SUCH POTENTIAL BACK-UP COMPOUND PRIOR TO FPFV OF A RANDOMIZED
CLINICAL TRIAL, THEN THE FOLLOWING PROVISIONS SHALL APPLY, AS APPLICABLE:

 

A.                                   IF INCYTE HAS DECLINED TO PARTICIPATE IN
SUCH DEVELOPMENT, THEN NOVARTIS MAY PROCEED WITH SUCH DEVELOPMENT AND THE
COMMERCIALIZATION IN THE JAK FIELD IN THE NOVARTIS JAK TERRITORY OF ANY SUCH
POTENTIAL JAK BACK-UP COMPOUND PROPOSED TO THE JSC BY NOVARTIS, TO THE EXTENT
THAT NOVARTIS HAS THE RIGHT TO DO SO ABSENT A LICENSE FROM INCYTE UNDER THE
INCYTE IP.  AT NOVARTIS’ REQUEST, INCYTE MAY, IN ITS SOLE DISCRETION, EXTEND THE
LICENSE GRANT UNDER THE INCYTE IP AND INCYTE’S AND ITS AFFILIATES’ INTERESTS IN
JOINT IP SET FORTH IN SECTION 2.1(B) (SUBJECT TO INCYTE’S RETAINED RIGHTS SET
FORTH IN SECTION 2.5) TO INCLUDE SUCH POTENTIAL JAK BACK-UP COMPOUND, AND SUCH
POTENTIAL JAK BACK-UP COMPOUND SHALL BE DEEMED A JAK LICENSED COMPOUND FOR THE
PURPOSES OF ARTICLE II AND ARTICLE VIII, IN WHICH EVENT NOVARTIS SHALL PAY TO
INCYTE THE DEVELOPMENT MILESTONES, REGULATORY MILESTONES, SALES MILESTONES AND
ROYALTIES PAYABLE BY NOVARTIS PURSUANT TO ARTICLE VIII;

 

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B.                                     IF NOVARTIS HAS DECLINED TO PARTICIPATE
IN SUCH DEVELOPMENT, THEN INCYTE MAY PROCEED WITH SUCH DEVELOPMENT AND THE
COMMERCIALIZATION IN THE JAK FIELD IN THE INCYTE TERRITORY OF ANY SUCH POTENTIAL
JAK BACK-UP COMPOUND PROPOSED TO THE JSC BY INCYTE, TO THE EXTENT THAT INCYTE
HAS THE RIGHT TO DO SO ABSENT A LICENSE FROM NOVARTIS UNDER THE NOVARTIS IP.  AT
INCYTE’S REQUEST, NOVARTIS MAY, IN ITS SOLE DISCRETION, EXTEND THE LICENSE GRANT
UNDER THE NOVARTIS IP SET FORTH IN SECTION 2.2 TO INCLUDE SUCH POTENTIAL JAK
BACK-UP COMPOUND, AND SUCH POTENTIAL JAK BACK-UP COMPOUND SHALL BE DEEMED A JAK
LICENSED COMPOUND FOR THE PURPOSES OF ARTICLE II AND ARTICLE VIII, ***; AND

 

C.                                     AT ANY TIME AFTER A PARTY DECLINES TO
PARTICIPATE IN SUCH DEVELOPMENT, THEN THE NON-PARTICIPATING PARTY MAY ELECT TO
OBTAIN RIGHTS TO SUCH POTENTIAL JAK BACK-UP COMPOUND BY BUYING-IN TO SUCH
DEVELOPMENT IN ACCORDANCE WITH THE PROCEDURE SET FORTH IN SECTION 4.3(C) AS IF
SUCH DEVELOPMENT WERE A JOINT DEVELOPMENT ACTIVITY.  IN THE EVENT A PARTY
EXERCISES SUCH OPTION, SUCH POTENTIAL JAK BACK-UP COMPOUND WILL BE DEEMED TO BE
A JAK LICENSED COMPOUND FOR ALL PURPOSES UNDER THIS AGREEMENT, INCLUDING WITH
RESPECT TO ARTICLE II AND ARTICLE VIII (INCLUDING NOVARTIS’ OBLIGATIONS
THEREUNDER TO PAY DEVELOPMENT MILESTONES, REGULATORY MILESTONES, SALES
MILESTONES AND ROYALTIES ***), EXCEPT AS SET FORTH IN SUBSECTION (III) BELOW.

 

(III)                               IF, PURSUANT TO SECTION 4.5(C)(I) OR
SECTION 4.5(C)(II)(C), BOTH PARTIES PARTICIPATE IN THE DEVELOPMENT OF A
POTENTIAL JAK BACK-UP COMPOUND AND BOTH OF THE FOLLOWING ARE APPLICABLE:

 

A.                                   THERE ARE NO JAK LICENSED COMPOUNDS,
POTENTIAL JAK BACK-UP COMPOUNDS OR JAK CANDIDATES CONTROLLED BY INCYTE THAT ARE
VIABLE COMPOUNDS; AND

 

B.                                     THE DEVELOPMENT, MANUFACTURE,
COMMERCIALIZATION AND/OR OTHER USE OF SUCH POTENTIAL JAK BACK-UP COMPOUND IS NOT
COVERED BY A VALID CLAIM OF PATENT RIGHTS CONTROLLED BY INCYTE;

 

then certain of the payments under ARTICLE VIII with respect to such Potential
JAK Back-Up Compound will be modified as follows: ***, it being understood that,
except for the specific modifications set forth in subsections (1) and
(2) above, all other payment obligations in ARTICLE VIII shall remain in effect.

 

4.6                                 Development Reports.

 

(A)                                              NOVARTIS SHALL PROVIDE, AS
APPLICABLE, THE C-MET JDC AND THE JAK JDC WITH A WRITTEN REPORT AT LEAST
QUARTERLY SUMMARIZING IN REASONABLE DETAIL NOVARTIS’ AND ITS AFFILIATES’
ACTIVITIES AND PROGRESS RELATED TO THE DEVELOPMENT OF LICENSED PRODUCTS IN THE
FIELD IN THE NOVARTIS TERRITORY, INCLUDING INFORMATION CONCERNING THE CONDUCT OF
NON-CLINICAL ACTIVITIES AND CLINICAL TRIALS, APPLICATIONS FOR AND SECURING OF
REGULATORY APPROVALS, FIRST COMMERCIAL SALE OF THE LICENSED PRODUCT ON A
COUNTRY-BY-COUNTRY BASIS AND ANY FUTURE PLANNED DEVELOPMENT

 

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ACTIVITIES; PROVIDED THAT A PRESENTATION BEFORE THE JSC, ACCOMPANIED WITH
WRITTEN DOCUMENTATION SUCH AS SLIDES, MAY SUBSTITUTE FOR SUCH WRITTEN REPORT.

 

(B)                                             INCYTE SHALL PROVIDE, AS
APPLICABLE, THE C-MET JDC AND THE JAK JDC WITH A WRITTEN REPORT AT LEAST
QUARTERLY SUMMARIZING IN REASONABLE DETAIL INCYTE’S AND ITS AFFILIATES’
ACTIVITIES AND PROGRESS RELATED TO THE DEVELOPMENT OF C-MET LICENSED PRODUCTS IN
ACCORDANCE WITH SECTION 4.2(B) AND THE DEVELOPMENT OF JAK LICENSED PRODUCTS IN
THE JAK FIELD IN THE INCYTE TERRITORY, INCLUDING INFORMATION CONCERNING THE
CONDUCT OF NON-CLINICAL ACTIVITIES AND CLINICAL TRIALS, APPLICATIONS FOR AND
SECURING OF REGULATORY APPROVALS, FIRST COMMERCIAL SALE OF JAK LICENSED PRODUCT
IN THE JAK FIELD IN THE INCYTE TERRITORY AND ANY FUTURE PLANNED DEVELOPMENT
ACTIVITIES; PROVIDED THAT A PRESENTATION BEFORE THE JSC, ACCOMPANIED WITH
WRITTEN DOCUMENTATION SUCH AS SLIDES, MAY SUBSTITUTE FOR SUCH WRITTEN REPORT.

 

4.7                                 REGULATORY MATTERS RELATED TO LICENSED
PRODUCTS.

 

(A)                                              REGULATORY SUBMISSIONS.  INCYTE
SHALL OVERSEE, MONITOR AND COORDINATE ALL REGULATORY ACTIONS, COMMUNICATIONS AND
FILINGS WITH, AND SUBMISSIONS TO, THE FDA WITH RESPECT TO JAK LICENSED PRODUCTS
IN THE JAK FIELD IN THE INCYTE TERRITORY.  NOVARTIS SHALL OVERSEE, MONITOR AND
COORDINATE ALL REGULATORY ACTIONS, COMMUNICATIONS AND FILINGS WITH, AND
SUBMISSIONS TO: (I) THE EMEA, MHLW AND OTHER REGULATORY AUTHORITIES IN THE
NOVARTIS JAK TERRITORY WITH RESPECT TO THE JAK LICENSED PRODUCTS IN THE JAK
FIELD AND (II) ALL REGULATORY AUTHORITIES WITH RESPECT TO THE C-MET LICENSED
PRODUCTS IN THE C-MET FIELD IN THE NOVARTIS TERRITORY.  EACH PARTY SHALL KEEP
THE JAK JDC REASONABLY INFORMED IN CONNECTION WITH THE PREPARATION OF ALL
REGULATORY DOCUMENTATION, REGULATORY AUTHORITY REVIEW OF REGULATORY
DOCUMENTATION, AND REGULATORY APPROVALS, ANNUAL REPORTS, ANNUAL RE-ASSESSMENTS,
AND VARIATIONS AND LABELING, IN EACH CASE WITH RESPECT TO THE JAK LICENSED
PRODUCT IN THE FIELD; PROVIDED THAT THE PROVIDING PARTY SHALL HAVE THE RIGHT TO
REDACT ANY INFORMATION TO THE EXTENT NOT RELATED TO JAK LICENSED PRODUCT IN THE
FIELD.  EACH PARTY SHALL RESPOND WITHIN A REASONABLE TIME FRAME TO ALL
REASONABLE INQUIRIES BY THE OTHER PARTY WITH RESPECT TO ANY INFORMATION PROVIDED
PURSUANT TO THIS SECTION 4.7(A).  UNLESS ALREADY THE CONFIDENTIAL INFORMATION OF
A PARTY, ANY INFORMATION DISCLOSED PURSUANT TO THIS SECTION 4.7(A) SHALL BE THE
CONFIDENTIAL INFORMATION OF THE DISCLOSING PARTY.  FOR THE PURPOSES OF THIS
SECTION 4.7(A), EACH PARTY GRANTS THE OTHER PARTY A ROYALTY-FREE LICENSE TO USE,
COPY AND DISTRIBUTE ANY ARTICLES, CLINICAL STUDY SUMMARIES OR OTHER MATERIALS
THAT IT HAS PREPARED SOLELY FOR THE PURPOSES OF PREPARING AND PURSUING ITS
REGULATORY SUBMISSIONS AND FILINGS AND COMMUNICATION WITH THE REGULATORY
AUTHORITIES.  THE PARTIES SHALL USE COMMERCIALLY REASONABLE EFFORTS TO PROMPTLY
TAKE THE ACTIONS DESCRIBED IN THIS SECTION 4.7(A)

 

(B)                                             REGULATORY MEETINGS AND
CORRESPONDENCE.  

 

(I)                                     INCYTE SHALL BE RESPONSIBLE FOR
INTERFACING, CORRESPONDING AND MEETING WITH THE FDA WITH RESPECT TO JAK LICENSED
PRODUCTS IN THE JAK FIELD IN THE INCYTE TERRITORY.  NOVARTIS SHALL BE
RESPONSIBLE FOR INTERFACING, CORRESPONDING AND MEETING WITH:  (I) THE EMEA, MHLW
AND OTHER REGULATORY AUTHORITIES WITH RESPECT TO THE JAK LICENSED PRODUCTS IN
THE JAK FIELD IN THE NOVARTIS JAK TERRITORY AND (II) FDA, EMEA, MHLW AND OTHER
REGULATORY AUTHORITIES WITH RESPECT TO THE C-MET LICENSED PRODUCTS IN THE C-MET
FIELD IN THE NOVARTIS TERRITORY.

 

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(II)                                  THE PARTY NOT RESPONSIBLE FOR INTERFACING,
CORRESPONDING AND MEETING WITH THE APPLICABLE REGULATORY AUTHORITIES IN A
COUNTRY WITH RESPECT TO THE JAK LICENSED PRODUCTS IN THE JAK FIELD SHALL HAVE
THE RIGHT TO HAVE A SENIOR, EXPERIENCED EMPLOYEE REASONABLY ACCEPTABLE TO THE
RESPONSIBLE PARTY, PARTICIPATE AS AN OBSERVER IN MATERIAL OR SCHEDULED
FACE-TO-FACE MEETINGS, VIDEO CONFERENCES AND ANY TELECONFERENCES, INVOLVING
PARTICIPATION OF PERSONNEL BEYOND REGULATORY EXPERTS, WITH THE FDA, EMEA, AND
MHLW, AND SHALL BE PROVIDED WITH ADVANCE ACCESS TO THE RESPONSIBLE PARTY’S
MATERIAL DOCUMENTATION PREPARED FOR SUCH MEETINGS.  PRIOR TO SUBMISSION OF
MATERIAL CORRESPONDENCE TO THE APPLICABLE REGULATORY AUTHORITY, THE RESPONSIBLE
PARTY SHALL, SUFFICIENTLY IN ADVANCE FOR THE OTHER PARTY TO REVIEW AND COMMENT,
PROVIDE THE OTHER PARTY ANY MATERIAL CORRESPONDENCE WITH THE FDA, EMEA AND MHLW
RELATED TO SUCH MEETINGS.  THE RESPONSIBLE PARTY SHALL ALSO PROVIDE THE OTHER
PARTY WITH COPIES OF ANY MATERIAL CORRESPONDENCE WITH THE FDA, EMEA, AND MHLW
RELATING TO DEVELOPMENT OF, OR THE PROCESS OF OBTAINING REGULATORY APPROVAL FOR,
JAK LICENSED PRODUCTS IN THE JAK FIELD, AND RESPOND WITHIN A REASONABLE TIME
FRAME TO ALL REASONABLE INQUIRIES BY THE OTHER PARTY WITH RESPECT THERETO.

 

(C)                                              GLOBAL SAFETY DATABASE;
PHARMACOVIGILANCE AGREEMENT.  CONTEMPORANEOUS WITH NOVARTIS’ ASSUMPTION OF
RESPONSIBILITY FOR STUDY 352, NOVARTIS SHALL ESTABLISH, HOLD AND MAINTAIN THE
GLOBAL SAFETY DATABASES FOR EACH LICENSED PRODUCT (THE “GLOBAL SAFETY DATABASE”)
INTO WHICH IT SHALL ENTER INFORMATION ON ALL ADVERSE EVENTS CONCERNING THE
LICENSED PRODUCT OCCURRING ANYWHERE IN THE WORLD AND REPORTED TO EITHER OF THE
PARTIES IN ACCORDANCE WITH A PHARMACOVIGILANCE AGREEMENT FOR EACH LICENSED
PRODUCT IN SUBSTANTIALLY THE SAME FORM AS THE DRAFT AGREEMENTS ATTACHED IN
EXHIBIT I (EACH, “PHARMACOVIGILANCE AGREEMENT”), WHICH THE PARTIES SHALL EXECUTE
ON THE EFFECTIVE DATE.  PURSUANT TO THE TERMS OF THE PHARMACOVIGILANCE
AGREEMENT, SUCH DATABASE SHALL COMPLY IN ALL MATERIAL RESPECTS WITH ALL LAWS
REASONABLY APPLICABLE TO PHARMACOVIGILANCE ANYWHERE WHERE THE LICENSED PRODUCTS
ARE BEING OR HAVE BEEN DEVELOPED OR COMMERCIALIZED. THE PHARMACOVIGILANCE
AGREEMENT SHALL, AMONG OTHER THINGS, GOVERN COOPERATION BETWEEN THE PARTIES THAT
WILL ENABLE EACH OF THEM TO COMPLY WITH ITS RESPECTIVE OBLIGATIONS UNDER
APPLICABLE LAWS WITH REGARD TO ADVERSE EVENT DATA COLLECTION, ANALYSIS AND
REPORTING AND TO ENABLE EACH PARTY TO SATISFY ITS DUTY OF CARE, AND TO GOVERN
THE GLOBAL SAFETY DATABASE.

 

ARTICLE V

CLINICAL AND COMMERCIAL SUPPLY

 

5.1                                 Clinical Supply.

 

(A)                                              MANUFACTURE AND SUPPLY OF JAK
LICENSED PRODUCT FOR STUDY 352.  EXCEPT AS SPECIFICALLY PROVIDED IN THAT LETTER
AGREEMENT DATED NOVEMBER 13, 2009, INCYTE SHALL REMAIN RESPONSIBLE FOR THE
SUPPLY OF PRECLINICAL AND CLINICAL MATERIAL OF JAK LICENSED PRODUCT FOR USE IN
THE CONDUCT OF STUDY 352, UNTIL SUCH TIME AS THE JAK JDC DETERMINES THAT
NOVARTIS SHOULD ASSUME RESPONSIBILITY FOR STUDY 352.  WITHIN *** AFTER THE
EFFECTIVE DATE, NOVARTIS SHALL REIMBURSE INCYTE THE OUT-OF-POCKET COSTS FOR THE
SUPPLY OF DRUG SUBSTANCE AND DRUG PRODUCT FOR JAK LICENSED COMPOUNDS AND JAK
LICENSED PRODUCTS AS DESCRIBED IN EXHIBIT C-1 AND THAT HAVE BEEN INCURRED AS OF
THE EFFECTIVE DATE.

 

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(B)                                             ON-GOING CLINICAL SUPPLY BY
INCYTE.  IN THE EVENT THAT NOVARTIS DETERMINES THAT INCYTE SHOULD PROVIDE THE
SUPPLY OF DRUG SUBSTANCE AND DRUG PRODUCT FOR LICENSED PRODUCT FOR NOVARTIS
DEVELOPMENT ACTIVITIES, THE PARTIES SHALL ENTER INTO A CLINICAL SUPPLY AGREEMENT
IN THE FORM ATTACHED AS EXHIBIT C-2 (THE “CLINICAL SUPPLY AGREEMENT”), UNDER
WHICH INCYTE SHALL:

 

(I)                                     USE COMMERCIALLY REASONABLE EFFORTS TO
SUPPLY NOVARTIS WITH SUCH DRUG SUBSTANCE OR DRUG PRODUCT AS REQUESTED IN WRITING
FROM NOVARTIS, INCLUDING API, FORMULATION, CMC AND BLISTER FORMULATION WORK. 
NOVARTIS SHALL REIMBURSE INCYTE’S OUT-OF-POCKET COSTS, SUBJECT TO AN AGREED UPON
BUDGET AND PAYMENT SCHEDULE BY THE PARTIES;

 

(II)                                  USE COMMERCIALLY REASONABLE EFFORTS TO
MANUFACTURE, HANDLE AND SUPPLY, AND SHALL USE COMMERCIALLY REASONABLE EFFORTS TO
CAUSE ITS THIRD PARTY SUPPLIER(S), AS APPLICABLE, TO MANUFACTURE, HANDLE AND
SUPPLY, ALL SUCH DRUG SUBSTANCE OR DRUG PRODUCT FOR LICENSED COMPOUND AND
LICENSED PRODUCT SUPPLIED BY INCYTE OR ITS AFFILIATE TO NOVARTIS PURSUANT TO THE
CLINICAL SUPPLY AGREEMENT (A) IN ACCORDANCE WITH THEN-CURRENT GOOD MANUFACTURING
PRACTICES, AS DEFINED IN ANY APPLICABLE REGULATORY AUTHORITY’S RULES AND
REGULATIONS, AS THE SAME MAY BE AMENDED FROM TIME TO TIME (“GMP”); (B) IN
COMPLIANCE WITH ALL APPLICABLE LAWS; (C) IN CONFORMANCE WITH ALL SPECIFICATIONS
FOR SUCH DRUG SUBSTANCE OR DRUG PRODUCT AS DETERMINED BY THE PARTIES AND AS
REQUIRED BY REGULATORY AUTHORITIES, INCLUDING SPECIFICATIONS PERTAINING TO
MANUFACTURING METHODS, TESTING, MATERIALS, FACILITIES, RELEASE, LABELING,
PACKAGING, STORAGE, SHIPMENT, AND SHELF-LIFE.

 

(III)                               PROVIDE NOVARTIS WITH ACCESS TO ALL
SUPPLIERS IN INCYTE’S SUPPLY CHAIN, AS PERMITTED UNDER INCYTE’S
AGREEMENT(S) WITH SUCH PARTIES, FOR THE PURPOSES OF AUDITING AND ENSURING
COMPLIANCE WITH GMPS AND HSE ISSUES; AND

 

(IV)                              AT NOVARTIS’ REQUEST, INCYTE SHALL USE
REASONABLE EFFORTS TO FACILITATE NEGOTIATIONS BETWEEN NOVARTIS AND INCYTE’S
THIRD PARTY MANUFACTURER(S) THAT MANUFACTURE SUCH DRUG PRODUCT OR DRUG SUBSTANCE
TO ENABLE NOVARTIS TO DISCUSS WITH SUCH THIRD PARTY MANUFACTURER(S) THE DIRECT
SUPPLY OF DRUG PRODUCT OR DRUG SUBSTANCE TO NOVARTIS.

 

5.2                                 Commercial Supply by Incyte.  If requested
by Novartis and agreed to by Incyte, Incyte shall provide commercial supply of
Drug Product for Licensed Product to Novartis under the terms of a commercial
quality and supply agreement.  The Parties shall commence negotiations on the
terms of such agreement *** prior to the anticipated filing date and shall make
a good faith effort to have an executable agreement no later than *** prior to
the anticipated date of first supply.

 

5.3                                 Supply by Novartis to Incyte.  If requested
by Incyte and agreed to by Novartis, Novartis shall supply bulk Drug Product to
Incyte under the terms of a clinical supply agreement or under a commercial
quality and supply agreement.  The Parties shall commence negotiations on the
terms of such agreement *** prior to the anticipated filing date and shall make
a good faith effort to have an executable agreement no later than *** of prior
to the anticipated date of first supply.

 

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ARTICLE VI

COMMERCIALIZATION AND CO-DETAILING OPTION

 

6.1                                 Commercialization Diligence.  Novartis shall
use Commercially Reasonable Efforts, at its expense, to Commercialize Licensed
Products in the Field in the Novartis Territory after receipt of Regulatory
Approval therefor.

 

6.2                                 Marketing Responsibilities For Licensed
Products.

 

(A)                                              C-MET LICENSED PRODUCTS. 
SUBJECT TO THE PROVISIONS OF SECTION 6.1, ALL BUSINESS DECISIONS REGARDING
COMMERCIALIZATION OF C-MET LICENSED PRODUCTS IN THE C-MET FIELD IN THE NOVARTIS
TERRITORY, INCLUDING THE DESIGN, SALE, PRICING, AND PROMOTION OF C-MET LICENSED
PRODUCTS IN THE C-MET FIELD IN THE NOVARTIS TERRITORY UNDER THIS AGREEMENT,
SHALL BE WITHIN THE SOLE DISCRETION OF NOVARTIS AND ITS AFFILIATES.  ALL
MATERIALS USED IN THE PROMOTION OF ALL C-MET LICENSED PRODUCTS IN THE C-MET
FIELD IN THE NOVARTIS TERRITORY, INCLUDING PRODUCT PACKAGING, MATERIALS USED IN
DETAILING DOCTORS, PRODUCT MESSAGING AND CONTENT USED IN THE PROMOTION OF SUCH
C-MET LICENSED PRODUCTS, SHALL BE APPROVED SOLELY BY NOVARTIS.

 

(B)                                             JAK LICENSED PRODUCTS.  ALL
BUSINESS DECISIONS REGARDING COMMERCIALIZATION OF JAK LICENSED PRODUCTS IN THE
JAK FIELD, INCLUDING THE DESIGN, SALE, PRICING, AND PROMOTION OF JAK LICENSED
PRODUCTS IN THE JAK FIELD UNDER THIS AGREEMENT, SHALL BE WITHIN INCYTE’S
DISCRETION IN THE INCYTE TERRITORY AND WITHIN NOVARTIS’ DISCRETION IN THE
NOVARTIS TERRITORY, BOTH SUBJECT TO JCC OVERSIGHT PURSUANT TO SECTION 3.2(D);
PROVIDED THAT, TO THE EXTENT COMMERCIALLY REASONABLE, NOVARTIS AND ITS
AFFILIATES SHALL MAINTAIN SEPARATE SALES FORCES FOR THE COMMERCIALIZATION OF ANY
PRODUCT THAT DIRECTLY COMPETES ON THE SAME INDICATIONS WITH THE JAK LICENSED
PRODUCT IN THE EU MAJOR MARKET COUNTRIES AND JAPAN.  ALL MATERIALS USED IN THE
PROMOTION OF ALL JAK LICENSED PRODUCTS IN THE JAK FIELD, INCLUDING PRODUCT
PACKAGING, MATERIALS USED IN DETAILING DOCTORS, PRODUCT MESSAGING AND CONTENT
USED IN THE PROMOTION OF SUCH JAK LICENSED PRODUCTS, SHALL BE WITHIN INCYTE’S
DISCRETION IN THE INCYTE TERRITORY AND WITHIN NOVARTIS’ DISCRETION IN THE
NOVARTIS TERRITORY, BOTH SUBJECT TO JCC OVERSIGHT PURSUANT TO SECTION 3.2(D).

 

6.3                                 Incyte Co-Detailing Option.

 

(A)                                              CO-DETAILING RIGHT.  INCYTE
SHALL HAVE A NON-EXCLUSIVE RIGHT TO DETAIL THE FIRST C-MET LICENSED PRODUCT IN
THE FIRST INDICATION WHICH IS MARKETED IN THE UNITED STATES ON THE TERMS AND
CONDITIONS SET FORTH IN THIS SECTION 6.3 (“CO-DETAILING RIGHT”).  NOVARTIS SHALL
NOTIFY INCYTE AT LEAST *** PRIOR TO THE ANTICIPATED LAUNCH OF THE FIRST C-MET
LICENSED PRODUCT IN THE UNITED STATES AND SHALL PROVIDE INCYTE WITH THE
FOLLOWING INFORMATION:  NOVARTIS’ THEN-CURRENT COMMERCIALIZATION PLANS
(“PROMOTIONAL PLAN”) WITH RESPECT TO SUCH C-MET LICENSED PRODUCT.  INCYTE’S
CO-DETAILING RIGHT IS LIMITED TO SPECIALISTS OUTLINED IN THE PROMOTIONAL PLAN. 
INCYTE MAY EXERCISE ITS CO-DETAILING RIGHT BY PROVIDING NOVARTIS WRITTEN NOTICE
AT ANY TIME NOT LATER THAN *** OR EARLIER THAN *** PRIOR TO THE INITIAL
ANTICIPATED LAUNCH OF SUCH C-MET LICENSED PRODUCT IN THE UNITED STATES.

 

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(B)                                             EFFECTS OF EXERCISE OF
CO-DETAILING RIGHT.  IF INCYTE EXERCISES ITS CO-DETAILING RIGHT:

 

(I)                                     THE PARTIES SHALL, NO LATER THAN FOUR
(4) MONTHS PRIOR TO THE INITIAL ANTICIPATED LAUNCH OF SUCH C-MET LICENSED
PRODUCT IN THE UNITED STATES, SET OUT THE NUMBER OF FTE SALES REPRESENTATIVES
PRIMARY DETAILING SUCH C-MET LICENSED PRODUCT IN THE UNITED STATES. IN NO EVENT
SHALL INCYTE BE RESPONSIBLE FOR A NUMBER OF FTE SALES REPRESENTATIVES PRIMARY
DETAILING SUCH C-MET LICENSED PRODUCT WHICH EXCEEDS *** OF NOVARTIS’ TOTAL FTES
FOR SUCH C-MET LICENSED PRODUCT IN THE UNITED STATES.

 

(II)                                  INCYTE SHALL BE RESPONSIBLE FOR ITS COSTS
IN CONDUCTING CO-DETAILING ACTIVITIES AS WELL AS ALL INCREMENTAL TRAINING AND
MEETING COSTS IN ACCORDANCE WITH SECTION 6.3(B)(IV); PROVIDED THAT NOVARTIS
SHALL REIMBURSE INCYTE AT *** OF THE FTE RATE FOR EACH INCYTE SALE
REPRESENTATIVE CONDUCTING THE CO-DETAILING.  INCYTE SHALL PROVIDE AN INVOICE TO
NOVARTIS FOR SUCH EXPENSE ON A QUARTERLY BASIS, AND NOVARTIS SHALL PAY SUCH
INVOICE WITHIN *** AFTER RECEIPT.

 

(III)                               THE PARTIES SHALL ESTABLISH A JOINT U.S.
COMMERCIALIZATION COMMITTEE (“UCC”) TO OVERSEE THE DETAILING OF THE RELEVANT
C-MET LICENSED PRODUCT IN THE U.S.  INCYTE SHALL BE ENTITLED TO HAVE ONE
(1) REPRESENTATIVE SIT ON THE UCC OR ANY GROUP CARRYING OUT THE UCC’S FUNCTION
AFTER THE EFFECTIVE DATE BUT PRIOR TO THE UCC’S ESTABLISHMENT.  THE UCC SHALL
HAVE RESPONSIBILITY FOR GENERAL OVERSIGHT OF ALL PROMOTION AND DETAILING
ACTIVITIES WITH RESPECT TO SUCH C-MET LICENSED PRODUCT IN THE UNITED STATES. 
THE UCC (OR ANY GROUP CARRYING OUT THE UCC’S FUNCTION AFTER THE EXERCISE OF THE
CO-DETAILING RIGHT BUT PRIOR TO THE UCC’S ESTABLISHMENT) WILL MEET QUARTERLY OR
MORE FREQUENTLY AS AGREED BY THE JSC.  THE TERM OF THE UCC WILL BE DETERMINED BY
THE JSC.

 

(IV)                              INCYTE’S SALES REPRESENTATIVES WILL BE
INCLUDED IN TRAINING PROGRAMS WITH RESPECT TO THE APPLICABLE C-MET LICENSED
PRODUCT THAT NOVARTIS PROVIDES TO ITS OWN SALES REPRESENTATIVES DETAILING SUCH
C-MET LICENSED PRODUCT. SUCH TRAINING SHALL BE PROVIDED BY NOVARTIS TO INCYTE
FREE OF CHARGE, PROVIDED THAT INCYTE SHALL BE RESPONSIBLE FOR MEETING AND
TRAINING COSTS INCREMENTAL TO THAT PROVIDED TO NOVARTIS’ SALES REPRESENTATIVES,
INCLUDING ANY TRAVEL, LODGING OR OTHER SIMILAR EXPENSES THAT MAY BE INCURRED BY
INCYTE IN CONNECTION WITH THE TRAINING.

 

(V)                                 INCYTE’S SALES REPRESENTATIVES SHALL BE
PROVIDED, AT NOVARTIS’ EXPENSE, WITH THE SAME PROMOTIONAL MATERIALS, INCLUDING
LITERATURE AND SAMPLES, AS NOVARTIS PROVIDES TO ITS OWN SIMILARLY-SITUATED
REPRESENTATIVES.

 

(VI)                              NOVARTIS SHALL APPROVE ALL TRAINING AND
PROMOTIONAL MATERIALS FOR SUCH C-MET LICENSED PRODUCT (INCLUDING MESSAGING) AND
SHALL PRESENT THIS INFORMATION TO THE UCC.  INCYTE SHALL PROMOTE SUCH C-MET
LICENSED PRODUCT IN ACCORDANCE WITH THE STANDARDS REASONABLY ESTABLISHED BY
NOVARTIS FOR SUCH C-MET LICENSED PRODUCT; PROVIDED THAT IF THE STANDARDS INCYTE
NORMALLY USES ARE MORE STRINGENT THAT THE STANDARDS ESTABLISHED BY NOVARTIS,
INCYTE MAY USE ITS OWN STANDARDS, SUBJECT TO NOVARTIS’ APPROVAL.

 

6.4                                 Novartis Co-Detailing Option.

 

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(A)                                              IF AT ANY TIME DURING THE TERM,
INCYTE, OR ANY OF ITS AFFILIATES, DESIRES TO COMMENCE NEGOTIATIONS WITH ONE OR
MORE THIRD PARTIES (OTHER THAN A CONTRACT SALES ORGANIZATION) TO CO-DETAIL OR
CO-PROMOTE JAK LICENSED PRODUCTS IN THE UNITED STATES, INCYTE SHALL PROMPTLY
NOTIFY NOVARTIS OF ITS INTENT TO COMMENCE NEGOTIATIONS AND SHALL PROVIDE
NOVARTIS A SUMMARY OF THE PROPOSED TERMS.

 

(B)                                             WITHIN *** AFTER RECEIPT OF SUCH
NOTIFICATION, NOVARTIS SHALL NOTIFY INCYTE IN WRITING EITHER THAT (I) NOVARTIS
IS INTERESTED IN NEGOTIATING AN AGREEMENT WITH INCYTE WITH RESPECT TO SUCH
TRANSACTION OR (II) NOVARTIS HAS NO INTEREST AND THEREFORE WAIVES SUCH RIGHT OF
FIRST OFFER.  IF NOVARTIS NOTIFIES INCYTE WITHIN SUCH *** PERIOD THAT NOVARTIS
DESIRES TO NEGOTIATE AN AGREEMENT WITH RESPECT TO SUCH TRANSACTION, THEN INCYTE
SHALL IN GOOD FAITH NEGOTIATE EXCLUSIVELY WITH NOVARTIS FOR UP TO *** FROM THE
DATE OF SUCH NOTIFICATION FROM NOVARTIS, OR SUCH LONGER PERIOD AS AGREED BETWEEN
THE PARTIES, REGARDING THE TERMS PURSUANT TO WHICH THE PARTIES WOULD ENTER INTO
SUCH TRANSACTION.

 

(C)                                              FAILURE BY NOVARTIS TO GIVE
NOTICE OF ITS INTEREST OR LACK OF INTEREST IN NEGOTIATING FOR SUCH AGREEMENT
WITHIN *** AFTER RECEIPT OF WRITTEN NOTICE FROM INCYTE AS DESCRIBED IN THE FIRST
SENTENCE OF THIS SECTION 6.4 SHALL BE DEEMED TO CONSTITUTE A WAIVER BY NOVARTIS
OF ITS RIGHT OF FIRST OFFER WITH RESPECT TO SUCH TRANSACTION.  IN ADDITION,
FAILURE OF THE PARTIES TO AGREE WITHIN SUCH *** NEGOTIATION PERIOD (OR SUCH
LONGER PERIOD AS AGREED BETWEEN THE PARTIES) SHALL RESULT IN THE TERMINATION OF
SUCH RIGHT OF FIRST OFFER.

 

(D)                                             IF NOVARTIS WAIVES ITS RIGHT OF
FIRST OFFER OR SUCH RIGHT OF FIRST OFFER TERMINATES WITH RESPECT TO ANY SUCH
TRANSACTION, THEN INCYTE SHALL BE FREE TO ENTER INTO A TRANSACTION FOR SUCH JAK
LICENSED PRODUCT WITH A THIRD PARTY; PROVIDED THAT IF NOVARTIS HAS NOTIFIED
INCYTE IN WRITING OF ITS INTEREST IN NEGOTIATING AN AGREEMENT BUT THE PARTIES
HAVE FAILED TO REACH AGREEMENT, THEN FOR A PERIOD OF ***; PROVIDED FURTHER THAT
IF, ***.

 

(E)                                              SHOULD NOVARTIS EXERCISE THE
CO-DETAILING OPTION UNDER THIS SECTION 6.4, AND THE PARTIES REACH AGREEMENT ON
TERMS FOR SUCH TRANSACTION, THE TERMS OF SUCH TRANSACTION SHALL BE REFLECTED IN
A SEPARATE U.S. COMMERCIALIZATION AGREEMENT ENTERED INTO BY THE PARTIES OR THEIR
AFFILIATES.

 

6.5                                 GLOBAL BRANDING; TRADEMARKS.

 

(A)                                              GLOBAL BRANDING STRATEGY.  THE
JCC SHALL HAVE THE RIGHT, FROM TIME TO TIME DURING THE TERM, TO IMPLEMENT (AND
THEREAFTER MODIFY AND UPDATE) A GLOBAL BRANDING STRATEGY, INCLUDING GLOBAL
POSITIONING, FOR JAK LICENSED PRODUCTS FOR USE IN THE FIELD THROUGHOUT THE WORLD
(THE “GLOBAL BRANDING STRATEGY”).  TO THE EXTENT THE JCC DETERMINES TO UTILIZE
SUCH GLOBAL

 

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BRANDING STRATEGY, EACH PARTY SHALL ADHERE TO THE GLOBAL BRANDING STRATEGY IN
ITS COMMERCIALIZATION OF THE LICENSED PRODUCT IN ITS TERRITORY.

 

(B)                                             TRADEMARKS.

 

(I)                                     NOVARTIS AND ITS AFFILIATES SHALL SELECT
THEIR OWN TRADEMARKS UNDER WHICH THEY WILL MARKET LICENSED PRODUCTS (PROVIDED
THAT NO SUCH TRADEMARK SHALL CONTAIN THE WORD “INCYTE”) AND SHALL OWN SUCH
TRADEMARKS.  INCYTE AND ITS AFFILIATES SHALL SELECT THEIR OWN TRADEMARKS UNDER
WHICH THEY WILL MARKET LICENSED PRODUCTS (PROVIDED THAT NO SUCH TRADEMARK SHALL
CONTAIN THE WORD “NOVARTIS”) AND SHALL OWN SUCH TRADEMARKS.

 

(II)                                  NOTWITHSTANDING SECTION 6.5(B)(I),
CONSISTENT WITH THE GLOBAL BRANDING STRATEGY, EACH PARTY SHALL, TO THE EXTENT
PERMITTED BY APPLICABLE REGULATORY AND LEGAL AUTHORITIES, UTILIZE THE TRADEMARK
OR TRADEMARKS SELECTED BY THE JCC IN CONNECTION WITH THE MARKETING AND SALE OF
THE JAK LICENSED PRODUCTS IN SUCH PARTY’S TERRITORY (EACH, A “JAK MARK” AND
COLLECTIVELY, THE “JAK MARKS”).  INCYTE SHALL OWN AND SHALL BE RESPONSIBLE FOR
REGISTERING AND MAINTAINING THE JAK MARKS IN THE INCYTE TERRITORY. NOVARTIS
SHALL OWN AND SHALL BE RESPONSIBLE FOR REGISTERING AND MAINTAINING THE JAK MARKS
IN THE NOVARTIS TERRITORY. AS THE OWNER OF THE JAK MARKS IN THE INCYTE
TERRITORY, INCYTE SHALL BE SOLELY RESPONSIBLE FOR DETERMINING WHAT, IF ANY,
ACTION TO TAKE IN RESPONSE TO ANY ALLEGED INFRINGEMENT OF SUCH TRADEMARKS BY
THIRD PARTIES IN THE INCYTE TERRITORY.  AS THE OWNER OF THE JAK MARKS IN THE
NOVARTIS JAK TERRITORY, NOVARTIS SHALL BE SOLELY RESPONSIBLE FOR DETERMINING
WHAT, IF ANY, ACTION TO TAKE IN RESPONSE TO ANY ALLEGED INFRINGEMENT OF SUCH
TRADEMARKS BY THIRD PARTIES IN THE NOVARTIS JAK TERRITORY.

 

(C)                                              NOVARTIS SHALL USE, IN
CONNECTION WITH ALL PACKAGING, LITERATURE, LABELS AND OTHER PRINTED MATTERS, TO
THE EXTENT PERMITTED BY LAW, AND WHERE REASONABLY PRACTICABLE IN LIGHT OF SPACE
LIMITATIONS, AN EXPRESSION TO THE EFFECT THAT THE LICENSED PRODUCTS WERE
DEVELOPED UNDER LICENSE FROM INCYTE, TOGETHER WITH THE INCYTE LOGO.  THE
PROVISIONS OF THIS SECTION 6.5 SHALL NOT APPLY TO PRIMARY PACKAGING OF THE
LICENSED PRODUCTS.  PRIMARY PACKAGING SHALL MEAN PACKAGING THAT IS IN DIRECT
CONTACT WITH THE LICENSED PRODUCTS OR THE LICENSED PRODUCTS THEMSELVES,
INCLUDING BUT NOT LIMITED TO VIALS, BLISTER PACKS, TABLETS AND CAPSULES.

 

ARTICLE VII

INTELLECTUAL PROPERTY OWNERSHIP,
PROTECTION AND RELATED MATTERS

 

7.1                                 Inventorship; Ownership.

 

(A)                                              INVENTORSHIP.  INVENTORSHIP OF
INVENTIONS CONCEIVED OR REDUCED TO PRACTICE DURING THE COURSE OF THE PERFORMANCE
OF ACTIVITIES PURSUANT TO THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH
THE PATENT LAWS OF THE UNITED STATES; PROVIDED HOWEVER, THAT IN THE EVENT THAT
DETERMINING INVENTORSHIP IN ACCORDANCE WITH SUCH LAWS WOULD RENDER ANY PATENT
RIGHT THAT COVERS SUCH INVENTION INVALID, INVENTORSHIP SHALL BE DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE JURISDICTION WHERE SUCH PATENT RIGHT IS FILED.

 

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(B)                                             OWNERSHIP.  AS BETWEEN THE
PARTIES, ALL INVENTIONS MADE OR INFORMATION CREATED, BY A PARTY’S OR ANY OF ITS
AFFILIATES’ EMPLOYEES, INDEPENDENT CONTRACTORS OR CONSULTANTS, IN THE COURSE OF
CONDUCTING ACTIVITIES UNDER THIS AGREEMENT, TOGETHER WITH ALL INTELLECTUAL
PROPERTY RIGHTS THEREIN, SHALL BE OWNED BY SUCH PARTY.  ALL INVENTIONS OR
DISCOVERIES MADE, OR INFORMATION CREATED, JOINTLY BY EACH PARTY’S (OR ANY OF ITS
AFFILIATES’) EMPLOYEES, INDEPENDENT CONTRACTORS OR CONSULTANTS, IN THE COURSE OF
CONDUCTING ACTIVITIES UNDER THIS AGREEMENT, TOGETHER WITH ALL INTELLECTUAL
PROPERTY RIGHTS THEREIN, SHALL BE JOINTLY OWNED BY THE PARTIES AND ARE “JOINT
IP”.  JOINT IP SHALL BE OWNED JOINTLY BY INCYTE AND NOVARTIS ON THE BASIS OF AN
UNDIVIDED INTEREST WITHOUT A DUTY TO ACCOUNT TO THE OTHER PARTY AND SHALL BE
DEEMED TO BE CONTROLLED BY EACH PARTY.  NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN, EACH PARTY SHALL HAVE THE RIGHT TO USE SUCH JOINT IP, OR LICENSE SUCH
JOINT IP TO ITS AFFILIATES OR ANY THIRD PARTY, OR SELL OR OTHERWISE TRANSFER ITS
INTEREST IN SUCH JOINT IP TO ITS AFFILIATES OR A THIRD PARTY, IN EACH CASE
WITHOUT THE CONSENT OF THE OTHER PARTY, SO LONG AS SUCH USE, SALE, LICENSE OR
TRANSFER IS SUBJECT TO THE LICENSES GRANTED PURSUANT TO THIS AGREEMENT AND IS
OTHERWISE CONSISTENT WITH THIS AGREEMENT. THE PARTIES, THROUGH THE JSC AND IN
ACCORDANCE WITH SECTION 7.2, SHALL DETERMINE WHICH PARTY SHALL BE RESPONSIBLE
FOR THE FILING, PROSECUTION AND MAINTENANCE OF JOINT IP ON A CASE-BY-CASE
BASIS.  EACH PARTY HEREBY AUTHORIZES AND GRANTS THE OTHER PARTY ITS PERMISSION
AND CONSENT TO ASSUME, DIRECTLY OR THROUGH ITS AUTHORIZED AGENTS, ATTORNEYS, OR
REPRESENTATIVES, THE RESPONSIBILITIES SET FORTH IN SECTION 7.2.

 

7.2                                 Prosecution and Maintenance of Patent
Rights.

 

(A)                                              NOVARTIS PATENT RIGHTS.  AT
NOVARTIS’ EXPENSE, NOVARTIS SHALL HAVE THE SOLE RIGHT TO FILE, PROSECUTE AND
MAINTAIN NOVARTIS PATENT RIGHTS.

 

(B)                                             C-MET PATENT RIGHTS.  *** SHALL
HAVE THE INITIAL RIGHT TO FILE, PROSECUTE AND MAINTAIN C-MET PATENT RIGHTS AND
JOINT IP THAT COVERS C-MET LICENSED COMPOUNDS OR C-MET LICENSED PRODUCTS (THE
“JOINT C-MET IP”), AT *** EXPENSE.  IF *** DECLINES TO FILE, PROSECUTE OR
MAINTAIN ANY C-MET PATENT RIGHTS OR JOINT C-MET IP IN ANY COUNTRY OF THE WORLD,
OR DESIRES TO ALLOW ANY C-MET PATENT RIGHTS OR JOINT C-MET IP TO LAPSE IN ANY
COUNTRY OF THE WORLD, OR DESIRES TO ABANDON ANY C-MET PATENT RIGHTS OR JOINT
C-MET IP IN ANY COUNTRY OF THE WORLD BEFORE ALL APPEALS WITHIN THE RESPECTIVE
JURISDICTION HAVE BEEN EXHAUSTED, THEN:

 

(I)                                     *** SHALL PROVIDE *** WITH REASONABLE
WRITTEN NOTICE OF SUCH DECISION SO AS TO PERMIT *** TO DECIDE WHETHER TO FILE,
PROSECUTE OR MAINTAIN SUCH C-MET PATENT RIGHTS OR JOINT C-MET IP AND TO TAKE ANY
NECESSARY ACTION.

 

(II)                                  FOLLOWING NOTICE FROM *** PURSUANT TO
SUBCLAUSE (I), *** MAY, BY PROVIDING PROMPT WRITTEN NOTICE THEREOF TO ***,
ASSUME CONTROL OF THE FILING, PROSECUTION AND/OR MAINTENANCE OF SUCH C-MET
PATENT RIGHTS OR JOINT C-MET IP IN THE NAME OF THE OWNER(S) OF SUCH C-MET PATENT
RIGHTS OR JOINT C-MET IP, AT *** EXPENSE.  ANY SUCH C-MET PATENT RIGHTS IN SUCH
COUNTRY SHALL NO LONGER BE EXCLUSIVELY LICENSED TO *** AND ITS AFFILIATES UNDER
SECTION 2.1 AND INSTEAD SHALL BE LICENSED ON A NON-EXCLUSIVE BASIS, BUT
OTHERWISE SHALL REMAIN *** PATENT RIGHT HEREUNDER FOR ALL PURPOSES.

 

(c)                                              JAK Patent Rights.

 

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(I)                                     *** SHALL HAVE THE INITIAL RIGHT TO
FILE, PROSECUTE AND MAINTAIN, AT *** EXPENSE, THE (X) SECONDARY PATENT RIGHTS IN
THE *** AND (Y) THE INCY0039 PATENT RIGHTS WORLDWIDE; PROVIDED THAT *** SHALL
USE A THIRD PARTY LAW FIRM SELECTED BY *** AND REASONABLY ACCEPTABLE TO *** TO
CONDUCT SUCH FILING, PROSECUTION AND MAINTENANCE; AND PROVIDED FURTHER, THAT ***
SHALL ACT PROMPTLY WITH RESPECT TO DECISIONS *** ON THE FILING AND PROSECUTION
OF PRIORITY APPLICATIONS.  IF *** DETERMINES TO CHANGE THE THIRD PARTY LAW FIRM
INITIALLY SELECTED TO CONDUCT SUCH FILING, PROSECUTION AND MAINTENANCE, ***
SHALL SELECT A REPLACEMENT THIRD PARTY LAW FIRM REASONABLY ACCEPTABLE TO ***. 
IF *** DECLINES TO FILE, PROSECUTE OR MAINTAIN ANY INCY0039 PATENT RIGHTS IN
***, DESIRES TO ALLOW TO LAPSE ANY INCY0039 PATENT RIGHTS IN ***, OR DESIRES TO
ABANDON ANY INCY0039 PATENT RIGHTS IN *** BEFORE ALL APPEALS WITHIN THE
RESPECTIVE JURISDICTION HAVE BEEN EXHAUSTED, THEN:

 

A.                                   *** SHALL PROVIDE *** WITH REASONABLE
WRITTEN NOTICE OF SUCH DECISION SO AS TO PERMIT *** TO DECIDE WHETHER TO FILE,
PROSECUTE OR MAINTAIN SUCH INCY0039 PATENT RIGHTS IN *** AND TO TAKE ANY
NECESSARY ACTION.

 

B.                                     FOLLOWING NOTICE FROM *** PURSUANT TO
CLAUSE (A), *** MAY, BY PROVIDING PROMPT WRITTEN NOTICE THEREOF TO ***, ASSUME
CONTROL OF THE FILING, PROSECUTION AND/OR MAINTENANCE OF SUCH INCY0039 PATENT
RIGHTS IN *** IN THE NAME OF THE OWNER(S) OF SUCH INCY0039 PATENT RIGHTS, AT ***
EXPENSE.

 

(II)                                  *** SHALL HAVE THE INITIAL RIGHT TO FILE,
PROSECUTE AND MAINTAIN, AT *** EXPENSE, THE SECONDARY JAK PATENT RIGHTS IN THE
***.  IF *** DECLINES TO FILE, PROSECUTE OR MAINTAIN ANY SECONDARY JAK PATENT
RIGHTS IN ***, DESIRES TO ALLOW ANY SECONDARY JAK PATENT RIGHTS TO LAPSE IN ***,
OR DESIRES TO ABANDON ANY SECONDARY JAK PATENT RIGHTS IN *** BEFORE ALL APPEALS
WITHIN THE RESPECTIVE JURISDICTION HAVE BEEN EXHAUSTED, THEN:

 

A.                                   *** SHALL PROVIDE *** WITH REASONABLE
WRITTEN NOTICE OF SUCH DECISION SO AS TO PERMIT *** TO DECIDE WHETHER TO FILE,
PROSECUTE OR MAINTAIN SUCH SECONDARY JAK PATENT RIGHT IN *** AND TO TAKE ANY
NECESSARY ACTION.

 

B.                                     FOLLOWING NOTICE FROM *** PURSUANT TO
CLAUSE (A), *** MAY, BY PROVIDING PROMPT WRITTEN NOTICE THEREOF TO ***, ASSUME
CONTROL OF THE FILING, PROSECUTION AND/OR MAINTENANCE OF SUCH SECONDARY JAK
PATENT RIGHT IN ***, AT *** EXPENSE.

 

(D)                                             COOPERATION.  SOLELY WITH
RESPECT TO THE RIGHTS AND OBLIGATIONS DESCRIBED IN SECTION 7.2(C), AN INDIVIDUAL
PARTY RESPONSIBLE FOR THE FILING, PROSECUTION AND MAINTENANCE OF A PATENT RIGHT
WILL BE REFERRED TO AS THE “CONTROLLING PARTY” AND THE OTHER PARTY WILL BE
REFERRED TO AS THE “NON-CONTROLLING PARTY”.

 

(I)                                     THE NON-CONTROLLING PARTY SHALL, AT THE
CONTROLLING PARTY’S EXPENSE AND REASONABLE REQUEST, ASSIST AND COOPERATE IN THE
FILING, PROSECUTION AND MAINTENANCE

 

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OF OR ANY RELATED NECESSARY ACTION FOR, AS APPLICABLE, THE NOVARTIS PATENT
RIGHTS OR INCYTE PATENT RIGHTS.

 

(II)                                  THE CONTROLLING PARTY SHALL PROVIDE THE
NON-CONTROLLING PARTY SUFFICIENTLY IN ADVANCE, WHERE REASONABLE, FOR THE
NON-CONTROLLING PARTY TO COMMENT, WITH COPIES OF ALL PATENT APPLICATIONS AND
OTHER MATERIAL SUBMISSIONS AND COMMUNICATIONS (INCLUDING ORAL COMMUNICATIONS)
WITH ANY PATENT COUNSEL OR PATENT AUTHORITIES PERTAINING TO THE INCYTE PATENT
RIGHTS AND, WITHIN THE INCYTE TERRITORY, THE NOVARTIS PATENT RIGHTS.

 

(III)                               UPON A REQUEST BY THE NON-CONTROLLING PARTY,
THE PARTIES WILL DISCUSS AND CONSIDER IN GOOD FAITH FILING SEPARATE PATENT
RIGHTS FOR CLAIMS THAT COVER LICENSED PRODUCTS (E.G., METHODS OF MANUFACTURING
AND USES OF SUCH LICENSED PRODUCT) SPECIFICALLY OR GENERICALLY AND CLAIMS THAT
COVER ONLY OTHER COMPOUNDS AND METHODS OF MAKING AND USING SUCH OTHER COMPOUNDS.

 

(IV)                              THE CONTROLLING PARTY SHALL GIVE DUE
CONSIDERATION TO THE NON-CONTROLLING PARTY’S COMMENTS, BUT SHALL HAVE THE FINAL
SAY IN DETERMINING WHETHER OR NOT TO INCORPORATE SUCH COMMENTS.

 

(V)                                 EACH PARTY SHALL PROVIDE THE OTHER WITH
COPIES OF ALL MATERIAL COMMUNICATIONS RECEIVED FROM ANY PATENT COUNSEL OR PATENT
AUTHORITIES PERTAINING TO SUCH INCYTE PATENT RIGHTS.

 

(VI)                              “MATERIAL” FOR THE PURPOSES OF THIS
SECTION 7.2(D) MEANS THAT THE SUBMISSION OR COMMUNICATION COULD AFFECT THE
PATENTABILITY OR SCOPE OF THE PATENTS COVERING THE LICENSED COMPOUNDS OR
PRODUCTS.

 

(E)                                              PATENT TERM EXTENSIONS.  ***
MAY SELECT WHICH, IF ANY, C-MET PATENT RIGHTS FOR WHICH A PATENT TERM EXTENSION
IS TO BE SOUGHT OR OBTAINED.  *** MAY, IN CONSULTATION WITH ***, SELECT WHICH,
IF ANY, JAK PATENT RIGHTS FOR WHICH A PATENT TERM EXTENSION IS TO BE SOUGHT OR
OBTAINED WITH RESPECT TO JAK LICENSED PRODUCTS IN THE ***.  EXCEPT AS SET FORTH
IN THE PRECEDING SENTENCE, *** MAY SELECT WHICH, IF ANY, JAK PATENT RIGHTS FOR
WHICH A PATENT TERM EXTENSION IS TO BE SOUGHT OR OBTAINED.

 

7.3                                 Third Party Infringement.

 

(A)                                              NOTICE.  EACH PARTY SHALL
PROMPTLY PROVIDE THE OTHER PARTY WITH WRITTEN NOTICE REASONABLY DETAILING ANY
KNOWN OR ALLEGED INFRINGEMENT BY A THIRD PARTY OF JOINT IP, INCYTE IP OR ANY
NOVARTIS IP, INCLUDING ANY “PATENT CERTIFICATION” FILED IN THE UNITED STATES
UNDER 21 U.S.C. §355(B)(2) OR 21 U.S.C. §355(J)(2) OR SIMILAR PROVISIONS IN
OTHER JURISDICTIONS, AND OF ANY DECLARATORY JUDGMENT, OPPOSITION, OR SIMILAR
ACTION ALLEGING THE INVALIDITY, UNENFORCEABILITY OR NON-INFRINGEMENT OF ANY SUCH
INTELLECTUAL PROPERTY RIGHTS (COLLECTIVELY “THIRD-PARTY INFRINGEMENT”).  WITHIN
*** AFTER RECEIPT OF SUCH NOTICE, THE PARTIES SHALL CONSULT VIA THE JSC TO
DETERMINE THE RESPONSE TO ANY THIRD PARTY INFRINGEMENT.

 

(b)                                             Enforcement.

 

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(I)                                     IF WITHIN *** AFTER RECEIPT OF THE
NOTICE SET FORTH IN SECTION 7.3(A) THE JSC FAILS TO AGREE ON A JOINT COURSE OF
ACTION WITH RESPECT TO A THIRD PARTY INFRINGEMENT, *** WILL HAVE THE INITIAL
RIGHT TO DETERMINE AND CONTROL A COURSE OF ACTION DESIGNED TO CURTAIL SUCH THIRD
PARTY INFRINGEMENT, WHETHER LEGAL OR COMMERCIAL IN THE *** IN CONNECTION WITH
THE THIRD PARTY INFRINGEMENT AGAINST A THIRD PARTY WHICH IS INFRINGING THE
RELEVANT INTELLECTUAL PROPERTY RIGHTS BY MAKING, USING OR SELLING A PRODUCT THAT
COMPETES WITH A LICENSED PRODUCT IN THE FIELD IN THE ***, AT ITS OWN EXPENSE AS
IT REASONABLY DETERMINES APPROPRIATE.  IN THE EVENT SUCH COURSE OF ACTION
INCLUDES LITIGATION, *** MAY CHOOSE, AT ITS OWN EXPENSE, TO BE REPRESENTED IN
SUCH ACTION BY COUNSEL OF ITS OWN CHOICE; PROVIDED, HOWEVER, THAT IF *** IS
REQUIRED AS A NECESSARY PARTY TO SUCH ACTION, *** SHALL PAY *** REASONABLE
EXPENSES ASSOCIATED THEREWITH.  *** SHALL KEEP *** REASONABLY INFORMED AS TO ANY
LEGAL OR COMMERCIAL COURSES OF ACTION IT PURSUES PURSUANT TO THIS SUBSECTION
(I).  AT THE REQUEST AND EXPENSE OF ***, *** SHALL PROVIDE REASONABLE ASSISTANCE
TO *** IN CONNECTION THEREWITH, INCLUDING BY EXECUTING REASONABLY APPROPRIATE
DOCUMENTS, COOPERATING IN DISCOVERY AND JOINING AS A PARTY TO THE ACTION.  IN
CONNECTION WITH ANY SUCH PROCEEDING, *** SHALL NOT ENTER INTO ANY SETTLEMENT
ADMITTING THE INVALIDITY OF, OR OTHERWISE IMPAIRING *** RIGHTS IN, *** OR JOINT
IP WITHOUT THE PRIOR WRITTEN CONSENT OF ***.  ANY RECOVERIES RESULTING FROM SUCH
AN ACTION RELATING TO A CLAIM OF THIRD PARTY INFRINGEMENT SHALL BE APPLIED AS
FOLLOWS:

 

A.                                   FIRST, TO REIMBURSE EACH PARTY FOR ALL
OUT-OF-POCKET COSTS IN CONNECTION WITH SUCH PROCEEDING (ON A PRO RATA BASIS,
BASED ON EACH PARTY’S RESPECTIVE LITIGATION COSTS, TO THE EXTENT THE RECOVERY
WAS LESS THAN ALL SUCH LITIGATION COSTS); AND

 

B.                                     SECOND, ***.

 

(II)                                  IF WITHIN *** AFTER *** RECEIPT OF A
NOTICE OF A THIRD PARTY INFRINGEMENT WITH RESPECT TO JOINT IP OR ***, *** DOES
NOT TAKE ANY ACTION AS DESCRIBED IN SECTION 7.3(B)(I) AND PERMITTED HEREUNDER
AGAINST A THIRD PARTY WHO IS INFRINGING SUCH INTELLECTUAL PROPERTY RIGHTS BY
MAKING, USING OR SELLING A PRODUCT THAT COMPETES WITH A LICENSED PRODUCT IN THE
***, *** MAY, SUBJECT TO THE FOLLOWING SENTENCE, IN ITS SOLE DISCRETION, BRING
AND CONTROL ANY LEGAL ACTION IN CONNECTION THEREWITH AT ITS SOLE EXPENSE.  IF
*** INTENDS TO BRING ANY SUCH LEGAL ACTION, IT SHALL FIRST NOTIFY *** IN WRITING
OF SUCH INTENT AND THE REASONS THEREFOR AND PROVIDE *** WITH AN OPPORTUNITY TO
INDICATE TO *** ITS REASONS FOR NOT BRINGING SUCH LEGAL ACTION; AND IF ***
PROVIDES EITHER A REASONABLE (X) LEGAL BASIS FOR *** NOT BRINGING SUCH LEGAL
ACTION, OR (Y) EXPLANATION OF HOW *** IS TAKING COMMERCIAL STEPS TO CURTAIL THE
THIRD PARTY INFRINGEMENT, *** SHALL NOT BRING SUCH LEGAL ACTION.  *** SHALL KEEP
*** REASONABLY INFORMED AS TO ANY LEGAL OR COMMERCIAL COURSES OF ACTION IT
PURSUES PURSUANT TO THIS SUBSECTION (II).  AT THE REQUEST AND EXPENSE OF ***,
*** SHALL PROVIDE REASONABLE ASSISTANCE TO *** IN CONNECTION THEREWITH,
INCLUDING BY EXECUTING REASONABLY APPROPRIATE DOCUMENTS, AND COOPERATING IN
DISCOVERY; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL REQUIRE *** TO JOIN AS A
PARTY OR OTHERWISE PARTICIPATE IN SUCH LEGAL ACTION, IF IN *** REASONABLE
OPINION SUCH PARTICIPATION WILL DAMAGE ANY OF *** COMMERCIAL RELATIONSHIPS. ***
MAY CHOOSE, AT ITS OWN EXPENSE, TO BE REPRESENTED IN ANY SUCH ACTION BY COUNSEL
OF ITS OWN CHOICE; PROVIDED, HOWEVER, THAT IF *** IS REQUIRED AS A NECESSARY
PARTY TO SUCH ACTION, *** SHALL PAY *** REASONABLE EXPENSES ASSOCIATED

 

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THEREWITH. IN CONNECTION WITH ANY SUCH PROCEEDING, *** SHALL NOT ENTER INTO ANY
SETTLEMENT ADMITTING THE INVALIDITY OF OR OTHERWISE IMPAIRING *** RIGHTS UNDER
THE JOINT IP OR SUCH *** WITHOUT THE PRIOR WRITTEN CONSENT OF ***.  ANY
RECOVERIES RESULTING FROM SUCH AN ACTION RELATING TO A CLAIM OF THIRD PARTY
INFRINGEMENT (AFTER PAYMENT OF EACH PARTY’S COSTS AND EXPENSES) WILL BE RETAINED
BY ***.

 

(III)                               IN THE EVENT OF A THIRD PARTY INFRINGEMENT
OF JAK PATENT RIGHTS THAT OCCURS ONLY IN THE ***, ***, AT ITS OWN EXPENSE, WILL
HAVE THE RIGHT TO BRING AND CONTROL ANY LEGAL ACTION IN THE *** IN CONNECTION
WITH SUCH THIRD PARTY INFRINGEMENT.

 

7.4                                 Patent Marking.  If permitted and to the
extent that Novartis does so with respect to its other products in the same
geographic market, Novartis shall, and shall cause its Affiliates, distributors
and licensees, to (a) mark the Licensed Products with the number of each issued
patent under the Incyte Patent Rights that apply to the Licensed Product and
(b) comply with the patent marking statutes in each country in which the
Licensed Product is manufactured by or on behalf of Novartis or its Affiliates.

 

7.5                                 Third Party Licenses.

 

(A)                                              IF *** IN GOOD FAITH BELIEVES
THAT IT IS NECESSARY TO OBTAIN A LICENSE UNDER ANY PATENT RIGHTS OF A THIRD
PARTY THAT WOULD BE INFRINGED BY THE MAKING, USING, SELLING, OFFERING FOR SALE
OR IMPORTING BY *** OF A LICENSED COMPOUND IN THE FIELD IN ANY COUNTRY IN THE
***, THEN PRIOR TO COMMENCING NEGOTIATIONS OR ENTERING INTO AN AGREEMENT WITH
RESPECT TO ANY SUCH THIRD PARTY PATENT RIGHTS, *** SHALL PROMPTLY NOTIFY ***. 
THE PARTIES SHALL THEREAFTER CONDUCT GOOD FAITH DISCUSSIONS REGARDING WHETHER
SUCH THIRD PARTY PATENT RIGHTS ARE NECESSARY TO MAKE, USE, SELL, OFFER FOR SALE
OR IMPORT LICENSED COMPOUND IN THE FIELD IN ANY COUNTRY IN THE ***.  IF THE
PARTIES AGREE THAT SUCH THIRD PARTY PATENT RIGHTS ARE NECESSARY TO MAKE, USE,
SELL, OFFER FOR SALE OR IMPORT LICENSED COMPOUND IN THE FIELD IN ANY COUNTRY IN
THE ***, THE PARTIES SHALL MEET TO DISCUSS AND DETERMINE WHICH PARTY WILL BE
PRIMARILY RESPONSIBLE FOR THE NEGOTIATION AND EXECUTION OF THE CORRESPONDING
LICENSE AGREEMENT; PROVIDED, HOWEVER, THAT *** SHALL HAVE THE FIRST RIGHT TO
OBTAIN A LICENSE AND NEGOTIATE AND EXECUTE A LICENSE AGREEMENT, IN CONNECTION
WITH THE MANUFACTURE OF LICENSED COMPOUNDS AND LICENSED PRODUCTS OR WITH RESPECT
TO ANY INTELLECTUAL PROPERTY APPLICABLE TO THE LICENSED COMPOUNDS AND LICENSED
PRODUCT.  IN THE EVENT THE PARTIES AGREE THAT *** SHALL HAVE THE RIGHT TO
NEGOTIATE AND EXECUTE SUCH A LICENSE AGREEMENT, AT THE REQUEST OF ***, ANY SUCH
LICENSE FROM A THIRD PARTY SHALL INCLUDE A LICENSE TO *** AND ITS SUBLICENSEES
WITH RESPECT TO THE LICENSED COMPOUND IN THE *** IN AND/OR OUTSIDE THE FIELD.  
NOTWITHSTANDING THE FOREGOING, NEITHER PARTY SHALL ENTER INTO A DEFINITIVE
LICENSE AGREEMENT WITH REGARD TO SUCH RIGHTS IN THE OTHER PARTY’S TERRITORY
WITHOUT THE OTHER PARTY’S WRITTEN CONSENT.  IN THE EVENT THAT THE PARTIES CANNOT
AGREE ON WHETHER A LICENSE FROM A THIRD PARTY IS NECESSARY, *** SHALL MAKE THE
FINAL DECISION WITH RESPECT TO LICENSES COVERING ALL OR PART OF THE ***.

 

(B)                                             TO THE EXTENT THE PARTIES HAVE
AGREED OR *** HAS DETERMINED IN ACCORDANCE WITH SECTION 7.5(A) THAT A LICENSE
UNDER SUCH THIRD PARTY PATENT RIGHTS IS NECESSARY TO AVOID INFRINGEMENT BASED ON
THE MAKING, USING, SELLING, OFFERING FOR SALE OR IMPORTING OF JAK LICENSED
COMPOUND IN THE FIELD AND SUCH LICENSE AGREEMENT RELATES TO WORLDWIDE RIGHTS FOR
JAK

 

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LICENSED COMPOUNDS OR JAK LICENSED PRODUCTS, *** OF ANY UP-FRONT LICENSE FEE OR
OTHER ACQUISITION COST AND MILESTONES BASED ON THE PRINCIPLE THAT SUCH RIGHTS IN
THE INCYTE TERRITORY CONSTITUTE *** OF SUCH COST AND SUCH RIGHTS IN THE NOVARTIS
JAK TERRITORY CONSTITUTE *** OF SUCH COST.  IF SUCH THIRD PARTY LICENSE RIGHTS
ARE AVAILABLE ONLY IN ONE PARTY’S TERRITORY, SUCH PARTY SHALL BE RESPONSIBLE FOR
ONE HUNDRED PERCENT (100%) OF SUCH COSTS SUBJECT TO THE DEDUCTIONS PERMITTED
UNDER SECTION 7.5(C) AND (D).

 

(C)                                              REGARDLESS OF WHICH PARTY
LICENSES SUCH RIGHTS, (I) EACH PARTY SHALL PAY TO THE APPLICABLE THIRD PARTY
LICENSOR (OR AS APPLICABLE, TO THE LICENSING PARTY FOR DELIVERY TO SUCH THIRD
PARTY) ALL ROYALTIES PAYABLE IN RESPECT OF SALES OF PRODUCTS BY SUCH PARTY, ITS
AFFILIATES, OR SUBLICENSEES AND (II) TO THE EXTENT THE PARTIES AGREE OR *** HAS
DETERMINED IN ACCORDANCE WITH SECTION 7.5(A) THAT SUCH IN-LICENSED RIGHTS ARE
NECESSARY TO MAKE, USE, SELL, OFFER FOR SALE OR IMPORT LICENSED COMPOUND IN THE
FIELD IN ANY COUNTRY IN THE *** WITHOUT INFRINGING SUCH THIRD PARTY PATENT
RIGHTS, *** SHALL BE ENTITLED TO DEDUCT UP TO *** OF THE ROYALTIES PAID OR
PAYABLE TO SUCH THIRD PARTY (PURSUANT TO A LICENSE UNDER SUCH THIRD PARTY’S
ISSUED VALID CLAIM(S) THAT COVER THE MAKING, USING, SELLING, OFFERING FOR SALE
OR IMPORTING OF THE APPLICABLE LICENSED COMPOUND IN THE FIELD IN SUCH COUNTRY IN
THE ***) WITH RESPECT TO SALES OF A LICENSED PRODUCT THAT CONTAINS SUCH LICENSED
COMPOUND IN SUCH COUNTRY IN THE *** FROM THE ROYALTIES PAYABLE BY *** TO ***
HEREUNDER WITH RESPECT TO NET SALES OF SUCH LICENSED PRODUCT IN SUCH COUNTRY;
PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE ROYALTIES PAYABLE UNDER
SECTION 8.3(A) BE REDUCED IN THE AGGREGATE PURSUANT TO THIS SECTION 7.5(C) BY
MORE THAN *** OF THE AMOUNTS SET FORTH IN SECTION 8.3(A).

 

(D)                                             NOTWITHSTANDING THE FOREGOING,
SOLELY WITH RESPECT TO PATENT APPLICATION NO. ***, NOVARTIS SHALL BE ENTITLED TO
DEDUCT UP TO *** OF THE ROYALTIES PAID OR PAYABLE TO SUCH THIRD PARTY (PURSUANT
TO A LICENSE UNDER SUCH THIRD PARTY’S ISSUED VALID CLAIM(S) THAT COVER THE
MAKING, USING, SELLING, OFFERING FOR SALE OR IMPORTING BY NOVARTIS OF THE
APPLICABLE C-MET LICENSED COMPOUND IN THE FIELD IN ANY COUNTRY IN THE NOVARTIS
TERRITORY) WITH RESPECT TO SALES OF A C-MET LICENSED PRODUCT THAT CONTAINS SUCH
C-MET LICENSED COMPOUND IN SUCH COUNTRY IN THE NOVARTIS TERRITORY FROM THE
ROYALTIES PAYABLE BY NOVARTIS TO INCYTE HEREUNDER WITH RESPECT TO NET SALES OF
SUCH C-MET LICENSED PRODUCT IN SUCH COUNTRY; PROVIDED, HOWEVER, THAT IN NO EVENT
SHALL THE ROYALTIES PAYABLE UNDER SECTION 8.3(A) BE REDUCED IN THE AGGREGATE
PURSUANT TO THIS SECTION 7.5(D) BY MORE THAN *** OF THE AMOUNTS SET FORTH IN
SECTION 8.3(A).

 

ARTICLE VIII

FINANCIAL PROVISIONS

 

8.1                                 License Fee.  Within *** after the Effective
Date, Incyte shall submit an invoice to Novartis for a one-time, non-creditable,
non-refundable license fee of One Hundred Fifty Million U.S. Dollars
(US$150,000,000), which Novartis shall pay within *** after receipt.

 

8.2                                 Milestone Payments.  Novartis shall pay
Incyte the following amounts after the first achievement by Novartis, its
Affiliates or its sublicensees of the corresponding milestone events set forth
below:

 

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(A)              C-MET DEVELOPMENT MILESTONES.

 

c-MET Development
Milestones

 

***

 

***

 

***

***

 

***

 

***

 

***

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

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* For purposes of clarity, a study conducted by Incyte pursuant to this
Agreement shall qualify for the milestone set forth in this
Section 8.2(a)(i)with respect to the *** for a c-MET Licensed Product.

 

(B)               C-MET REGULATORY MILESTONES.

 

c-MET Regulatory Milestones

 

***

 

***

 

***

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

 

***

 

***

 

***

***

 

***

 

***

 

***

 

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(C)               JAK DEVELOPMENT MILESTONES.

 

JAK Development Milestones

 

***

 

***

 

***

***

 

***

 

***

 

***

(ii) FPFV in a Phase III Study that is a Novartis Sponsored Study *

 

US$60,000,000

 

***

 

***

 

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

* For purposes of clarity, Study 352 as described in Exhibit F-1 shall qualify
for the milestone set forth in this Section 8.2(c)(ii) with respect to the ***
for a JAK Licensed Product.

 

(D)               JAK REGULATORY MILESTONES.

 

JAK Regulatory Milestones

 

***

 

***

 

***

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

 

***

 

***

 

***

***

 

***

 

***

 

***

 

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(E)               SALES MILESTONES.

 

(I)            C-MET LICENSED PRODUCT SALES MILESTONES.  NOVARTIS SHALL MAKE THE
NON-REFUNDABLE, NON-CREDITABLE, ONE-TIME PAYMENTS TO INCYTE OF AS SET FORTH
BELOW UPON THE FIRST ACHIEVEMENT OF AGGREGATE ANNUAL NET SALES OF C-MET LICENSED
PRODUCTS THAT MEET OR EXCEED THE THRESHOLDS SET FORTH BELOW.

 

c-MET Licensed Product Annual Net Sales
Threshold

 

Milestone Payment

(A)  Annual Net Sales of c-MET Licensed Products equal to or greater than ***

 

***

(B)  Annual Net Sales of c-MET Licensed Products equal to or greater than ***

 

***

(C)  Annual Net Sales of c-MET Licensed Products equal to or greater than ***

 

***

(D)  Annual Net Sales of c-MET Licensed Products equal to or greater than ***

 

***

(E)  Annual Net Sales of c-MET Licensed Products equal to or greater than ***

 

***

 

(II)           JAK LICENSED PRODUCT SALES MILESTONES.  NOVARTIS SHALL MAKE THE
NON-REFUNDABLE, NON-CREDITABLE, ONE-TIME PAYMENTS TO INCYTE OF AS SET FORTH
BELOW UPON THE FIRST ACHIEVEMENT OF AGGREGATE ANNUAL NET SALES OF JAK LICENSED
PRODUCTS IN THE NOVARTIS JAK TERRITORY THAT MEET OR EXCEED THE THRESHOLDS SET
FORTH BELOW.

 

JAK Licensed Product Annual Net Sales
Threshold

 

Milestone Payment

(A)  Annual Net Sales of JAK Licensed Products equal to or greater than ***

 

***

(B)  Annual Net Sales of JAK Licensed Products equal to or greater than ***

 

***

(C)  Annual Net Sales of JAK Licensed Products equal to or greater than ***

 

***

(D)  Annual Net Sales of JAK Licensed Products equal to or greater than ***

 

***

 

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(III)          ACHIEVEMENT OF THE MILESTONE EVENTS ABOVE IN THIS
SECTION 8.2(E) SHALL BE DETERMINED BASED ON ANNUAL NET SALES OF THE LICENSED
PRODUCTS MADE BY NOVARTIS AND ITS AFFILIATES AND SUBLICENSEES THROUGHOUT THE
NOVARTIS TERRITORY.  MORE THAN ONE OF THE SALES MILESTONE PAYMENTS MAY BE EARNED
CONCURRENTLY BASED ON THE SAME ANNUAL NET SALES OF THE LICENSED PRODUCTS.  BY
WAY OF EXAMPLE, IF IN THE FIRST CALENDAR YEAR FOLLOWING THE FIRST COMMERCIAL
SALE OF A JAK LICENSED PRODUCT, THE ANNUAL NET SALES FOR JAK LICENSED PRODUCTS
IS EQUAL TO OR EXCEEDS ***, THEN NOVARTIS SHALL PAY INCYTE THE MILESTONE
PAYMENTS SET FORTH IN BOTH SECTIONS 8.2(E)(II)(A) AND (B) (TOTAL ***).

 

(F)                EXCEPT AS OTHERWISE SPECIFIED, NONE OF THE PAYMENTS LISTED IN
THIS SECTION 8.2 SHALL BE PAYABLE MORE THAN ONCE, AND EACH SHALL BE PAYABLE AT
THE FIRST ACHIEVEMENT OF A MILESTONE EVENT FOR A LICENSED PRODUCT AND SHALL NOT
BE PAYABLE AGAIN IF SUBSEQUENTLY ANOTHER LICENSED PRODUCT ACHIEVES THE SAME
MILESTONE EVENT.  ***.

 

(G)               IF A FORESEEN DEVELOPMENT ACTIVITY DESCRIBED IN
SECTION 8.2(A)(I), (A)(II) OR (C)(I) IS NOT CONDUCTED IN THE COURSE OF
ACCELERATING THE DEVELOPMENT ACTIVITIES FOR AN INDICATION, THEN, EFFECTIVE UPON
ACHIEVEMENT OF THE LATER MILESTONE WITH RESPECT TO THE SAME INDICATION SET FORTH
IN SECTION 8.2(A)(II), (A)(III) OR (C)(II) AS THE CASE MAY BE, THE PREVIOUSLY
UNPAID PAYMENTS THAT WOULD BE DUE FOR THE PRECEDING MILESTONES SHALL ALSO BECOME
DUE AND PAYABLE EVEN THOUGH THE MISSING MILESTONE HAS NOT BEEN ACHIEVED.

 

(H)               FOR PURPOSES OF CLARITY, THE MILESTONE PAYMENT SET FORTH IN
SECTIONS 8.2(B)(II)(B) AND 8.2(D)(II)(B) SHALL BE IN ADDITION TO THE MILESTONE
PAYMENT SET FORTH IN SECTIONS 8.2(B)(II)(A) AND 8.2(D)(II)(A).

 

(I)                NOVARTIS SHALL PROVIDE INCYTE WRITTEN NOTICE OF THE
ACHIEVEMENT OF EACH MILESTONE EVENT: (A) WITHIN *** AFTER ACHIEVEMENT OF THE
MILESTONE EVENT SET FORTH IN SECTION 8.2(A), (B), (C) OR (D); AND (B) WITHIN ***
AFTER THE END OF ANY CALENDAR QUARTER IN WHICH A MILESTONE SET FORTH IN SECTION
8.2(E) IS ACHIEVED.  INCYTE SHALL PROVIDE NOVARTIS WRITTEN NOTICE OF THE
ACHIEVEMENT OF THE MILESTONE EVENT SET FORTH IN SECTION 8.2(D)(I) WITHIN ***
AFTER THE ACHIEVEMENT OF SUCH MILESTONE.  NOVARTIS SHALL PAY TO INCYTE, BY WIRE
TRANSFER TO AN ACCOUNT DESIGNATED BY INCYTE, THE APPLICABLE NON-REFUNDABLE,
NON-CREDITABLE MILESTONE PAYMENT LISTED ABOVE: (1) WITH RESPECT TO MILESTONE
EVENTS SET FORTH IN SECTION 8.2(A), (B), (C) OR (D), WITHIN *** AFTER NOVARTIS’
RECEIPT OF INVOICE AND (2) WITH RESPECT TO ALL MILESTONE EVENTS SET FORTH IN
SECTION 8.2(E), WITHIN *** AFTER THE END OF THE APPLICABLE CALENDAR QUARTER;
PROVIDED THAT INCYTE HAS ISSUED THE RELEVANT INVOICE FOR SUCH SALES MILESTONES
WITHIN *** AFTER INCYTE’S RECEIPT OF NOTICE FROM NOVARTIS OF THE ACHIEVEMENT OF
SUCH SALES MILESTONES.  IN THE EVENT INCYTE FAILS TO ISSUE AN INVOICE WITHIN
SUCH *** PERIOD AS DESCRIBED ABOVE, NOVARTIS’S OBLIGATION TO PAY SUCH AMOUNT
WITHIN*** AFTER THE END OF THE APPLICABLE CALENDAR QUARTER SHALL BE EXTENDED BY
THE

 

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NUMBER OF DAYS THAT LAPSE BETWEEN THE DATE INCYTE SHOULD HAVE INVOICED NOVARTIS
AND THE DATE INCYTE ACTUALLY INVOICES NOVARTIS.

 

8.3           Royalties.

 

(A)               NOVARTIS ROYALTIES TO INCYTE.  NOVARTIS SHALL PAY TO INCYTE
ROYALTIES ON AGGREGATE NET SALES OF EACH LICENSED PRODUCT, ON A LICENSED
PRODUCT-BY-LICENSED PRODUCT BASIS, AT THE FOLLOWING RATES:

 

(I)            C-MET LICENSED PRODUCTS.  SUBJECT TO SECTION 4.4(C), ON A C-MET
LICENSED PRODUCT-BY-C-MET LICENSED PRODUCT BASIS, NOVARTIS SHALL PAY TO INCYTE
ROYALTIES ON NET SALES OF EACH C-MET LICENSED PRODUCT IN THE NOVARTIS TERRITORY
AS FOLLOWS:

 

Annual Net Sales of c-MET Licensed Product

 

Royalty Rate

 

On Annual Net Sales less than or equal to ***

 

***%

 

On Annual Net Sales greater than *** and less than or equal to ***

 

***%

 

On Annual Net Sales greater than ***

 

***%

 

 

(II)           JAK LICENSED PRODUCTS.  ON A JAK LICENSED PRODUCT-BY-JAK LICENSED
PRODUCT BASIS, NOVARTIS SHALL PAY TO INCYTE ROYALTIES ON NET SALES OF EACH JAK
LICENSED PRODUCT IN THE JAK FIELD IN THE NOVARTIS JAK TERRITORY AS FOLLOWS:

 

Annual Net Sales of such JAK Licensed Product

 

Royalty Rate

 

On Annual Net Sales less than or equal to ***

 

***%

 

On Annual Net Sales greater than *** and less than or equal to ***

 

***%

 

On Annual Net Sales greater than *** and less than or equal to ***

 

***%

 

On Annual Net Sales greater than ***

 

***%

 

 

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(B)               ***.

 

(I)            ***.

 

(II)           ***.

 

(C)               ROYALTIES PAYABLE UNDER THIS SECTION 8.3 SHALL BE PAID BY THE
APPLICABLE PARTY ON A LICENSED PRODUCT-BY-LICENSED PRODUCT AND
COUNTRY-BY-COUNTRY BASIS FROM THE DATE OF FIRST COMMERCIAL SALE OF EACH LICENSED
PRODUCT WITH RESPECT TO WHICH ROYALTY PAYMENTS ARE DUE FOR A PERIOD WHICH IS THE
LONGER OF:  (I) THE LAST TO EXPIRE OF ANY VALID CLAIM OF LICENSED PATENT RIGHTS
COVERING SUCH LICENSED PRODUCT IN SUCH COUNTRY; (II) *** FOLLOWING THE DATE OF
FIRST COMMERCIAL SALE IN SUCH COUNTRY; AND (III) THE EXPIRATION OF REGULATORY
EXCLUSIVITY FOR SUCH LICENSED PRODUCT IN SUCH COUNTRY (EACH SUCH TERM WITH
RESPECT TO A LICENSED PRODUCT AND A COUNTRY, A “ROYALTY TERM”). NOTWITHSTANDING
THE FOREGOING, IN THE EVENT THAT EITHER (A) THE ROYALTY TERM CONTINUES SOLELY
DUE TO CLAUSE (II) (I.E. IN A SPECIFIC COUNTRY THE LICENSED PRODUCT IS NEITHER
COVERED BY A VALID CLAIM OF LICENSED PATENT RIGHTS NOR IS SUCH LICENSED PRODUCT
SUBJECT TO REGULATORY EXCLUSIVITY) OR (B) GENERIC COMPETITION EXISTS WITH
RESPECT TO A LICENSED PRODUCT IN A COUNTRY WITH RESPECT TO A ROYALTY-REPORTING
PERIOD, THEN THE ROYALTY RATES IN SUCH COUNTRY FOR SUCH LICENSED PRODUCT (FOR
SUCH ROYALTY-REPORTING PERIOD, IF APPLICABLE) WILL BE *** THE APPLICABLE RATE IN
SECTION 8.3(A) ***, BASED ON THE WEIGHTED AVERAGE ANNUAL ROYALTY RATE IN THE
NOVARTIS TERRITORY OR THE INCYTE TERRITORY, AS THE CASE MAY BE, BEGINNING ON
JANUARY 1ST OF THE CALENDAR YEAR FOLLOWING THE FIRST CALENDAR YEAR IN WHICH
THERE EXISTS A SITUATION DESCRIBED IN (A) OR (B) OF THIS SENTENCE IN THE
APPLICABLE COUNTRY.

 

(D)               UPON THE EXPIRATION OF THE ROYALTY TERM WITH RESPECT TO A
LICENSED PRODUCT IN A COUNTRY, (I) THE LICENSES GRANTED BY INCYTE TO NOVARTIS
PURSUANT TO SECTION 2.1 SHALL BE DEEMED TO BE FULLY PAID-UP, IRREVOCABLE AND
PERPETUAL WITH RESPECT TO SUCH LICENSED PRODUCT

 

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IN SUCH COUNTRY; AND (II) THE LICENSES GRANTED BY NOVARTIS TO INCYTE PURSUANT TO
SECTION 2.2 SHALL BE DEEMED TO BE FULLY PAID-UP, IRREVOCABLE AND PERPETUAL WITH
RESPECT TO SUCH JAK LICENSED PRODUCT IN SUCH COUNTRY.

 

8.4           Royalty Reports; Payments.  Within *** after the end of any
Calendar Quarter, the Royalty Paying Party shall provide the Royalty Receiving
Party with a report stating the sales in units and in value of the Licensed
Product made by the Royalty Paying Party, its Affiliates, licensees and
sublicensees, as applicable, in the Royalty Paying Party’s territory, on a
country-by-country basis, together with the calculation of the royalties due to
the Royalty Receiving Party, including the method used to calculate the
royalties and the exchange rates used.  Royalty payments shall be made by the
Royalty Paying Party to the bank account indicated by the Royalty Receiving
Party within *** after the end of the applicable Calendar Quarter; provided that
the Royalty Receiving Party has issued the relevant invoice for royalty payment
within *** after the Royalty Receiving Party’s receipt of the royalty report
from the Royalty Paying Party.  In the event the Royalty Receiving Party fails
to issue an invoice within such *** period as described above, the Royalty
Paying Party’s obligation to pay such amounts within *** after the end of the
applicable Calendar Quarter shall be extended by the number of days that lapse
between the date the Royalty Receiving Party should have invoiced the Royalty
Paying Party and the date the Royalty Receiving Party actually invoices the
Royalty Paying Party.

 

8.5           Financial Records.  The Parties shall keep complete and accurate
books and records in accordance with the defined Accounting Standards. The
parties will keep such books and records for at least *** following the end of
the Calendar Year to which they pertain. Such books of accounts shall be kept at
the principal place of business of the financial personnel with responsibility
for preparing and maintaining such records.  With respect to royalties, such
records shall be in sufficient detail to support calculations of royalties due
to either Party.  Novartis and Incyte shall also keep complete and accurate
records and books of accounts containing all data reasonably required for the
calculation and verification of Development Costs, including internal FTEs
utilized by either Party in jointly funded Clinical Trials or other Development
activities and any amounts that are subject to reimbursement pursuant to
Section 6.3(b)(ii).

 

8.6           Audits.

 

(A)               EACH PARTY MAY, UPON REQUEST AND AT ITS EXPENSE (EXCEPT AS
PROVIDED FOR HEREIN), CAUSE AN INTERNATIONALLY-RECOGNIZED INDEPENDENT ACCOUNTING
FIRM SELECTED BY IT (EXCEPT ONE TO WHOM THE AUDITEE HAS A REASONABLE OBJECTION),
(THE “AUDIT TEAM”) TO AUDIT DURING ORDINARY BUSINESS HOURS THE BOOKS AND RECORDS
OF THE OTHER PARTY AND THE CORRECTNESS OF ANY PAYMENT MADE OR REQUIRED TO BE
MADE TO OR BY SUCH PARTY, AND ANY REPORT UNDERLYING SUCH PAYMENT (OR LACK
THEREOF), PURSUANT TO THE TERMS OF THIS AGREEMENT. PRIOR TO COMMENCING ITS WORK
PURSUANT TO THIS AGREEMENT, THE AUDIT TEAM SHALL ENTER INTO AN APPROPRIATE
CONFIDENTIALITY AGREEMENT WITH THE AUDITEE.

 

(B)               IN RESPECT OF EACH AUDIT OF THE AUDITEE’S BOOKS AND RECORDS:
(I) THE AUDITEE MAY BE AUDITED ONLY ***, (II) NO RECORDS FOR ANY GIVEN YEAR FOR
AN AUDITEE MAY BE AUDITED MORE THAN ***; PROVIDED THAT THE AUDITEE’S RECORDS
SHALL STILL BE MADE AVAILABLE IF SUCH

 

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RECORDS IMPACT ANOTHER FINANCIAL YEAR WHICH IS BEING AUDITED, (III) THE AUDIT
RIGHTS HOLDER SHALL ONLY BE ENTITLED TO AUDIT BOOKS AND RECORDS OF AN AUDITEE
FROM THE *** PRIOR TO THE CALENDAR YEAR IN WHICH THE AUDIT REQUEST IS MADE.

 

(C)               IN ORDER TO INITIATE AN AUDIT FOR A PARTICULAR CALENDAR YEAR,
THE AUDIT RIGHT HOLDER MUST PROVIDE WRITTEN NOTICE TO THE AUDITEE. THE AUDIT
RIGHTS HOLDER EXERCISING ITS AUDIT RIGHTS SHALL PROVIDE THE AUDITEE WITH NOTICE
OF ONE OR MORE PROPOSED DATES OF THE AUDIT NOT LESS THAN *** PRIOR TO THE FIRST
PROPOSED DATE.  THE AUDITEE WILL REASONABLY ACCOMMODATE THE SCHEDULING OF SUCH
AUDIT.  THE AUDITEE SHALL PROVIDE SUCH AUDIT TEAM(S) WITH FULL AND COMPLETE
ACCESS TO THE APPLICABLE BOOKS AND RECORDS AND OTHERWISE REASONABLY COOPERATE
WITH SUCH AUDIT.

 

(D)               THE AUDIT REPORT AND BASIS FOR ANY DETERMINATION BY AN AUDIT
TEAM SHALL BE MADE AVAILABLE FIRST FOR REVIEW AND COMMENT BY THE AUDITEE, AND
THE AUDITEE SHALL HAVE THE RIGHT, AT ITS EXPENSE, TO REQUEST A FURTHER
DETERMINATION BY SUCH AUDIT TEAM AS TO MATTERS WHICH THE AUDITEE DISPUTES (TO BE
COMPLETED NO MORE THAN *** AFTER THE FIRST DETERMINATION IS PROVIDED TO SUCH
AUDITEE AND TO BE LIMITED TO THE DISPUTED MATTERS).  IF THE PARTIES DISAGREE AS
TO SUCH FURTHER DETERMINATION, THE AUDIT RIGHT HOLDER AND THE AUDITEE SHALL
MUTUALLY SELECT AN INTERNATIONALLY-RECOGNIZED INDEPENDENT ACCOUNTING FIRM THAT
SHALL MAKE A FINAL DETERMINATION AS TO THE REMAINING MATTERS IN DISPUTE THAT
SHALL BE BINDING UPON THE PARTIES.  SUCH ACCOUNTANTS SHALL NOT DISCLOSE TO THE
AUDIT RIGHTS HOLDER ANY INFORMATION RELATING TO THE BUSINESS OF THE AUDITEE
EXCEPT THAT WHICH SHOULD PROPERLY HAVE BEEN CONTAINED IN ANY REPORT REQUIRED
HEREUNDER OR OTHERWISE REQUIRED TO BE DISCLOSED TO SUCH PARTY TO THE EXTENT
NECESSARY TO VERIFY THE PAYMENTS REQUIRED TO BE MADE PURSUANT TO THE TERMS OF
THIS AGREEMENT.

 

(E)               IF THE AUDIT SHOWS ANY UNDER-REPORTING OR UNDERPAYMENT, OR
OVERCHARGING BY ANY PARTY, THAT UNDER-REPORTING, UNDERPAYMENT OR OVERCHARGING
SHALL BE REPORTED TO THE AUDIT RIGHTS HOLDER AND THE UNDERPAYING OR OVERCHARGING
PARTY SHALL REMIT SUCH UNDERPAYMENT OR REIMBURSE SUCH OVERCOMPENSATION (TOGETHER
WITH INTEREST AT THE ANNUAL INTEREST RATE OF *** AS PUBLISHED IN THE *** OR ITS
SUCCESSOR ON THE LAST BUSINESS DAY OF THE APPLICABLE CALENDAR QUARTER PRIOR TO
THE AUDIT) TO THE UNDERPAID OR OVERCHARGED PARTY WITHIN *** AFTER RECEIVING THE
AUDIT REPORT.  FURTHER, IF THE AUDIT FOR AN ANNUAL PERIOD SHOWS AN
UNDER-REPORTING OR UNDERPAYMENT OR AN OVERCHARGE BY ANY PARTY FOR THAT PERIOD IN
EXCESS OF *** OF THE AMOUNTS PROPERLY DETERMINED, THE UNDERPAYING OR
OVERCHARGING PARTY, AS THE CASE MAY BE, SHALL REIMBURSE THE APPLICABLE UNDERPAID
OR OVERCHARGED AUDIT RIGHTS HOLDER CONDUCTING THE AUDIT, FOR ITS RESPECTIVE
AUDIT FEES AND REASONABLE OUT-OF-POCKET COSTS IN CONNECTION WITH SAID AUDIT,
WHICH REIMBURSEMENT SHALL BE MADE WITHIN *** AFTER RECEIVING APPROPRIATE
INVOICES AND OTHER SUPPORT FOR SUCH AUDIT-RELATED COSTS.

 

(F)                FOR THE PURPOSES OF THE AUDIT RIGHTS DESCRIBED HEREIN, AN
INDIVIDUAL PARTY SUBJECT TO AN AUDIT IN ANY GIVEN YEAR WILL BE REFERRED TO AS
THE “AUDITEE” AND THE OTHER PARTY WHO HAS CERTAIN AND RESPECTIVE RIGHTS TO AUDIT
THE BOOKS AND RECORDS OF THE AUDITEE WILL BE REFERRED TO AS THE “AUDIT RIGHTS
HOLDER”.

 

8.7           Tax Matters.  The royalties, milestones and other amounts payable
by Novartis to Incyte pursuant to this Agreement (“Payments”) shall not be
reduced on account of any taxes

 

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unless required by Law.  Incyte alone shall be responsible for paying any and
all taxes (other than withholding taxes required by Law to be deducted and paid
on Incyte’s behalf by Novartis) levied on account of, or measured in whole or in
part by reference to, any Payments it receives.  The Parties will cooperate in
good faith to obtain the benefit of any relevant tax treaties to minimize as far
as reasonably possible any taxes which may be levied on any Payments.  Novartis
shall deduct or withhold from the Payments any taxes that it is required by Law
to deduct or withhold.  Notwithstanding the foregoing, if Incyte is entitled
under any applicable tax treaty to a reduction of the rate of, or the
elimination of, applicable withholding tax, it may deliver to Novartis or the
appropriate governmental authority (with the assistance of Novartis to the
extent that this is reasonably required and is expressly requested in writing)
the prescribed forms necessary to reduce the applicable rate of withholding or
to relieve Novartis of its obligation to withhold tax, and Novartis shall apply
the reduced rate of withholding tax, or dispense with withholding tax, as the
case may be, provided that Novartis has received evidence of Incyte’s delivery
of all applicable forms (and, if necessary, its receipt of appropriate
governmental authorization) *** prior to the time that the Payment is due.  If,
in accordance with the foregoing, Novartis withholds any amount, it shall make
timely payment to the proper taxing authority of the withheld amount, and send
to Incyte proof of such payment within *** following that latter payment. 
Notwithstanding the foregoing, Novartis represents that the payments to be paid
by Novartis to Incyte pursuant to Sections 8.1, 8.2 and 8.3 hereof shall not be
subject to withholding tax under conditions less favorable to Incyte than those
applicable to treaty-eligible residents under the income tax treaty between the
United States and Switzerland in force at the point of time such payments are
paid.

 

8.8           Currency Exchange.

 

(A)               SALES AND ROYALTY CALCULATIONS. THE CURRENCY EXCHANGE METHOD
SET OUT IN THIS SECTION 8.8(A) SHALL BE APPLIED FOR CALCULATIONS OF AMOUNTS FOR
SALES AND ROYALTIES.  WITH RESPECT TO AMOUNTS INVOICED IN UNITED STATES DOLLARS,
ALL SUCH AMOUNTS SHALL BE EXPRESSED IN UNITED STATES DOLLARS.  WITH RESPECT TO
AMOUNTS INVOICED IN A CURRENCY OTHER THAN UNITED STATES DOLLARS, ALL SUCH
AMOUNTS SHALL BE EXPRESSED BOTH IN THE CURRENCY IN WHICH THE AMOUNT WAS INVOICED
AND IN THE UNITED STATES DOLLAR EQUIVALENT.  THE UNITED STATES DOLLAR EQUIVALENT
SHALL BE CALCULATED USING THE NOVARTIS STANDARD EXCHANGE RATE METHODOLOGY FOR
THE CONVERSION OF FOREIGN CURRENCY SALES INTO UNITED STATES DOLLARS.

 

(B)               DEVELOPMENT COST CALCULATIONS. THE CURRENCY EXCHANGE METHOD
SET OUT IN THIS SECTION 8.8(B) SHALL BE APPLIED FOR CALCULATIONS OF AMOUNTS FOR
DEVELOPMENT COSTS.  FOR PURPOSES OF ANY DEVELOPMENT COST SHARING BETWEEN THE
PARTIES UNDER THIS AGREEMENT, SUCH COSTS SHALL BE CALCULATED ON A QUARTERLY
BASIS.  WITH RESPECT TO AMOUNTS INVOICED IN UNITED STATES DOLLARS, ALL SUCH
AMOUNTS SHALL BE EXPRESSED IN UNITED STATES DOLLARS.  WITH RESPECT TO AMOUNTS
INVOICED IN A CURRENCY OTHER THAN UNITED STATES DOLLARS, ALL SUCH AMOUNTS SHALL
BE EXPRESSED BOTH IN THE CURRENCY IN WHICH THE AMOUNT WAS INVOICED AND IN THE
UNITED STATES DOLLAR EQUIVALENT.  THE UNITED STATES DOLLAR EQUIVALENT SHALL BE
CALCULATED USING THE AVERAGE OF THE LAST (BID) U.S. DOLLAR/FOREIGN CURRENCY
RATES FOR THE LAST BUSINESS DAY OF EACH MONTH IN THE CALENDAR QUARTER FOR WHICH
DEVELOPMENT COSTS ARE BEING REPORTED, AS REPORTED BY THE WALL STREET JOURNAL,
FOR THE CONVERSION OF FOREIGN CURRENCY SALES INTO UNITED STATES DOLLARS.

 

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8.9           Late Payments.  The paying Party shall pay interest to the
receiving Party on the aggregate amount of any payments that are not paid on or
before the date such payments are due under this Agreement at a rate per annum
equal to the lesser of the ***, as reported by The Wall Street Journal, *** or
the highest rate permitted by applicable Law, calculated on the number of days
such payments are paid after the date such payments are due; provided, that with
respect to any disputed payments, no interest payment shall be due until such
dispute is resolved and the interest which shall be payable thereon shall be
based on the finally-resolved amount of such payment, calculated from the
original date on which the disputed payment was due through the date on which
payment is actually made.

 

ARTICLE IX

TERM AND TERMINATION

 

9.1           Agreement Term.  The term of this Agreement shall commence on the
Effective Date and shall continue on a Program-by-Program basis until the
earlier of (i) the termination of this Agreement or any program in accordance
with Section 9.2; or (ii) following the First Commercial Sale of any Licensed
Product, the expiration of the last-to-expire of all Royalty Terms with respect
to all Licensed Compounds and Licensed Products within such Program (the
“Term”). Notwithstanding the above, if there are any ongoing disputes at the end
of the Term as set forth above, this Agreement shall remain in full force and
effect until all such disputes are resolved.

 

9.2           Termination.

 

(A)               TERMINATION FOR CONVENIENCE.  NOVARTIS SHALL HAVE THE RIGHT TO
TERMINATE THIS AGREEMENT, IN ITS ENTIRETY OR ON A PROGRAM-BY-PROGRAM BASIS, FOR
CONVENIENCE UPON *** PRIOR WRITTEN NOTICE TO INCYTE.

 

(B)               TERMINATION FOR MATERIAL BREACH.  IF EITHER PARTY (THE
“NON-BREACHING PARTY”) BELIEVES THAT THE OTHER PARTY (THE “BREACHING PARTY”) IS
IN MATERIAL BREACH OF THIS AGREEMENT, THEN THE NON-BREACHING PARTY MAY DELIVER
NOTICE OF SUCH BREACH TO THE BREACHING PARTY. IF THE BREACHING PARTY FAILS TO
CURE SUCH BREACH, OR TAKE SUCH STEPS AS WOULD BE CONSIDERED REASONABLE TO
EFFECTIVELY CURE SUCH BREACH, WITHIN THE *** PERIOD AFTER DELIVERY OF SUCH
NOTICE, THE NON-BREACHING PARTY MAY TERMINATE THIS AGREEMENT UPON WRITTEN NOTICE
TO THE BREACHING PARTY, WHICH TERMINATION SHALL APPLY (X) SOLELY WITH RESPECT TO
A PROGRAM (AND ALL LICENSED COMPOUNDS AND LICENSED PRODUCTS FOR SUCH PROGRAM) IF
SUCH BREACH IS RELATED SOLELY TO SUCH PROGRAM, OR (Y) EITHER ON A
PROGRAM-BY-PROGRAM BASIS OR TO THE AGREEMENT IN ITS ENTIRETY AT THE DISCRETION
OF THE NON-BREACHING PARTY IF SUCH BREACH IS NOT RELATED SOLELY TO A PROGRAM.

 

(C)               TERMINATION IF NOVARTIS CHALLENGES INCYTE IP.  IF NOVARTIS OR
ANY OF ITS AFFILIATES, DIRECTLY OR INDIRECTLY, (I) INITIATES OR REQUESTS AN
INTERFERENCE OR OPPOSITION PROCEEDING WITH RESPECT TO ANY INCYTE PATENT RIGHT,
(II) MAKES, FILES OR MAINTAINS ANY CLAIM, DEMAND, LAWSUIT, OR CAUSE OF ACTION TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF ANY INCYTE PATENT RIGHT IN A
TRIBUNAL OR FORUM, OR (III) OPPOSES ANY EXTENSION OF, OR THE GRANT OF A
SUPPLEMENTARY PROTECTION CERTIFICATE WITH RESPECT TO, ANY INCYTE PATENT RIGHT,
INCYTE SHALL HAVE THE RIGHT TO TERMINATE THIS

 

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AGREEMENT UPON *** WRITTEN NOTICE TO NOVARTIS.  ANY SUCH TERMINATION SHALL ONLY
BECOME EFFECTIVE IF NOVARTIS OR ITS AFFILIATE, AS APPLICABLE, HAS NOT WITHDRAWN
SUCH ACTION BEFORE THE END OF THE ABOVE NOTICE PERIOD.

 

(D)               TERMINATION IF NOVARTIS ABANDONS PROGRAM.  IF INCYTE BELIEVES
THAT NOVARTIS HAS ABANDONED EITHER THE JAK PROGRAM OR THE C-MET PROGRAM, INCYTE
MAY DELIVER WRITTEN NOTICE TO NOVARTIS SETTING OUT IN REASONABLE DETAIL THE
BASIS FOR INCYTE’S BELIEF.  NOVARTIS SHALL HAVE *** FROM RECEIPT OF SUCH NOTICE
TO TAKE SUCH STEPS AS WOULD BE CONSIDERED REASONABLY LIKELY TO RESULT IN
NOVARTIS NOT BEING DEEMED TO HAVE ABANDONED SUCH PROGRAM WITHIN A REASONABLE
PERIOD FOLLOWING SUCH ACTIONS.  IF NOVARTIS FAILS TO TAKE SUCH ACTION AND FAILS
TO DISPUTE THE FACTS GIVING RISE TO SUCH NOTICE WITHIN SUCH *** PERIOD, THEN
INCYTE MAY WITHIN *** FOLLOWING THE EXPIRATION OF SUCH *** PERIOD ELECT TO
TERMINATE SUCH PROGRAM BY PROVIDING NOVARTIS WRITTEN NOTICE OF SUCH TERMINATION,
SUCH TERMINATION TO BE EFFECTIVE IMMEDIATELY AND OTHERWISE EFFECTED IN
ACCORDANCE WITH SECTION 9.3(A).

 

(E)               TERMINATION DISPUTES.  IF A PARTY GIVES NOTICE OF TERMINATION
UNDER THIS SECTION 9.2(B) OR 9.2(D), AND THE OTHER PARTY DISPUTES WHETHER SUCH
NOTICE WAS PROPER, THEN THE ISSUE OF WHETHER OR NOT THIS AGREEMENT WAS PROPERLY
TERMINATED SHALL BE RESOLVED IN ACCORDANCE WITH ARTICLE XIII, AND THE AGREEMENT
SHALL REMAIN IN FULL FORCE AND EFFECT UNTIL SUCH DISPUTE IS RESOLVED.  IF AS A
RESULT OF SUCH DISPUTE RESOLUTION PROCESS IT IS DETERMINED THAT THE NOTICE OF
TERMINATION WAS PROPER, THEN SUCH TERMINATION SHALL BE DEEMED TO BE EFFECTIVE ON
THE DATE ON WHICH SUCH NOTICE WAS FIRST PROVIDED.  ON THE OTHER HAND, IF AS A
RESULT OF THE DISPUTE RESOLUTION PROCESS IT IS DETERMINED THAT THE NOTICE OF
TERMINATION WAS IMPROPER, THEN NO TERMINATION SHALL HAVE OCCURRED AND THIS
AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT.

 

9.3           Effects Of Termination.

 

(A)               UPON TERMINATION OF THIS AGREEMENT IN WHOLE OR WITH RESPECT TO
A TERMINATED PROGRAM IN ACCORDANCE WITH SECTION 9.2(A) OR BY INCYTE UNDER
9.2(B), 9.2(C) OR 9.2(D):

 

(I)            ALL LICENSES GRANTED BY INCYTE TO NOVARTIS HEREUNDER WITH RESPECT
TO SUCH TERMINATED PROGRAM(S) SHALL TERMINATE AND NOVARTIS SHALL NOT HAVE ANY
RIGHTS TO USE OR EXERCISE ANY RIGHTS UNDER THE INCYTE IP;

 

(II)           NOVARTIS SHALL BE RELEASED FROM ITS DEVELOPMENT AND
COMMERCIALIZATION OBLIGATIONS WITH RESPECT TO SUCH TERMINATED PROGRAM(S);

 

(III)          NOVARTIS SHALL PROVIDE TO INCYTE A FAIR AND ACCURATE SUMMARY
REPORT OF THE STATUS OF THE DEVELOPMENT AND COMMERCIALIZATION OF THE LICENSED
PRODUCTS IN SUCH TERMINATED PROGRAM(S) IN EACH COUNTRY IN THE NOVARTIS TERRITORY
THROUGH THE EFFECTIVE DATE OF TERMINATION WITHIN *** AFTER SUCH TERMINATION;

 

(IV)          INCYTE SHALL HAVE NO FURTHER OBLIGATION TO *** IF THE TERMINATED
PROGRAM IS THE JAK PROGRAM OR IF THE AGREEMENT IS TERMINATED IN ITS ENTIRETY;

 

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(V)                                 IF INCYTE ELECTS TO CONTINUE SUCH LICENSE,
(A) THE LICENSE GRANTED TO INCYTE PURSUANT TO SECTION 2.2(A) SHALL REMAIN IN
EFFECT AND AUTOMATICALLY BE EXPANDED TO INCLUDE, WITH RESPECT TO THE TERMINATED
PROGRAM(S) THE RIGHT TO RESEARCH, DEVELOP, MAKE, HAVE MADE, USE, OFFER FOR SALE,
SELL AND IMPORT ALL APPLICABLE LICENSED PRODUCTS THAT FORMED A PART OF THE
TERMINATED PROGRAM(S) IN THE NOVARTIS TERRITORY, ***, AND (B) THE LICENSE
GRANTED TO INCYTE PURSUANT TO SECTION 2.2(B) SHALL REMAIN IN EFFECT ***;

 

(VI)                              IN THE EVENT THAT INCYTE TERMINATES A PROGRAM
PURSUANT TO SECTION 9.2(D), THEN, IRRESPECTIVE OF WHETHER INCYTE ELECTS TO
CONTINUE THE LICENSE GRANTED TO INCYTE PURSUANT TO SECTION 2.2(A), ***, AND ***;
PROVIDED THAT IF SUBCLAUSE (V) AND THIS SUBCLAUSE (VI) BOTH APPLY, THEN ***
EITHER SUBCLAUSE (V) OR THIS (VI) ***;

 

(VII)                           NOVARTIS SHALL PROMPTLY TRANSFER AND ASSIGN TO
INCYTE ALL OF NOVARTIS’ AND ITS AFFILIATES’ RIGHTS, TITLE AND INTERESTS IN AND
TO THE PRODUCT TRADEMARK(S) (BUT NOT ANY NOVARTIS HOUSE MARKS) OWNED BY NOVARTIS
AND USED FOR THE LICENSED PRODUCTS IN THE TERMINATED PROGRAM(S) IN THE NOVARTIS
TERRITORY, IN EXCHANGE FOR A PAYMENT TO NOVARTIS IN AN AMOUNT EQUAL TO
REIMBURSEMENT OF NOVARTIS’ REASONABLE ACCUMULATED COSTS RELATED TO THE
DEVELOPMENT, CLEARANCE, REGISTRATION, ENFORCEMENT AND MAINTENANCE OF THE
APPLICABLE TRADEMARK THROUGHOUT THE NOVARTIS TERRITORY;

 

(VIII)                        NOVARTIS SHALL AS SOON AS REASONABLY PRACTICABLE
TRANSFER AND ASSIGN TO INCYTE ALL REGULATORY DOCUMENTATION, THE DATA COMPRISING
THE GLOBAL SAFETY DATABASE AND OTHER DOCUMENTED TECHNICAL AND OTHER INFORMATION
OR MATERIALS CONTROLLED BY NOVARTIS’ WHICH ARE NECESSARY OR USEFUL FOR THE
DEVELOPMENT, MANUFACTURE AND COMMERCIALIZATION OF THE LICENSED COMPOUNDS OR
LICENSED PRODUCTS IN TERMINATED PROGRAM(S) IN THE NOVARTIS TERRITORY; PROVIDED
THAT NOVARTIS MAY RETAIN A SINGLE COPY OF SUCH ITEMS FOR ITS RECORDS.  WITHIN
*** AFTER INCYTE’S RECEIPT OF AN INVOICE THEREFOR, INCYTE SHALL REIMBURSE
NOVARTIS FOR NOVARTIS’ AND ITS AFFILIATES’ REASONABLE OUT-OF-POCKET COSTS
INCURRED IN CONNECTION WITH SUCH TRANSFERS AND ASSIGNMENT (BUT NOT THE
GENERATION, CREATION OR DEVELOPMENT OF SUCH INFORMATION AND MATERIALS);

 

(IX)                                INCYTE SHALL HAVE THE OPTION, EXERCISABLE
WITHIN *** FOLLOWING THE EFFECTIVE DATE OF SUCH TERMINATION, TO OBTAIN NOVARTIS
INVENTORY OF LICENSED PRODUCTS MANUFACTURED BY A THIRD PARTY WITH RESPECT TO
SUCH TERMINATED PROGRAM(S) ***

 

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FOR SUCH INVENTORY OF LICENSED PRODUCT.  INCYTE MAY EXERCISE SUCH OPTION BY
WRITTEN NOTICE TO NOVARTIS DURING SUCH *** PERIOD; PROVIDED THAT IN THE EVENT
INCYTE EXERCISES SUCH RIGHT TO PURCHASE SUCH INVENTORY, NOVARTIS SHALL GRANT,
AND HEREBY DOES GRANT, A ROYALTY-FREE RIGHT AND LICENSE TO ANY TRADEMARKS, NAMES
AND LOGOS OF NOVARTIS CONTAINED THEREIN *** TO PERMIT THE ORDERLY SALE OF SUCH
INVENTORY;

 

(X)                                   THE PROVISIONS OF ARTICLE VII (OTHER THAN
SECTION 7.1 AND SECTION 7.2(A))SHALL BE TERMINATED WITH RESPECT TO SUCH
TERMINATED PROGRAM, PROVIDED THAT NOVARTIS SHALL PROVIDE REASONABLE ASSISTANCE
TO INCYTE AND COOPERATION IN CONNECTION WITH THE TRANSITION OF PROSECUTION,
MAINTENANCE AND ENFORCEMENT RESPONSIBILITIES TO INCYTE, INCLUDING EXECUTION OF
SUCH DOCUMENTS AS MAY BE NECESSARY TO EFFECT SUCH TRANSITION; AND

 

(XI)                                TO THE EXTENT THAT NOVARTIS IS RESPONSIBLE
FOR MANUFACTURING A LICENSED PRODUCT PRIOR TO TERMINATION OF THIS AGREEMENT FOR
A TERMINATED PROGRAM, NOVARTIS SHALL:

 

A.                                   IN ACCORDANCE WITH THE TERMS OF THE SUPPLY
AGREEMENT, AND IN EXCHANGE FOR A PAYMENT EQUAL TO *** OF NOVARTIS’ COSTS,
INCLUDING ALLOCATED OVERHEAD FOR THE SUPPLY OF PRODUCT, AND IF REGULATORY
APPROVAL HAS BEEN OBTAINED FOR SUCH LICENSED PRODUCT, USE COMMERCIALLY
REASONABLE EFFORTS TO SUPPLY INCYTE AND ITS AFFILIATES WITH COMPARABLE
QUANTITIES OF THE APPLICABLE LICENSED PRODUCTS IN THE DOSAGE STRENGTH,
FORMULATION AND PRESENTATION AS WERE BEING COMMERCIALIZED AS OF THE EFFECTIVE
DATE OF TERMINATION UNTIL THE EARLIER OF *** AFTER THE EFFECTIVE DATE OF THE
TERMINATION OR ESTABLISHMENT BY INCYTE OF AN ALTERNATIVE SUPPLY FOR SUCH
LICENSED PRODUCT; PROVIDED THAT INCYTE SHALL USE ITS COMMERCIALLY REASONABLE
EFFORTS TO ESTABLISH AN ALTERNATIVE SUPPLY AS PROMPTLY AS REASONABLY
PRACTICABLE;

 

B.                                     COOPERATE WITH INCYTE IN REASONABLE
RESPECTS TO TRANSFER MANUFACTURING DOCUMENTS AND MATERIALS WHICH ARE USED (AT
THE TIME OF THE TERMINATION) BY NOVARTIS IN THE MANUFACTURE OF THE APPLICABLE
LICENSED PRODUCTS; AND

 

C.                                     COOPERATE WITH INCYTE IN REASONABLE
RESPECTS TO TRANSFER TO INCYTE, OR INCYTE’S DESIGNATED CONTRACT MANUFACTURER,
THE MANUFACTURING TECHNOLOGIES (INCLUDING ALL RELEVANT KNOW-HOW) THAT ARE USED
AND NECESSARY (AT THE TIME OF THE TERMINATION) AND CONTROLLED BY NOVARTIS IN THE
MANUFACTURE OF THE APPLICABLE LICENSED PRODUCTS, PROVIDED THAT INCYTE SHALL
REIMBURSE NOVARTIS FOR NOVARTIS’S REASONABLE OUT-OF-POCKET COSTS TO PROVIDE SUCH
REQUESTED ASSISTANCE.

 

(B)                                             UPON TERMINATION OF THIS
AGREEMENT BY NOVARTIS IN WHOLE OR WITH RESPECT TO A TERMINATED PROGRAM IN
ACCORDANCE WITH SECTION 9.2(B):

 

(I)                                     ALL LICENSES GRANTED BY NOVARTIS TO
INCYTE HEREUNDER WITH RESPECT TO SUCH TERMINATED PROGRAM(S) SHALL TERMINATE AND
INCYTE SHALL NOT HAVE ANY RIGHTS TO USE OR EXERCISE ANY RIGHTS UNDER THE
NOVARTIS IP;

 

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(II)                                  NOVARTIS SHALL BE RELEASED FROM ITS
DEVELOPMENT AND COMMERCIALIZATION OBLIGATIONS WITH RESPECT TO SUCH TERMINATED
PROGRAM(S) AND ANY EXCLUSIVITY AND NON-COMPETE OBLIGATIONS PERTAINING SOLELY TO
SUCH TERMINATED PROGRAM(S);

 

(III)                               INCYTE SHALL PROVIDE TO NOVARTIS A FAIR AND
ACCURATE SUMMARY REPORT OF THE STATUS OF THE DEVELOPMENT AND COMMERCIALIZATION
OF THE LICENSED PRODUCTS IN SUCH TERMINATED PROGRAM(S) IN THE INCYTE TERRITORY
THROUGH THE EFFECTIVE DATE OF TERMINATION WITHIN *** AFTER SUCH TERMINATION;

 

(IV)                              ***;

 

(V)                                 WITH RESPECT TO THE TERMINATED PROGRAM(S),
THE LICENSE GRANTED TO NOVARTIS PURSUANT TO SECTION 2.1 SHALL REMAIN IN EFFECT
AND ALL PAYMENT OBLIGATIONS UNDER ARTICLE VIII SHALL REMAIN IN EFFECT; PROVIDED
THAT WITH RESPECT TO ROYALTIES ARISING AFTER THE EFFECTIVE DATE OF TERMINATION,
NOVARTIS *** PAYABLE UNDER SECTION 8.3(A) AS THEY BECOME DUE;

 

(VI)                              NOVARTIS’ RIGHTS AND INCYTE’S OBLIGATIONS
PURSUANT TO SECTIONS 7.2 AND 7.3 SHALL SURVIVE; AND

 

(VII)                           THE PROVISIONS OF SECTION 3.2(E) (JOINT
INTELLECTUAL PROPERTY COMMITTEE) SHALL REMAIN IN EFFECT SOLELY WITH RESPECT TO
THE INCY0039 PATENT RIGHTS; PROVIDED THAT IF THE JIPC FAILS TO REACH UNANIMOUS
AGREEMENT ON A MATTER BEFORE IT FOR DECISION FOR A PERIOD IN EXCESS OF THIRTY
(30) DAYS, THE JIPC REPRESENTATIVES APPOINTED BY INCYTE SHALL HAVE THE DECIDING
VOTE ON SUCH MATTER.

 

(C)                                              ARTICLES I (DEFINITIONS), IX
(TERM AND TERMINATION), X (INDEMNIFICATION AND LIMITATION OF LIABILITY), XII
(CONFIDENTIALITY), XIII (DISPUTE RESOLUTION) AND XIV (MISCELLANEOUS) AND
SECTIONS 2.6(A)(III), 7.1 (INVENTORSHIP; OWNERSHIP), 8.5 (FINANCIAL RECORDS),
8.6 (AUDITS), 11.5) (DISCLAIMER OF WARRANTY) AND 11.6 (STANDSTILL) SHALL SURVIVE
TERMINATION OR EXPIRATION (IN ACCORDANCE WITH SECTION 9.1 (AGREEMENT TERM) OF
THIS AGREEMENT).

 

(D)                                             TERMINATION OF THIS AGREEMENT
SHALL BE IN ADDITION TO, AND SHALL NOT PREJUDICE, THE PARTIES’ REMEDIES AT LAW
OR IN EQUITY, INCLUDING THE PARTIES’ ABILITY TO RECEIVE LEGAL DAMAGES AND/OR
EQUITABLE RELIEF WITH RESPECT TO ANY BREACH OF THIS AGREEMENT (INCLUDING A
BREACH OF A REPRESENTATION OR WARRANTY SET FORTH IN ARTICLE XI), REGARDLESS OF
WHETHER OR NOT SUCH BREACH WAS THE REASON FOR THE TERMINATION.

 

ARTICLE X

 

INDEMNIFICATION; LIMITATION OF LIABILITY

 

10.1                           By Novartis.

 

(A)                                              NOVARTIS AGREES, AT NOVARTIS’S
COST AND EXPENSE, TO DEFEND, INDEMNIFY AND HOLD HARMLESS INCYTE AND ITS
AFFILIATES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND

 

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AGENTS (THE “INCYTE INDEMNIFIED PARTIES”) FROM AND AGAINST ANY LOSSES, COSTS,
DAMAGES, FEES OR EXPENSES ARISING OUT OF ANY THIRD PARTY CLAIM RELATING TO
(A) ANY BREACH BY NOVARTIS OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR
OBLIGATIONS PURSUANT TO THIS AGREEMENT, (B) THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF NOVARTIS, AND (C) THE DEVELOPMENT, MANUFACTURE, COMMERCIALIZATION,
USE, SALE OR OTHER DISPOSITION BY NOVARTIS, ITS AFFILIATES OR SUBLICENSEES OF
ANY LICENSED COMPOUND OR LICENSED PRODUCT; ***.

 

(B)                                             IN THE EVENT OF ANY SUCH CLAIM
AGAINST THE INCYTE INDEMNIFIED PARTIES BY ANY THIRD PARTY, INCYTE SHALL
PROMPTLY, ***, NOTIFY NOVARTIS IN WRITING OF THE CLAIM.  NOVARTIS SHALL HAVE THE
RIGHT, EXERCISABLE BY NOTICE TO INCYTE WITHIN *** AFTER RECEIPT OF NOTICE FROM
INCYTE OF THE CLAIM, TO ASSUME DIRECTION AND CONTROL OF THE DEFENSE, LITIGATION,
SETTLEMENT, APPEAL OR OTHER DISPOSITION OF THE CLAIM (INCLUDING THE RIGHT TO
SETTLE THE CLAIM SOLELY FOR MONETARY CONSIDERATION) WITH COUNSEL SELECTED BY
NOVARTIS AND REASONABLY ACCEPTABLE TO INCYTE; ***.  THE INCYTE INDEMNIFIED
PARTIES SHALL COOPERATE WITH NOVARTIS AND MAY, AT THEIR OPTION AND EXPENSE, BE
SEPARATELY REPRESENTED IN ANY SUCH ACTION OR PROCEEDING.  NOVARTIS SHALL NOT BE
LIABLE FOR ANY LITIGATION COSTS OR EXPENSES INCURRED BY THE INCYTE INDEMNIFIED
PARTIES WITHOUT NOVARTIS’S PRIOR WRITTEN AUTHORIZATION.  IN ADDITION, NOVARTIS
SHALL NOT BE RESPONSIBLE FOR THE INDEMNIFICATION OR DEFENSE OF ANY INCYTE
INDEMNIFIED PARTY TO THE EXTENT ARISING FROM ANY NEGLIGENT OR INTENTIONAL ACTS
BY ANY INCYTE INDEMNIFIED PARTY OR THE BREACH BY INCYTE OF ANY OBLIGATION OR
WARRANTY UNDER THIS AGREEMENT, OR ANY CLAIMS COMPROMISED OR SETTLED WITHOUT ITS
PRIOR WRITTEN CONSENT.

 

(C)                                              NOTWITHSTANDING ANYTHING TO THE
CONTRARY ABOVE, IN THE EVENT OF ANY SUCH CLAIM AGAINST THE INCYTE INDEMNIFIED
PARTIES BY A GOVERNMENTAL OR CRIMINAL ACTION SEEKING AN INJUNCTION AGAINST
INCYTE, INCYTE SHALL HAVE THE RIGHT TO CONTROL THE DEFENSE, LITIGATION,
SETTLEMENT, APPEAL OR OTHER DISPOSITION OF THE CLAIM AT NOVARTIS’ EXPENSE.

 

10.2                           By Incyte.

 

(A)                                              INCYTE AGREES, AT INCYTE’S COST
AND EXPENSE, TO DEFEND, INDEMNIFY AND HOLD HARMLESS NOVARTIS AND ITS AFFILIATES
AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS (THE “NOVARTIS
INDEMNIFIED PARTIES”) FROM AND AGAINST ANY LOSSES, COSTS, DAMAGES, FEES OR
EXPENSES ARISING OUT OF ANY THIRD PARTY CLAIM RELATING TO (A) ANY BREACH BY
INCYTE OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS PURSUANT TO THIS
AGREEMENT, OR (B) THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF INCYTE, AND
(C) THE DEVELOPMENT, MANUFACTURE, COMMERCIALIZATION, USE, SALE OR OTHER
DISPOSITION BY INCYTE, ITS AFFILIATES OR SUBLICENSEES OF ANY JAK LICENSED
COMPOUND, JAK LICENSED PRODUCT, C-MET LICENSED COMPOUND OR C-MET LICENSED
PRODUCT; PROVIDED, HOWEVER, THAT INCYTE SHALL NOT DEFEND, INDEMNIFY NOR HOLD
HARMLESS NOVARTIS INDEMNIFIED PARTIES FROM AND AGAINST ANY LOSSES, COSTS,
DAMAGES, FEES OR EXPENSES ARISING OUT OF ANY THIRD PARTY CLAIMS PERTAINING
DIRECTLY TO THE NOVARTIS IP.

 

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(B)                                             IN THE EVENT OF ANY SUCH CLAIM
AGAINST THE NOVARTIS INDEMNIFIED PARTIES BY ANY THIRD PARTY, NOVARTIS SHALL
PROMPTLY, AND IN ANY EVENT WITHIN ***, NOTIFY INCYTE IN WRITING OF THE CLAIM.
INCYTE SHALL HAVE THE RIGHT, EXERCISABLE BY NOTICE TO NOVARTIS WITHIN *** AFTER
RECEIPT OF NOTICE FROM NOVARTIS OF THE CLAIM, TO ASSUME DIRECTION AND CONTROL OF
THE DEFENSE, LITIGATION, SETTLEMENT, APPEAL OR OTHER DISPOSITION OF THE CLAIM
(INCLUDING THE RIGHT TO SETTLE THE CLAIM SOLELY FOR MONETARY CONSIDERATION) WITH
COUNSEL SELECTED BY INCYTE AND REASONABLY ACCEPTABLE TO NOVARTIS; PROVIDED THAT
THE FAILURE TO PROVIDE TIMELY NOTICE OF A CLAIM BY A THIRD PARTY SHALL NOT LIMIT
A NOVARTIS INDEMNIFIED PARTY’S RIGHT FOR INDEMNIFICATION HEREUNDER EXCEPT TO THE
EXTENT SUCH FAILURE RESULTS IN ACTUAL PREJUDICE TO INCYTE; AND PROVIDED FURTHER
THAT BEFORE ENTERING INTO A SETTLEMENT, INCYTE SHALL PROVIDE NOVARTIS WITH A
BOND, OR OTHER EVIDENCE REASONABLY SATISFACTORY TO NOVARTIS THAT INCYTE HAS
READILY AVAILABLE FUNDS, IN EITHER CASE IN AN AMOUNT SUFFICIENT TO INDEMNIFY
NOVARTIS IN FULL PROMPTLY THEREAFTER. THE NOVARTIS INDEMNIFIED PARTIES SHALL
COOPERATE WITH INCYTE AND MAY, AT THEIR OPTION AND EXPENSE, BE SEPARATELY
REPRESENTED IN ANY SUCH ACTION OR PROCEEDING.  INCYTE SHALL NOT BE LIABLE FOR
ANY LITIGATION COSTS OR EXPENSES INCURRED BY THE NOVARTIS INDEMNIFIED PARTIES
WITHOUT INCYTE’S PRIOR WRITTEN AUTHORIZATION.  IN ADDITION, INCYTE SHALL NOT BE
RESPONSIBLE FOR THE INDEMNIFICATION OR DEFENSE OF ANY NOVARTIS INDEMNIFIED PARTY
TO THE EXTENT ARISING FROM ANY NEGLIGENT OR INTENTIONAL ACTS BY ANY NOVARTIS
INDEMNIFIED PARTY, OR THE BREACH BY NOVARTIS OF ANY REPRESENTATION, OBLIGATION
OR WARRANTY UNDER THIS AGREEMENT, OR ANY CLAIMS COMPROMISED OR SETTLED WITHOUT
ITS PRIOR WRITTEN CONSENT.

 

(C)                                              NOTWITHSTANDING ANYTHING TO THE
CONTRARY ABOVE: (I) IN THE EVENT OF ANY SUCH CLAIM AGAINST THE NOVARTIS
INDEMNIFIED PARTIES BY A GOVERNMENTAL OR CRIMINAL ACTION SEEKING AN INJUNCTION
AGAINST NOVARTIS, OR (II) IF AT THE TIME THAT A CLAIM FOR WHICH INDEMNIFICATION
MAY BE SOUGHT UNDER THIS SECTION 10.2, OR AT ANY TIME THEREAFTER PRIOR TO THE
FINAL RESOLUTION OF SUCH CLAIM, A BANKRUPTCY EVENT OF INCYTE HAS OCCURRED,
NOVARTIS SHALL HAVE THE RIGHT TO CONTROL THE DEFENSE, LITIGATION, SETTLEMENT,
APPEAL OR OTHER DISPOSITION OF THE CLAIM AT INCYTE’S EXPENSE.

 

10.3                           Limitation of Liability.  EXCEPT WITH RESPECT TO
A BREACH OF ARTICLE XII OR A PARTY’S LIABILITY PURSUANT TO ARTICLE X, NEITHER
PARTY SHALL BE LIABLE FOR SPECIAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR OTHER
INDIRECT OR REMOTE DAMAGES, OR, EXCEPT WITH RESPECT TO A BREACH OF ARTICLE II OR
SECTION 4.1(A) OR (B), FOR LOSS OF PROFITS, LOSS OF DATA OR LOSS OF USE DAMAGES,
IN EACH CASE ARISING IN ANY WAY OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS
RIGHTS HEREUNDER, WHETHER BASED UPON WARRANTY, CONTRACT, TORT, STRICT LIABILITY
OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES OR LOSS.

 

10.4                           Insurance.  Each Party shall use all commercially
reasonable efforts to maintain Third Party insurance and/or self-insurance, as
applicable, including product liability insurance, with respect to its
activities hereunder in amounts customary to such insurance and sufficient to
meet its obligations under this Agreement, and shall claim upon such insurance
policy according to such policy’s relevant terms and conditions before relying
upon indemnification from the other Party.

 

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ARTICLE XI

 

REPRESENTATIONS AND WARRANTIES AND COVENANTS

 

11.1                           Representation Of Authority; Consents.  Incyte
and Novartis each represents and warrants to the other Party that:

 

(A)                                              AS OF THE EFFECTIVE DATE, IT
HAS FULL RIGHT, POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT; 

 

(B)                                             AS OF THE EFFECTIVE DATE, THIS
AGREEMENT HAS BEEN DULY EXECUTED BY SUCH PARTY AND CONSTITUTES A LEGAL, VALID
AND BINDING OBLIGATION OF SUCH PARTY, ENFORCEABLE IN ACCORDANCE WITH ITS TERMS,
EXCEPT AS ENFORCEABILITY MAY BE LIMITED BY BANKRUPTCY, FRAUDULENT CONVEYANCE,
INSOLVENCY, REORGANIZATION, MORATORIUM AND OTHER LAWS RELATING TO OR AFFECTING
CREDITORS’ RIGHTS GENERALLY AND BY GENERAL EQUITABLE PRINCIPLES AND PUBLIC
POLICY CONSTRAINTS (INCLUDING THOSE PERTAINING TO LIMITATIONS AND/OR EXCLUSIONS
OF LIABILITY, COMPETITION LAWS, PENALTIES AND JURISDICTIONAL ISSUES INCLUDING
CONFLICTS OF LAWS); AND

 

(C)                                              AS OF THE EFFECTIVE DATE, ALL
NECESSARY CONSENTS, APPROVALS AND AUTHORIZATIONS OF ALL GOVERNMENT AUTHORITIES
AND OTHER PERSONS REQUIRED TO BE OBTAINED BY SUCH PARTY IN CONNECTION WITH THE
EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT HAVE BEEN AND SHALL BE
OBTAINED.

 

11.2                           No Conflict.  Each Party represents and warrants
to the other Party that the execution and delivery of this Agreement and the
performance of such Party’s obligations hereunder (a) do not conflict with or
violate such Party’s corporate charter and bylaws or any requirement of
applicable Laws and (b) do not and shall not conflict with, violate or breach or
constitute a default or require any consent under, any oral or written
contractual obligation of such Party.  Each Party agrees that it shall not
during the term of this Agreement grant any right,  license, consent or
privilege to any Third Party or otherwise undertake any action, either directly
or indirectly, that would conflict with the rights granted to the other Party or
interfere with any obligations of such Party set forth in this Agreement.

 

11.3                           Additional Incyte Representations and
Warranties.  Incyte represents and warrants that, as of the Effective Date,
except as disclosed in Schedule 11.3:

 

(A)                                              NEITHER IT NOR ANY OF ITS
AFFILIATES OR ANY OF ITS OR THEIR SUBLICENSEES HAS RECEIVED WRITTEN NOTICE OF
ANY CLAIM OR LITIGATION WHICH ALLEGES ANY INTELLECTUAL PROPERTY RIGHTS OF A
THIRD PARTY ARE INFRINGED BY A LICENSED COMPOUND OR THE DEVELOPMENT OR
COMMERCIALIZATION OF ANY LICENSED COMPOUND; TO THE KNOWLEDGE OF INCYTE AND ITS
AFFILIATES, NONE OF INCYTE OR ANY OF ITS AFFILIATES HAS IN THE PAST INFRINGED OR
IS CURRENTLY INFRINGING ANY THIRD PARTY INTELLECTUAL PROPERTY RIGHTS THROUGH
ACTIVITIES RELATED TO THE LICENSED COMPOUNDS; AND TO THE KNOWLEDGE OF INCYTE AND
ITS AFFILIATES, THE DEVELOPMENT AND COMMERCIALIZATION ACTIVITIES CONTEMPLATED BY
INCYTE UNDER THIS AGREEMENT, WILL NOT INFRINGE THE INTELLECTUAL PROPERTY RIGHTS
OF ANY THIRD PARTY;

 

(B)                                             THERE ARE NO CLAIMS, JUDGMENTS
OR SETTLEMENTS AGAINST OR OWED BY INCYTE OR ANY OF ITS AFFILIATES, NOR, TO THE
KNOWLEDGE OF INCYTE OR ANY OF ITS AFFILIATES, ANY PENDING REISSUE,

 

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reexamination, interference, opposition or similar proceedings, with respect to
any Licensed Compounds or Incyte IP, and Incyte has not received written notice
of any threatened claims or litigation or any reissue, reexamination,
interference, opposition or similar proceedings seeking to invalidate or
otherwise challenge any Incyte IP;

 

(C)                                              TO THE KNOWLEDGE OF INCYTE AND
ITS AFFILIATES, NO THIRD PARTY IS INFRINGING ANY INCYTE PATENT RIGHTS;

 

(D)                                             (I) INCYTE IS THE LEGAL AND
BENEFICIAL OWNER OR HAS THE RIGHT TO GRANT TO NOVARTIS THE RIGHTS GRANTED
HEREIN, TO ALL INCYTE IP, (II) NO THIRD PARTY HAS ANY RIGHT, INTEREST OR CLAIM
IN OR TO SUCH RIGHTS THAT WOULD LIMIT THE RIGHTS GRANTED TO NOVARTIS UNDER THIS
AGREEMENT AND (III) ALL ASSIGNMENTS TO INCYTE OF INVENTORSHIP RIGHTS RELATING TO
THE INCYTE PATENT RIGHTS CONTROLLED BY INCYTE ARE VALID AND ENFORCEABLE;

 

(E)                                              ALL FEES DUE TO DATE THAT ARE
REQUIRED TO MAINTAIN THE INCYTE IP HAVE BEEN PAID IN FULL AND TO INCYTE’S
KNOWLEDGE, THE INCYTE IP IS VALID AND ENFORCEABLE;

 

(F)                                                INCYTE HAS NOT GRANTED TO ANY
THIRD PARTY RIGHTS THAT ARE INCONSISTENT WITH NOVARTIS’ RIGHTS HEREUNDER,
INCLUDING A GRANT OF RIGHTS THAT REMOVED INCYTE IP FROM INCYTE’S CONTROL AND
LIMITED THE RIGHTS GRANTED TO NOVARTIS UNDER THIS AGREEMENT, AND THERE ARE NO
AGREEMENTS OR ARRANGEMENTS TO WHICH INCYTE OR ANY OF ITS AFFILIATES IS A PARTY
RELATING TO LICENSED COMPOUNDS OR INCYTE IP THAT WOULD LIMIT THE RIGHTS GRANTED
TO NOVARTIS UNDER THIS AGREEMENT; AND

 

(G)                                             INCYTE HAS DISCLOSED TO NOVARTIS
ALL MATERIAL INFORMATION KNOWN TO IT AND ITS AFFILIATES WITH RESPECT TO THE
SAFETY AND EFFICACY OF EACH OF THE LICENSED COMPOUNDS. 

 

11.4                           Incyte Covenant.  Incyte shall not grant to any
Third Party rights that would be inconsistent with Novartis’ rights hereunder,
including a grant of rights that would remove Incyte IP from Incyte’s Control
and limit the rights granted to Novartis under this Agreement.

 

11.5                           Disclaimer of Warranty.  Nothing in this
Agreement shall be construed as a representation made or warranty given by
either Party that either Party will be successful in obtaining any Patent
Rights, that any patents will issue based on pending applications or that any
such pending applications or patents issued thereon will be valid.  ALL INCYTE
IP TRANSFERRED PURSUANT TO THIS AGREEMENT SHALL BE PROVIDED ON AN “AS IS”
BASIS.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY EXPRESSLY
DISCLAIMS, WAIVES, RELEASES AND RENOUNCES ANY WARRANTY, INCLUDING ANY IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT.

 

11.6                           Standstill.  Novartis agrees that, for a period
commencing on the Effective Date and ending *** after the Effective Date, unless
specifically invited in writing to do so by Incyte, Novartis and each of its
Affiliates (as that term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934 (the “Exchange Act”) will not in any manner, directly or indirectly:

 

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(A)                                              EFFECT, OR SEEK, OFFER OR
PROPOSE TO EFFECT (WHETHER PUBLICLY OR OTHERWISE) OR CAUSE OR PARTICIPATE IN,
(I) ANY ACQUISITION OF (A) ANY VOTING STOCK OF INCYTE, (B) DIRECT OR INDIRECT
RIGHTS OR OPTIONS TO ACQUIRE ANY VOTING STOCK OF INCYTE, OR (C) ASSETS OR
SECURITIES OF INCYTE OR ANY OF ITS SUBSIDIARIES, (II) ANY MERGER, CONSOLIDATION,
TENDER OR EXCHANGE OFFER, OR OTHER BUSINESS COMBINATION INVOLVING INCYTE OR ANY
AFFILIATE THEREOF, (III) ANY RESTRUCTURING, RECAPITALIZATION, LIQUIDATION,
DISSOLUTION OR SIMILAR TRANSACTION WITH RESPECT TO INCYTE OR ANY AFFILIATE
THEREOF, OR (IV) ANY “SOLICITATION” OF “PROXIES” (AS SUCH TERMS ARE DEFINED OR
USED IN REGULATION 14A UNDER THE EXCHANGE ACT) OR CONSENTS WITH RESPECT TO ANY
VOTING STOCK OF INCYTE, ANY “ELECTION CONTEST” (AS SUCH TERM IS DEFINED OR USED
IN RULE 14A-11 OF THE EXCHANGE ACT) WITH RESPECT TO INCYTE, OR ANY DEMAND FOR A
COPY OF INCYTE’S STOCK LEDGER, LIST OF ITS STOCKHOLDERS, OR OTHER BOOKS AND
RECORDS;

 

(B)                                             FORM, JOIN, PARTICIPATE IN OR
ENCOURAGE THE FORMATION OF ANY “GROUP” (WITHIN THE MEANING OF
SECTION 13(D)(3) OF THE EXCHANGE ACT) (“13D GROUP”) WITH RESPECT TO ANY VOTING
STOCK OF INCYTE;

 

(C)                                              OTHERWISE ACT (OTHER THAN AS
CONTEMPLATED UNDER THIS AGREEMENT), ALONE OR IN CONCERT WITH OTHERS (INCLUDING
BY PROVIDING FINANCING FOR ANOTHER PARTY), TO SEEK OR OFFER TO CONTROL OR
INFLUENCE, IN ANY MANNER, THE MANAGEMENT, BOARD OF DIRECTORS OR POLICIES OF
INCYTE;

 

(D)                                             TAKE ANY ACTION THAT MIGHT FORCE
INCYTE TO MAKE A PUBLIC ANNOUNCEMENT REGARDING ANY OF THE TYPES OF MATTERS SET
FORTH IN SECTION 11.6(A) ABOVE;

 

(E)                                              MAKE (PUBLICLY OR TO INCYTE, OR
ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SECURITY HOLDERS, DIRECTLY OR
INDIRECTLY) ANY REQUEST OR PROPOSAL TO AMEND, WAIVE OR TERMINATE ANY PROVISION
OF THIS AGREEMENT OR ANY INQUIRY OR STATEMENT RELATING THERETO; OR

 

(F)                                                INSTIGATE, ENCOURAGE OR
ASSIST ANY THIRD PARTY TO DO ANY OF THE FOREGOING; PROVIDED THAT NOVARTIS AND
ITS AFFILIATES MAY ACQUIRE, HOLD OR SELL, THROUGH THEIR RESPECTIVE TREASURY
DEPARTMENTS, AN AGGREGATE AMOUNT NOT TO EXCEED *** OF THE VOTING POWER
REPRESENTED BY INCYTE’S VOTING STOCK SOLELY FOR THE PURPOSES OF INVESTMENT IN
THE ORDINARY COURSE OF BUSINESS (SO LONG AS ANY DECISION TO MAKE SUCH
ACQUISITION OR SALE IS IN COMPLIANCE WITH UNITED STATES SECURITIES LAW), *** AND
PROVIDED FURTHER THAT THE RESTRICTIONS SET FORTH IN THIS SECTION 11.6 SHALL
TERMINATE IMMEDIATELY IF: (I) A PERSON OR 13D GROUP NOT INCLUDING NOVARTIS OR
ITS AFFILIATES ***, EITHER (X) INCYTE PUBLICLY ANNOUNCES ITS

 

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WILLINGNESS TO CONSIDER SUCH PROPOSAL OR ALTERNATIVE PROPOSALS FOR A TRANSACTION
DESCRIBED IN CLAUSE (II)(A) OR (B) BELOW, OR (Y) THE BOARD OF DIRECTORS OF
INCYTE DETERMINES TO ENGAGE IN NEGOTIATIONS WITH SUCH PERSON OR 13D GROUP OR ANY
OTHER PARTY OTHER THAN NOVARTIS OR ITS AFFILIATES WITH RESPECT TO A TRANSACTION
DESCRIBED IN CLAUSE (II)(A) OR (B) BELOW ***, (II) INCYTE OR ITS AFFILIATES
ENTERS IN TO A LETTER OF INTENT OR DEFINITIVE AGREEMENT WITH ANY PARTY OTHER
THAN NOVARTIS OR ITS AFFILIATES (A) ***; OR (B) WHICH WOULD RESULT IN ALL OR
SUBSTANTIALLY ALL OF INCYTE’S ASSETS BEING SOLD TO ANY PERSON OR 13D GROUP NOT
INCLUDING NOVARTIS OR ITS AFFILIATES; (III) INCYTE ANNOUNCES ITS DETERMINATION
TO PURSUE (W) A TRANSACTION DESCRIBED IN CLAUSE (II)(A) OR (B) ABOVE, (X) ***
THAT REPRESENTS MORE THAN *** OF THE VOTING POWER OF THE OUTSTANDING VOTING
STOCK OF INCYTE, (Y) THE SALE, TRANSFER OR DISPOSITION OF ALL OR SUBSTANTIALLY
ALL OF INCYTE’S ASSETS OR *** WITH ANY PARTY OTHER THAN NOVARTIS OR ITS
AFFILIATES; ***; OR (VI) THE SALE, TRANSFER OR DISPOSITION TO ***; PROVIDED,
HOWEVER, THAT ANY TERMINATION PURSUANT TO CLAUSE (I)(B) ABOVE SHALL NOT PERMIT
NOVARTIS OR ITS AFFILIATES TO TAKE ANY ACTION DESCRIBED IN SECTION 11.6(A)(IV),
SECTION 11.6(B) OR SECTION 11.6(F).  IN THE EVENT THAT THE TRANSACTIONS
CONTEMPLATED BY CLAUSES (I), (II) AND/OR (III) SHALL HAVE BEEN TERMINATED OR
ABANDONED, AND SUCH TERMINATION OR ABANDONMENT IS DEMONSTRABLE BY A PRESS
RELEASE ISSUED BY INCYTE (OR, IN THE CASE OF CLAUSE ***), THEN THIS SECTION 11.6
SHALL AGAIN BE APPLICABLE FOR THE REMAINDER OF THE PERIOD SPECIFIED HEREIN.

 

Further, nothing in this Section 11.6 shall obligate Novartis or its Affiliates
to cause Novartis’ or its Affiliates’ advisors (including financial advisors,
attorneys, accountants and consultants) to comply with the terms of this
Section 11.6 when acting on their own behalf or on behalf of Third Parties.

 

ARTICLE XII

 

CONFIDENTIALITY

 

12.1                           Confidential Information.  All Confidential
Information of a Party (“Disclosing Party”) shall not be used by the other Party
(the “Receiving Party”) except in performing its obligations or exercising
rights explicitly granted under this Agreement and shall be maintained

 

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in confidence by the Receiving Party and shall not otherwise be disclosed by the
Receiving Party to any Third Party, without the prior written consent of the
Disclosing Party with respect to such Confidential Information, except to the
extent that the Confidential Information:

 

(A)                                              WAS KNOWN BY THE RECEIVING
PARTY OR ITS AFFILIATES PRIOR TO ITS DATE OF DISCLOSURE TO THE RECEIVING PARTY;
OR

 

(B)                                             IS LAWFULLY DISCLOSED TO THE
RECEIVING PARTY OR ITS AFFILIATES BY SOURCES OTHER THAN THE DISCLOSING PARTY
RIGHTFULLY IN POSSESSION OF THE CONFIDENTIAL INFORMATION; OR

 

(C)                                              BECOMES PUBLISHED OR GENERALLY
KNOWN TO THE PUBLIC THROUGH NO FAULT OR OMISSION ON THE PART OF THE RECEIVING
PARTY, ITS AFFILIATES OR ITS SUBLICENSEES; OR

 

(D)                                             IS INDEPENDENTLY DEVELOPED BY OR
FOR THE RECEIVING PARTY OR ITS AFFILIATES WITHOUT REFERENCE TO OR RELIANCE UPON
SUCH CONFIDENTIAL INFORMATION, AS ESTABLISHED BY WRITTEN RECORDS.

 

Specific information shall not be deemed to be within any of the foregoing
exclusions merely because it is embraced by more general information falling
within those exclusions.

 

12.2                           Permitted Disclosure.  The Receiving Party may
provide the Disclosing Party’s Confidential Information:

 

(A)                                              TO THE RECEIVING PARTY’S
RESPECTIVE EMPLOYEES, CONSULTANTS AND ADVISORS, AND TO THE EMPLOYEES,
CONSULTANTS AND ADVISORS OF SUCH PARTY’S AFFILIATES, WHO HAVE A NEED TO KNOW
SUCH INFORMATION AND MATERIALS FOR PERFORMING OBLIGATIONS OR EXERCISING RIGHTS
EXPRESSLY GRANTED UNDER THIS AGREEMENT AND HAVE AN OBLIGATION TO TREAT SUCH
INFORMATION AND MATERIALS AS CONFIDENTIAL;

 

(B)                                             TO PATENT OFFICES IN ORDER TO
SEEK OR OBTAIN PATENT RIGHTS OR TO REGULATORY AUTHORITIES IN ORDER TO SEEK OR
OBTAIN APPROVAL TO CONDUCT CLINICAL TRIALS OR TO GAIN REGULATORY APPROVAL WITH
RESPECT TO THE LICENSED PRODUCT AS CONTEMPLATED BY THIS AGREEMENT; PROVIDED,
THAT SUCH DISCLOSURE MAY BE MADE ONLY FOLLOWING REASONABLE NOTICE TO THE
DISCLOSING PARTY AND TO THE EXTENT REASONABLY NECESSARY TO SEEK OR OBTAIN SUCH
PATENT RIGHTS OR APPROVALS; OR

 

(C)                                              IF SUCH DISCLOSURE IS REQUIRED
BY LAW OR TO DEFEND OR PROSECUTE LITIGATION OR ARBITRATION; PROVIDED, THAT PRIOR
TO SUCH DISCLOSURE, TO THE EXTENT PERMITTED BY LAW, THE RECEIVING PARTY PROMPTLY
NOTIFIES THE DISCLOSING PARTY OF SUCH REQUIREMENT AND FURNISHES ONLY THAT
PORTION OF THE DISCLOSING PARTY’S CONFIDENTIAL INFORMATION THAT THE RECEIVING
PARTY IS LEGALLY REQUIRED TO FURNISH.

 

12.3                           Publicity; Attribution; Terms of this Agreement;
Non-Use of Names.

 

(A)                                              EXCEPT AS REQUIRED BY JUDICIAL
ORDER OR APPLICABLE LAW OR AS SET FORTH BELOW, NEITHER PARTY SHALL MAKE ANY
PUBLIC ANNOUNCEMENT CONCERNING THIS AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT
OF THE OTHER PARTY, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR
DELAYED.  THE PARTY PREPARING ANY SUCH PUBLIC ANNOUNCEMENT SHALL PROVIDE THE
OTHER PARTY WITH A DRAFT THEREOF AT LEAST *** PRIOR TO THE DATE ON WHICH SUCH
PARTY WOULD LIKE

 

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TO MAKE THE PUBLIC ANNOUNCEMENT.  NOTWITHSTANDING THE FOREGOING, THE PARTIES
SHALL EACH ISSUE A SEPARATE PRESS RELEASE, IN THE FORMS ATTACHED AS EXHIBIT G,
WITHIN ONE (1) BUSINESS DAY AFTER THE EFFECTIVE DATE TO ANNOUNCE THE EXECUTION
OF THIS AGREEMENT AND DESCRIBE THE MATERIAL FINANCIAL AND OPERATIONAL TERMS OF
THIS AGREEMENT.  NEITHER PARTY SHALL USE THE NAME, TRADEMARK, TRADE NAME OR LOGO
OF THE OTHER PARTY OR ITS EMPLOYEES IN ANY PUBLICITY OR NEWS RELEASE RELATING TO
THIS AGREEMENT OR ITS SUBJECT MATTER, WITHOUT THE PRIOR EXPRESS WRITTEN
PERMISSION OF THE OTHER PARTY.

 

(B)                                             NOTWITHSTANDING THE TERMS OF
THIS ARTICLE XII,

 

(I)                                     EITHER PARTY SHALL BE PERMITTED TO
DISCLOSE THE EXISTENCE AND TERMS OF THIS AGREEMENT TO THE EXTENT REQUIRED, IN
THE REASONABLE OPINION OF SUCH PARTY’S LEGAL COUNSEL, TO COMPLY WITH APPLICABLE
LAWS, INCLUDING THE RULES AND REGULATIONS PROMULGATED BY THE SEC OR ANY OTHER
GOVERNMENTAL AUTHORITY.  NOTWITHSTANDING THE FOREGOING, BEFORE DISCLOSING THIS
AGREEMENT OR ANY OF THE TERMS HEREOF PURSUANT TO THIS SECTION 12.3(B), THE
PARTIES WILL COORDINATE IN ADVANCE WITH EACH OTHER IN CONNECTION WITH THE
REDACTION OF CERTAIN PROVISIONS OF THIS AGREEMENT WITH RESPECT TO ANY FILINGS
WITH THE SEC, LONDON STOCK EXCHANGE, THE UK LISTING AUTHORITY, NYSE, THE NASDAQ
STOCK MARKET OR ANY OTHER STOCK EXCHANGE ON WHICH SECURITIES ISSUED BY A PARTY
OR A PARTY’S AFFILIATE ARE TRADED, AND EACH PARTY WILL USE COMMERCIALLY
REASONABLE EFFORTS TO SEEK CONFIDENTIAL TREATMENT FOR SUCH TERMS AS MAY BE
REASONABLY REQUESTED BY THE OTHER PARTY; PROVIDED THAT EACH PARTY WILL
ULTIMATELY RETAIN CONTROL OVER WHAT INFORMATION THAT PARTY DISCLOSES TO THEIR
RELEVANT EXCHANGE, AND PROVIDED FURTHER THAT THE PARTIES WILL USE THEIR
COMMERCIALLY REASONABLE EFFORTS TO FILE REDACTED VERSIONS WITH ANY GOVERNING
BODIES WHICH ARE CONSISTENT WITH REDACTED VERSIONS PREVIOUSLY FILED WITH ANY
OTHER GOVERNING BODIES.  OTHER THAN SUCH OBLIGATION, NEITHER PARTY (NOR ITS
AFFILIATES) WILL BE OBLIGATED TO CONSULT WITH OR OBTAIN APPROVAL FROM THE OTHER
PARTY WITH RESPECT TO ANY FILINGS TO THE SEC, LONDON STOCK EXCHANGE, THE UK
LISTING AUTHORITY, NYSE, THE NASDAQ STOCK MARKET OR ANY OTHER STOCK EXCHANGE

 

(II)                                  EITHER PARTY MAY DISCLOSE THE EXISTENCE
AND TERMS OF THIS AGREEMENT IN CONFIDENCE TO ITS ATTORNEYS AND ADVISORS, AND TO
POTENTIAL ACQUIRERS (AND THEIR RESPECTIVE PROFESSIONAL ATTORNEYS AND ADVISORS),
IN CONNECTION WITH A POTENTIAL MERGER, ACQUISITION OR REORGANIZATION AND TO
EXISTING AND POTENTIAL INVESTORS OR LENDERS OF SUCH PARTY, AS A PART OF THEIR
DUE DILIGENCE INVESTIGATIONS, OR TO EXISTING AND POTENTIAL LICENSEES OR
SUBLICENSEES OR TO PERMITTED ASSIGNEES, IN EACH CASE UNDER AN AGREEMENT TO KEEP
THE TERMS OF CONFIDENTIALITY AND NON-USE SUBSTANTIALLY NO LESS RIGOROUS THAN THE
TERMS CONTAINED IN THIS AGREEMENT AND TO USE SUCH INFORMATION SOLELY FOR THE
PURPOSE PERMITTED PURSUANT TO THIS SECTION 12.3(B).

 

(III)                               EITHER PARTY MAY ISSUE A PRESS RELEASE OR
MAKE A PUBLIC DISCLOSURE RELATING TO THIS AGREEMENT OR THE SUPPLY AGREEMENT OR
THE PARTIES’ ACTIVITIES UNDER THIS AGREEMENT TO THE EXTENT THAT SUCH DISCLOSURE
DESCRIBES THE COMMENCEMENT AND/OR “TOP-LINE” RESULTS OF CLINICAL TRIALS OF THE
LICENSED PRODUCT, THE ACHIEVEMENT OF ANY DEVELOPMENT EVENTS WITH RESPECT TO THE
LICENSED PRODUCT OR THE FILING FOR OR RECEIPT OF REGULATORY APPROVAL WITH
RESPECT TO THE LICENSED PRODUCT, AMOUNTS PAID TO EITHER PARTY IN RESPECT OF THE
ACHIEVEMENT OF ANY MILESTONE EVENTS, OR THE TERMINATION OF THIS AGREEMENT. 
PRIOR TO MAKING ANY SUCH DISCLOSURE, THE PARTY MAKING THE DISCLOSURE SHALL
PROVIDE THE OTHER PARTY WITH A DRAFT OF SUCH PROPOSED DISCLOSURE AT LEAST ***
(OR, TO THE EXTENT TIMELY DISCLOSURE OF A MATERIAL EVENT IS REQUIRED BY LAW OR
STOCK EXCHANGE OR STOCK MARKET RULES, SUCH PERIOD OF TIME SUFFICIENTLY IN
ADVANCE OF THE DISCLOSURE SO THAT THE OTHER PARTY WILL HAVE THE OPPORTUNITY TO
COMMENT UPON THE

 

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DISCLOSURE) PRIOR TO MAKING ANY SUCH DISCLOSURE, FOR THE OTHER PARTY’S REVIEW
AND COMMENT, WHICH SHALL BE CONSIDERED IN GOOD FAITH BY THE DISCLOSING PARTY.

 

(C)                                              FOR PURPOSES OF CLARITY, EITHER
PARTY MAY ISSUE A PRESS RELEASE OR PUBLIC ANNOUNCEMENT OR MAKE SUCH OTHER
DISCLOSURE RELATING TO THIS AGREEMENT IF THE CONTENTS OF SUCH PRESS RELEASE,
PUBLIC ANNOUNCEMENT OR DISCLOSURE (I) HAS PREVIOUSLY BEEN MADE PUBLIC OTHER THAN
THROUGH A BREACH OF THIS AGREEMENT BY THE ISSUING PARTY OR ITS AFFILIATES OR
(II) IS CONTAINED IN SUCH PARTY’S FINANCIAL STATEMENTS PREPARED IN ACCORDANCE
WITH ACCOUNTING STANDARDS.

 

12.4                           Publications.  Each Party and its Affiliates
shall have the right to make disclosures pertaining to Licensed Compound or
Licensed Product to Third Parties in Publications in accordance with the
following procedure:  The publishing Party shall provide the non-publishing
Party with an advance copy of the proposed Publication, and each Party shall
then have *** prior to submission for any Publication in which to recommend any
changes it reasonably believes are necessary to preserve any Patent Rights or
Know-How belonging in whole or in part to the non-publishing Party.  If the
non-publishing Party informs the publishing Party that such Publication, in the
non-publishing Party’s reasonable judgment, could be expected to have a material
adverse effect on any patentable invention owned by or licensed, in whole or in
part, to the non-publishing Party (other than pursuant to a license granted
under this Agreement), or on any Know-How which is Confidential Information of
the non-publishing Party, the publishing Party shall delay or prevent such
Publication as follows:  (i) with respect to a patentable invention, such
Publication shall be delayed sufficiently long (not to exceed ***) to permit the
timely preparation and filing of a patent application; and (ii) with respect to
Know-How which is Confidential Information of such non-publishing Party, such
Know-How shall be deleted from the Publication. Each Party shall have the right
to present its Publications, which Publications shall be subject to the
requirements in this Section 12.4, at scientific conferences, including at any
conferences in any country in the world.

 

12.5                           Term.  All obligations under this ARTICLE XII
shall expire (i) *** following expiration of this Agreement pursuant to
Section 9.1, (ii) *** following termination of this Agreement pursuant to
Section 9.2(b), or (iii) *** following termination of this Agreement pursuant to
Section 9.2(a) or 9.2(c).

 

12.6                           Return of Confidential Information.  Upon the
expiration or termination of this Agreement, the Receiving Party shall return to
the Disclosing Party all Confidential Information received by the Receiving
Party from the Disclosing Party (and all copies and reproductions thereof).  In
addition, the Receiving Party shall destroy:  (a) any notes, reports or other
documents prepared by the Receiving Party which contain Confidential Information
of the Disclosing Party; and (b) any Confidential Information of the Disclosing
Party (and all copies and reproductions thereof) which is in electronic form or
cannot otherwise be returned to the Disclosing Party.  Alternatively, upon
written request of the Disclosing Party, the Receiving Party shall destroy all
Confidential Information received by the Receiving Party from the Disclosing
Party (and all copies and reproductions thereof) and any notes, reports or other
documents prepared by the Receiving Party which contain Confidential Information
of the Disclosing Party.  Nothing in this Section 12.6 shall require the
alteration, modification, deletion or destruction of archival tapes or other
electronic back-up media made in the ordinary course of business; provided that
the Receiving Party shall continue to be bound by its obligations of

 

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confidentiality and other obligations under this ARTICLE XII with respect to any
Confidential Information contained in such archival tapes or other electronic
back-up media.  Any requested destruction of Confidential Information shall be
certified in writing to the Disclosing Party by an authorized officer of the
Receiving Party supervising such destruction.  Notwithstanding the foregoing,
(i) the Receiving Party’s legal counsel may retain one copy of the Disclosing
Party’s Confidential Information solely for the purpose of determining the
Receiving Party’s continuing obligations under this ARTICLE XII and (ii) the
Receiving Party may retain the Disclosing Party’s Confidential Information and
its own notes, reports and other documents (A) to the extent reasonably required
(i) to exercise the rights and licenses of the Receiving Party expressly
surviving expiration or termination of this Agreement; (ii) to perform the
obligations of the Receiving Party expressly surviving expiration or termination
of this Agreement; or (B) to the extent it is impracticable to do so without
incurring disproportionate cost.  Notwithstanding the return or destruction of
the Disclosing Party’s Confidential Information, the Receiving Party shall
continue to be bound by its obligations of confidentiality and other obligations
under this ARTICLE XII.

 

ARTICLE XIII

 

DISPUTE RESOLUTION

 

13.1                           Dispute Resolution Process.  Matters before the
JSC and subcommittees shall be governed by the process specified in
Section 3.5.  Any controversy, claim or dispute arising out of or relating to
this Agreement that is not subject to Section 3.5, shall be settled, if
possible, through good faith negotiations between the Parties.  If the Parties
are unable to settle such dispute within ***, and a Party wishes to pursue the
matter, the matter may be referred by either Party to the Executive Officers,
who shall meet to attempt to resolve the dispute in good faith.  Such
resolution, if any, of a referred issue shall be final and binding on the
Parties.  All negotiations pursuant to this Section 13.1 are confidential and
shall be treated as compromise and settlement negotiations for purposes of
applicable rules of evidence.  If the Executive Officers are unable to settle
the dispute within *** after referral thereto pursuant to Section 13.1, then
each Party reserves its right to any and all remedies available under law or
equity with respect to the dispute, subject to Section 13.2.

 

13.2                           Injunctive Relief.  Notwithstanding anything to
the contrary in this ARTICLE XIII, any Party may seek immediate injunctive or
other interim relief from any court of competent jurisdiction as necessary to
enforce the provisions of Section 11.6 or ARTICLE XII and to enforce and prevent
infringement or misappropriation of the Patent Rights, Know-How or Confidential
Information Controlled by such Party.

 

ARTICLE XIV

 

MISCELLANEOUS

 

14.1                           Governing Law.  This Agreement (and any claims or
disputes arising out of or related thereto or to the transactions contemplated
thereby or to the inducement of any party to enter therein, whether for breach
of contract, tortious conduct, or otherwise and whether predicated on common
law, statute or otherwise) shall in all respects be governed by and

 

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construed in accordance with the laws of the State of New York, including all
matters of construction, validity and performance, in each case without
reference to any conflict of law rules that might lead to the application of the
laws of any other jurisdiction.

 

14.2                           Consent to Jurisdiction.  Each Party irrevocably
submits to the exclusive jurisdiction of the United States District Court for
the Southern District of New York or the United States District Court for the
District of Delaware, for the purposes of any suit, action or other proceeding
arising out of the Transaction.  Each Party agrees to commence any such action,
suit or proceeding either in the United States District Court for the Southern
District of New York or the United States District Court for the District of
Delaware or if such suit, action or other proceeding may not be brought in such
court for jurisdictional reasons, in the Supreme Court of the State of New York,
New York County.  Each Party further agrees that service of any process,
summons, notice or document by U.S. registered mail to such Party’s respective
address set forth in Section 14.6 shall be effective service of process for any
action, suit or proceeding in New York or Delaware with respect to any matters
to which it has submitted to jurisdiction in this Section 14.2. Each Party
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement in (i) the United
States District Court for the Southern District of New York or (ii) the United
States District Court for the District of Delaware, and hereby and thereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.

 

14.3                           Assignment.

 

(A)                                              NEITHER PARTY MAY ASSIGN ITS
RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF
THE OTHER PARTY, EXCEPT THAT WITHOUT PRIOR WRITTEN CONSENT OF THE OTHER PARTY
(A) NOVARTIS MAY MAKE SUCH ASSIGNMENT TO A NOVARTIS GROUP MEMBER, (B) INCYTE MAY
MAKE SUCH ASSIGNMENT TO AN INCYTE GROUP MEMBER, AND (C) EITHER PARTY MAY MAKE
SUCH ASSIGNMENT TO A THIRD PARTY TO WHOM A PARTY IS REQUIRED TO, OR REASONABLY
BELIEVES THAT IT WILL BE REQUIRED TO, DIVEST ANY NOVARTIS IP OR INCYTE IP, AS
THE CASE MAY BE, TO THE EXTENT NECESSARY TO COMPLY WITH LAW OR THE ORDER OF ANY
GOVERNMENTAL AUTHORITY AS A RESULT OF SUCH TRANSACTION (SO LONG AS IN EACH SUCH
CASE SUCH PARTY SHALL REMAIN JOINTLY AND SEVERALLY LIABLE WITH SUCH ASSIGNEE
WITH RESPECT TO ALL OBLIGATIONS SO ASSIGNED).  ANY REQUEST FOR CONSENT TO
ASSIGNMENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.  ANY PURPORTED
ASSIGNMENT IN CONTRAVENTION OF THIS SECTION 14.3 SHALL, AT THE OPTION OF THE
NON-ASSIGNING PARTY, BE NULL AND VOID AND OF NO EFFECT.  NO ASSIGNMENT SHALL
RELEASE EITHER PARTY FROM RESPONSIBILITY FOR THE PERFORMANCE OF ANY ACCRUED
OBLIGATION OF SUCH PARTY HEREUNDER.  THIS AGREEMENT SHALL BE BINDING UPON AND
ENFORCEABLE AGAINST THE SUCCESSOR TO OR ANY PERMITTED ASSIGNEE FROM EITHER OF
THE PARTIES. 

 

(B)                                             EACH PARTY AGREES THAT,
NOTWITHSTANDING ANY PROVISIONS OF THIS AGREEMENT TO THE CONTRARY:

 

(I)                                     EITHER PARTY MAY ASSIGN THIS AGREEMENT
AND THE RIGHTS, OBLIGATIONS AND LICENSES GRANTED HEREUNDER TO A THIRD PARTY IN
CONNECTION WITH A SALE OR TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE ASSIGNING
PARTY’S BUSINESS TO WHICH THIS AGREEMENT RELATES OR IF A PARTY MERGES OR
CONSOLIDATES WITH A THIRD PARTY.

 

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(II)           IN THE EVENT THAT THIS AGREEMENT IS ASSIGNED BY EITHER PARTY IN
CONNECTION WITH A SALE OR TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE ASSIGNING
PARTY’S BUSINESS TO WHICH THIS AGREEMENT RELATES, SUCH ASSIGNMENT SHALL NOT
PROVIDE (A) THE NON-ASSIGNING PARTY WITH RIGHTS OR ACCESS TO INTELLECTUAL
PROPERTY RIGHTS OF THE ASSIGNEE OR ACQUIRER OF SUCH PARTY, NOR (B) THE ASSIGNEE
OR ACQUIRER WITH RIGHTS OR ACCESS TO INTELLECTUAL PROPERTY RIGHTS OF THE
NON-ASSIGNING PARTY.

 

14.4         CHANGE OF CONTROL.

 

(A)               IN THE EVENT OF ANY CHANGE OF CONTROL OF INCYTE, INCYTE SHALL
NOTIFY NOVARTIS PROMPTLY, BUT IN NO EVENT LATER THAN *** FOLLOWING SUCH CHANGE
OF CONTROL. NOVARTIS SHALL HAVE THE RIGHT, BY PROVIDING WRITTEN NOTICE WITHIN
*** FOLLOWING ANY SUCH NOTICE OF CHANGE OF CONTROL, TO ELECT TO TERMINATE ANY OR
ALL OF INCYTE’S RIGHTS UNDER, OR DELETE, IN WHOLE OR IN PART, FROM THIS
AGREEMENT: SECTIONS *** AND ***.  IF NOVARTIS MAKES ANY ELECTION AS PROVIDED IN
THIS SECTION 14.4 TO DELETE ANY SECTION, THE PARTIES AGREE TO ADOPT THE
REPLACEMENT PROVISIONS SET FORTH IN EXHIBIT H IN PLACE OF THE RELEVANT SECTIONS
IN THIS AGREEMENT, AND NO PARTY SHALL HAVE ANY FURTHER OBLIGATIONS WITH RESPECT
TO ANY SUCH DELETED SECTION.  FOR THE AVOIDANCE OF DOUBT, NOVARTIS SHALL BE
ENTITLED, IN ITS SOLE DISCRETION, TO MAKE THE ELECTIONS PROVIDED FOR IN THIS
SECTION 14.4(A) UPON EACH OCCURRENCE OF A CHANGE OF CONTROL.

 

(B)               IN THE EVENT OF ANY CHANGE OF CONTROL OF NOVARTIS, NOVARTIS
SHALL NOTIFY INCYTE PROMPTLY, BUT IN NO EVENT LATER THAN *** FOLLOWING SUCH
CHANGE OF CONTROL. INCYTE SHALL HAVE THE RIGHT, BY PROVIDING WRITTEN NOTICE
WITHIN*** FOLLOWING ANY SUCH NOTICE OF CHANGE OF CONTROL, TO ELECT TO TERMINATE
ANY OR ALL OF NOVARTIS’ RIGHTS UNDER, OR DELETE, IN WHOLE OR IN PART, FROM THIS
AGREEMENT: SECTIONS *** AND ***.  IF INCYTE MAKES ANY ELECTION AS PROVIDED IN
THIS SECTION 14.4 TO DELETE ANY SECTION, THE PARTIES AGREE TO ADOPT THE
REPLACEMENT PROVISIONS SET FORTH IN EXHIBIT H IN PLACE OF THE RELEVANT SECTIONS
IN THIS AGREEMENT, AND NO PARTY SHALL HAVE ANY FURTHER OBLIGATIONS WITH RESPECT
TO ANY SUCH DELETED SECTION.  FOR THE AVOIDANCE OF DOUBT, INCYTE SHALL BE
ENTITLED, IN ITS SOLE DISCRETION, TO MAKE THE ELECTIONS PROVIDED FOR IN THIS
SECTION 14.4(B) UPON EACH OCCURRENCE OF A CHANGE OF CONTROL.

 

(C)               IN THE EVENT OF A CHANGE OF CONTROL OF A PARTY, THE
DEVELOPMENT OR COMMERCIALIZATION OF A COMPOUND OR PRODUCT THAT, AS OF THE DATE
OF SUCH CHANGE OF CONTROL, IS BEING DEVELOPED OR COMMERCIALIZED BY THE ACQUIRER
OF SUCH PARTY OR ANY AFFILIATE CONTROLLED BY (AS “CONTROLLED BY” IS DEFINED IN
SECTION 1.3) SUCH ACQUIRER, SHALL NOT CONSTITUTE A BREACH OF THIS AGREEMENT;
PROVIDED THAT (I) SUCH ACQUIRER OR AFFILIATE KEEPS SUCH DEVELOPMENT OR
COMMERCIALIZATION PROGRAM FOR SUCH OTHER PRODUCT SEPARATE FROM THE DEVELOPMENT
AND COMMERCIALIZATION PROGRAMS FOR LICENSED PRODUCTS AND (II) THE PARTY THAT
EXPERIENCED THE CHANGE OF CONTROL CONTINUES TO MEET ITS OBLIGATIONS HEREUNDER.

 

(D)               IN THE EVENT THAT ANY GROUP COMPANY OF A PARTY ENTERS INTO AN
AGREEMENT WITH ANY PERSON PURSUANT TO WHICH A CHANGE OF CONTROL WOULD OCCUR UPON
THE CLOSING OF THE TRANSACTIONS CONTEMPLATED BY SUCH AGREEMENT, THEN DURING THE
PERIOD BETWEEN ENTRY INTO SUCH AGREEMENT AND THE OCCURRENCE OF THE RELATED
CHANGE OF CONTROL, THE PARTY NOT ENTERING INTO SUCH AGREEMENT MAY ELECT TO
SUSPEND THE SHARING OF INFORMATION AND CONDUCT OF MEETINGS

 

77

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

 

*** Confidential material redacted and filed separately with the Commission.

 

contemplated in Sections *** and ***, in whole or in part, provided that if such
agreement is subsequently terminated without the occurrence of the related
Change of Control, then the Party not entering into such agreement may no longer
elect to suspend such sharing of information and conduct of meetings.

 

14.5         Entire Agreement; Amendments.  This Agreement, the Supply Agreement
and the Exhibits referred to in this Agreement constitute the entire agreement
between the Parties with respect to the subject matter hereof, and supersede all
previous arrangements with respect to the subject matter hereof, whether written
or oral, including the Prior Confidentiality Agreement.  Any amendment or
modification to this Agreement shall be made in writing signed by both Parties.

 

14.6         Notices.  Notices to Incyte shall be addressed to:

 

Incyte Corporation

Experimental Station, Route 141 & Henry Clay Road

Wilmington, Delaware 19880

Attention: Chief Commercial Officer

Facsimile No.: ***

 

with a copy to:

 

Incyte Corporation

Experimental Station, Route 141 & Henry Clay Road

Building E336

Wilmington, Delaware 19880

Attention: General Counsel

Facsimile No.: ***

 

Notices to Novartis shall be addressed to:

 

Novartis International Pharmaceutical Ltd.

Attention: Board of Directors

 

Physical Address:

 

131 Front Street, Hamilton HM12

Bermuda

 

Mailing Address:

P.O.Box 2899

Hamilton HM LX

Bermuda

Facsimile No.: ***

 

78

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

 

*** Confidential material redacted and filed separately with the Commission.

 

with a copy to:

 

Allen & Overy LLP

1221 Avenue of the Americas

New York, New York 10020

Attention: Eric Shube

Facsimile No.: ***

 

Either Party may change its address to which notices shall be sent by giving
notice to the other Party in the manner herein provided.  All reports,
approvals, and notices required or permitted by this Agreement to be given to a
Party (each a “Notice”) shall be given in writing, by personal delivery,
telecopy or overnight courier, to the Party concerned at its address as set
forth above (or at such other address as a Party may specify by written notice
pursuant to this Section 14.6 to the other). All Notices shall be deemed
effective, delivered and received (a) if given by personal delivery, or by
overnight courier, when actually delivered and signed for, or (b) if given by
facsimile, when such facsimile is transmitted to the facsimile number specified
above and receipt therefor is confirmed.

 

14.7         Force Majeure.  No failure or omission by either Party in the
performance of any obligation of this Agreement shall be deemed a breach of this
Agreement or create any liability if the same shall arise from any Force Majeure
Event; provided that the Party affected by such Force Majeure Event promptly
notifies the other Party and uses diligent efforts to cure such failure or
omission as soon as is practicable after the occurrence of one or more Force
Majeure Events.

 

14.8         Compliance With Laws.  Each Party shall perform its obligations
under this Agreement in compliance with all applicable Laws.

 

14.9         Use Of Names, Logos Or Symbols.  Subject to Sections 6.5 and 12.3,
no Party shall use the name, trademarks, logos, physical likeness, employee
names or owner symbol of the other Party for any purpose, including private or
public securities placements, without the prior written consent of the affected
Party.  Nothing contained in this Agreement shall be construed as granting
either Party any rights or license to use any of the other Party’s trademarks or
trade names or the names of any employees thereof, without separate, express
written permission of the owner of such trademark or trade name or name.

 

14.10       Independent Contractors.  It is understood and agreed that the
relationship between the Parties is that of independent contractors and that
nothing in this Agreement shall be construed to create a joint venture or any
relationship of employment, agency or partnership between the Parties to this
Agreement.  Neither Party is authorized to make any representations,
commitments, or statements of any kind on behalf of the other Party or to take
any action that would bind the other Party except as explicitly provided in this
Agreement.  Furthermore, none of the transactions contemplated by this Agreement
shall be construed as a partnership for any tax purposes.

 

79

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14.11       Headings.  The captions or headings of the sections or other
subdivisions hereof are inserted only as a matter of convenience or for
reference and shall have no effect on the meaning of the provisions hereof.

 

14.12       No Implied Waivers; Rights Cumulative.  No failure on the part of
Incyte or Novartis to exercise, and no delay by either Party in exercising, any
right, power, remedy or privilege under this Agreement, or provided by statute
or at law or in equity or otherwise, shall impair, prejudice or constitute a
waiver of any such right, power, remedy or privilege by such Party or be
construed as a waiver of any breach of this Agreement or as an acquiescence
therein by such Party, nor shall any single or partial exercise of any such
right, power, remedy or privilege by a Party preclude any other or further
exercise thereof or the exercise of any other right, power, remedy or privilege.

 

14.13       Severability.  If, under applicable Laws, any provision of this
Agreement is invalid or unenforceable, or otherwise directly or indirectly
affects the validity of any other material provision(s) of this Agreement (such
invalid or unenforceable provision, a “Severed Clause”), this Agreement shall
endure except for the Severed Clause.  The Parties shall consult one another and
use good faith efforts to agree upon a valid and enforceable provision that is a
reasonable substitute for the Severed Clause in view of the intent of this
Agreement.

 

14.14       Execution In Counterparts.  This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.  Signatures
provided by facsimile transmission or in Adobe™ Portable Document Format (PDF)
sent by electronic mail shall be deemed to be original signatures.

 

14.15       No Third Party Beneficiaries.  No Person other than Novartis and
Incyte (and their respective assignees) shall be deemed an intended beneficiary
hereunder or have any right to enforce any obligation of this Agreement.

 

14.16       Exhibits.  In the event of inconsistencies between this Agreement
and any exhibits or attachments hereto, the terms of this Agreement shall
control.

 

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

 

80

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IN WITNESS WHEREOF, the Parties have caused their duly authorized officers to
execute and acknowledge this Agreement as of the date first written above.

 

 

NOVARTIS INTERNATIONAL PHARMACEUTICAL LTD.

 

INCYTE CORPORATION

 

 

 

By:

/s/ Simon Zivi

 

By:

/s/ Paul A. Friedman

Name: Simon Zivi

 

Name: Paul A. Friedman

Title: Director

 

Title: CEO

 

 

NOVARTIS INTERNATIONAL PHARMACEUTICAL LTD.

 

 

 

 

 

By:

/s/ Michael Jones

 

 

Name: Michael Jones

 

 

Title: Director

 

 

 

81

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

 

Exhibit A

 

Incyte Patent Rights

 

1

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

 

*** Confidential material redacted and filed separately with the Commission.

 

A-1

 

c-MET Patent Rights

 

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

 

2

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

 

*** Confidential material redacted and filed separately with the Commission.

 

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

***

 

***

 

***

 

3

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

 

*** Confidential material redacted and filed separately with the Commission.

 

A-2

 

JAK Patent Rights

 

INCY0039

 

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

 

4

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

 

*** Confidential material redacted and filed separately with the Commission.

 

***

 

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

 

***

***

 

***

***

 

***

***

 

***

***

 

***

 

***

***

 

***

***

 

***

 

***

***

 

***

***

 

***

 

5

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

 

Exhibit B

 

Initial Information Transfer to Novartis

 

Described below are the items to be provided to Novartis by Incyte pursuant to
Section 4.1(a)(i) of the Agreement, which include the material documents,
information and data listed in this Exhibit B that are recorded in tangible form
that are Incyte Know-How for c-MET Licensed Products and JAK Licensed Products,
to the extent each of which exists as of the Effective Date and has not already
been provided to Novartis.  Within sixty (60) days after the Effective Date,
Novartis will confirm in writing to Incyte whether Incyte’s initial data
transfer obligations, as described in Section 4.1(a)(i) of the Agreement, have
been achieved.  Subject to Section 4.3(c) of the Agreement, additional data may
be requested by Novartis, and such requests as reasonably agreed will be
addressed by Incyte in a timely fashion.

 

Clinical & Regulatory Documents and Information

 

·                  Clinical study related documents, information and data that
are recorded in tangible form, including those currently possessed by CROs and
other third party vendors

·                  Regulatory Authority submissions, correspondence and all
communications, including minutes from teleconferences and contact reports (US
and ex-US)

·                  Regulatory Authority meeting briefing documents and related
minutes (US and ex-US)

·                  Pre-IND submissions

·                  IND submissions

·                  Annual reports to IND(s)

·                  CTA/IMPD submissions

·                  Annual Safety Reports submissions

·                  Investigator’s Brochures and any updates thereto

·                  Safety reports (CIOMSs and/or Medwatch reports)

·                  Documents related to serious adverse events (“SAEs”)

·                  Investigator Safety Letters, actions taken for safety
reasons, and other relevant safety information

·                  Safety pharmacology and toxicology study related documents,
information and data that are recorded in tangible form

·                  Pharmacology and Absorption, Distribution, Metabolism, and
Excretion (ADME) related documents, information and data that are recorded in
tangible form

 

c-MET Licensed Compound Documents

 

Incyte may retain (x) copies of all documents, information and data, including
regulatory submissions, correspondence, and clinical trial data; (y) originals
of regulatory submissions, correspondence, and clinical trial data until fifteen
(15) Business Days after responsibility for the relevant regulatory filing or
clinical trial has been transferred to Novartis in accordance with the Agreement
and this Exhibit B, and (z) any other original documents, information and data
to the extent, and only for as long as, required by Incyte to carry out its
research and Development responsibilities under the Agreement, including
Incyte’s conduct of the Phase I study for INCB-28060 (“Study 28060-101”). 
Incyte will provide both a shared electronic depository and paper copies of all
requested documents, information and data where both electronic and paper
versions are currently available.

 

1

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

 

JAK Licensed Compound Documents

 

Incyte may retain (x) originals of all documents, information and data,
including regulatory submissions, correspondence, and clinical trial data and
(y) originals of regulatory submissions, correspondence, and clinical trial data
directly related to Study 352 until fifteen (15) Business Days after
responsibility for the relevant regulatory filing or clinical trial has been
transferred to Novartis in accordance with the Agreement and this Exhibit B. 
Incyte will provide both a shared electronic depository and paper copies of all
requested documents, information and data where both electronic and paper
versions are currently available.

 

Manufacturing Know-How

 

Incyte will prepare and compile an inventory of relevant documents and transfer
all Incyte Know-How for manufacturing c-MET Licensed Products and JAK Licensed
Products including, but not limited to: laboratory notebook data, batch records,
process data, stability data, summary reports, formulation folders, analytical
methods, development reports, quality and regulatory documentation, validation
reports and other material data related to the development, manufacturing,
and/or distribution of Drug Substance and Drug Product. As part of the Know-How
transfer, Incyte shall cooperate with Novartis to establish a transfer protocol
and make resources available at Incyte’s cost to enable the successful execution
of the transfer protocol.  Additionally, Incyte will disclose and transfer as
necessary, any vendor sourcing and/or contracting information that Novartis may
request.

 

2

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

 

Exhibit C

 

1

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

 

*** Confidential material redacted and filed separately with the Commission.

 

C-1

 

Out-of-Pocket Costs

 

***

***

 

****

 

*****

 

***

***

 

***

 

***

 

***

***

 

***

 

***

 

***

***

 

***

 

***

 

***

***

 

***

 

***

 

***

 

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

****

 

*****

 

2

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

 

C-2

 

Clinical Supply Agreement

 

This Clinical Supply Agreement (this “Supply Agreement”) is entered into as of
[   ] between Incyte Corporation, a Delaware corporation having an office at
Experimental Station, Route 141 & Henry Clay Road, Wilmington, Delaware
(“Incyte”), and [Novartis International Pharmaceuticals Ltd.], a [          ]
having an office at [                ] (“Novartis”). Novartis and Incyte are
sometimes referred to herein individually as a “Party” and collectively as the
“Parties”.

 

WHEREAS, Incyte and Novartis have entered into a Collaboration and License
Agreement, dated                 , 2009 (“Collaboration and License Agreement”);
and

 

WHEREAS, Pursuant to the Collaboration and License Agreement, Incyte (or its
designees) has agreed to manufacture, handle and supply the Drug Substance or
the Drug Substance intermediate and Drug Product required by Novartis for use in
Clinical Trials in accordance with the Development Plan on the terms and
conditions set out in (i) this Supply Agreement and (ii) the Collaboration and
License Agreement.

 

NOW THEREFORE, the Parties hereby agree as follows:

 

1.                                      Defined Terms

 

Terms defined in the Collaboration and License Agreement shall have the same
meaning when used in this Supply Agreement, unless expressly stated otherwise.

 

2.                                      Supply and Packaging

 

2.1                                 In accordance with Section 5.1(b) of the
Collaboration and License Agreement, Incyte agrees to use Commercially
Reasonable Efforts to supply Novartis with any agreed Drug Substance
intermediate, the Drug Substance and the Drug Product for use in the Clinical
Trials on and subject to the terms and conditions of: (a) this Supply Agreement
and (b) the Collaboration and License Agreement.

 

2.2                                 The Drug Substance intermediate, the Drug
Substance and Drug Product delivered by Incyte pursuant to this Supply Agreement
shall have attached an agreed form of label.

 

2.3                                 Incyte may either itself package the Drug
Substance and Drug Product (“Clinical Supplies”), or use a Third Party or
Affiliate subcontractor.  The Out-of-Pocket cost and expense of packaging will
be charged by Incyte to Novartis.  Alternatively, Novartis may undertake the
packaging itself or through a Third Party contractor at its own expense

 

2.4                                 For Clinical Supplies other than for Study
352, Incyte (or alternatively, Novartis) shall manufacture or purchase from a
Third Party or Affiliate subcontractor the labels and packaging materials for
the Clinical Supplies, in accordance with specifications to be agreed between
the Parties in writing, and shall conduct quality assurance testing as

 

3

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

 

*** Confidential material redacted and filed separately with the Commission.

 

stipulated in a separate SOP agreed between the Parties.  Both Parties shall be
responsible for the design of all art work for such labels and packaging
materials.

 

2.5                                 Each Party shall at all times comply with
all Laws applicable to it in connection with the importation, supply and use of
the Clinical Supplies.

 

3.                                      Forecasts and Orders

 

3.1                                 Incyte and Novartis will mutually agree, on
a monthly basis, to a rolling forecast of the quantities of Clinical Supplies
required to carry out the Clinical Trials in accordance with the relevant
Development Plan (each a “Clinical Trial Forecast”).

 

3.2                                 Incyte and Novartis will mutually agree in
the applicable JDC on a Clinical Supply plan for the Drug Substance
intermediate, Drug Substance, and Drug Product and on the responsibilities of
each Party in implementing the Clinical Supply plan, including a delivery date
for each batch of Clinical Supplies to be delivered by Incyte to Novartis in
accordance with paragraph 4.2.  Based on this agreed Clinical Supply plan,
Novartis will provide Incyte with a written signed request for Clinical
Supplies, which shall constitute a binding order by Novartis (a “Clinical Trial
Order”).  The JDC shall track the actual use of the Clinical Supplies in
accordance with the Development Plan to determine if any significant deviation
occurs between the quantity used in the Clinical Trials and the Clinical Trial
Forecast.  If mutually agreed by Incyte and Novartis, Novartis may request
changes to the delivery date(s), and the quantities of Clinical Supplies to be
delivered on each delivery date, provided it gives Incyte at least *** written
notice in advance of the agreed delivery date.

 

3.3                                 Incyte shall use Commercially Reasonable
Efforts to meet all orders placed by Novartis which are within the Clinical
Trial Forecast by the delivery dates agreed on by the Parties, in accordance
with Incyte’s standard terms of delivery.  Novartis agrees to purchase from
Incyte all Clinical Supplies manufactured for Novartis by Incyte according to
the Clinical Trial Orders, and use the Drug Substance intermediate, Drug
Substance and Drug Product supplied by Incyte for the Clinical Trials.

 

3.4                                 Where a shortage in Clinical Supplies occurs
while clinical trials in the Novartis Territory are ongoing, Incyte shall use
Commercially Reasonable Efforts to supply Clinical Supplies as necessary for the
conduct of all ongoing Clinical Trials of the Clinical Supplies.

 

4.                                      Allocation, delivery and acceptance
testing

 

4.1                                 Incyte shall be responsible for and shall
conduct either by itself or by assigning a Third Party or Affiliate
subcontractor the allocation of Clinical Supplies before delivery to Novartis. 
All costs and expenses relating to the allocation of Clinical Supplies shall be
charged by Incyte to Novartis in accordance with paragraph 6.

 

4.2                                 Incyte (or any of its Affiliates) shall
deliver the Clinical Supplies to Novartis, at Novartis’s cost and expense.  For
the avoidance of doubt, Novartis shall be responsible for delivery of the
Clinical Supplies to the site(s) of the Clinical Trials, and for all costs

 

4

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

 

*** Confidential material redacted and filed separately with the Commission.

 

and expenses relating thereto.  Incyte shall use Commercially Reasonable Efforts
to deliver the Clinical Supplies specified in Novartis’s firm order to meet the
requirements of the Development Plan.

 

4.3                                 Incyte shall conduct at Novartis’s cost and
expense appropriate release tests for the Drug Substance intermediate, Drug
Substance and Drug Product as agreed between the Parties in a Quality Agreement.

 

4.4                                 Before delivery to Novartis, Incyte shall at
its cost and expense conduct an acceptance test to check the quality of the
Clinical Trial Order in order to determine whether the Clinical Trial Order has
any observable defects.  Incyte shall not package or deliver to Novartis any
Clinical Supplies which have observable defects.

 

5.                                      Clinical Products Standards

 

Incyte shall manufacture, handle and supply, or shall require its Third Party or
Affiliate manufacturer, as applicable, to manufacture, handle and supply, all
Clinical Supplies supplied by Incyte or its Affiliate to Novartis pursuant to
this Supply Agreement and in conformance with appropriate international and
country specific regulatory standards for cGMP compliance.

 

6.                                      Fees, costs and expenses

 

6.1                                 Incyte (or Incyte Affiliate) shall invoice
Novartis upon each delivery of the Clinical Supplies, for Incyte’s *** for the
supply of Clinical Supplies under this Supply Agreement, which Novartis shall
pay in full within *** after receipt.

 

7.                                      Duration and Termination

 

7.1                                 Without prejudice to paragraph 7.2, this
Supply Agreement shall commence on the date of this Supply Agreement and shall
continue in force until the earlier of: (i) Novartis’ written notice of a
termination of this Supply Agreement for convenience; (ii) the completion of all
Clinical Trials and completion of performance of the obligations of both Parties
hereunder; (iii) commercial launch of a JAK Licensed Product in the Novartis
Territory for a myeloproliferative disease; or (iv) termination or the expiry of
the Collaboration and License Agreement, whereupon it shall terminate.

 

7.2                                 If this Supply Agreement terminates as a
result of (i) paragraph 7.1(i) or (ii) termination (but not expiry) of the
Collaboration and License Agreement, the terms of this Supply Agreement shall
continue to apply to all outstanding orders for Clinical Supplies that have been
accepted by Incyte and Novartis shall pay Incyte in accordance with the terms of
this Supply Agreement for all Clinical Supplies delivered to it in accordance
with such outstanding orders.

 

8.                                      General

 

ARTICLE XI (Representations and Warranties), Section 12.1 (Confidential
Information), Section 12.2 (Permitted Disclosure), Section 12.6 (Return of
Confidential Information),

 

5

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

 

ARTICLE XIII (Dispute Resolution) and ARTICLE XIV (Miscellaneous) of the
Collaboration and License Agreement shall be incorporated into this Supply
Agreement, mutatis mutandis.

 

6

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

 

IN WITNESS WHEREOF, the Parties have caused their duly authorized officers to
execute and acknowledge this Supply Agreement as of the date first written
above.

 

NOVARTIS INTERNATIONAL PHARMACEUTICAL LTD.

 

INCYTE CORPORATION

 

 

 

By:

 

 

By:

 

Name:

 

Name:

Title:

 

Title:

 

7

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

 

Exhibit D

 

Initial Development Plans

 

1

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

 

Exhibit D-1

 

c-MET Development Plan

 

Conduct of study in accordance with the protocol existing as of the Effective
Date for c-MET Licensed Compound INCB28060, Study 101.

 

2

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

 

*** Confidential material redacted and filed separately with the Commission.

 

Exhibit D-2

 

JAK Development Plan

 

A.                                   Conduct of study in accordance with the
protocol existing as of the Effective Date for JAK Licensed Compound INCB018424,
Study 352.

 

B.                                     ***.

 

C.                                     ***.

 

3

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

 

Exhibit E

 

c-MET Studies

 

A.                                   Initial Phase I Study in cancer patients,
such study to be conducted in accordance with a mutually agreeable protocol. 
Incyte shall be responsible for all decisions with respect to the conduct of
such Phase 1 Study and shall pay all costs in connection with such study until
achievement of (i) plasma IC90, (ii) demonstrated IC90 tumor inhibition in at
least three (3) subjects and (iii) completion of the food effect portion of the
study as outlined in the protocol for study INCB28060 101.  Thereafter, Novartis
shall become responsible for any further Development as well as any additional
costs.

 

B.                                     3-month toxicology study in rat, such
study to be conducted in accordance with a mutually agreeable protocol

 

1

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

 

Exhibit F

 

Study 351 and Study 352

 

1

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

 

*** Confidential material redacted and filed separately with the Commission.

 

Exhibit F-1

 

Out-of-Pocket Costs for Toxicology Studies

 

***

 

****

 

*****

 

***

 

*****

 

*****

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***

 

***

 

***

 

***

 

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*****

 

2

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*** Confidential material redacted and filed separately with the Commission.

 

Exhibit F-2

 

Study 352

 

Out-of-Pocket Costs for EMEA Registration Study

 

*****

 

***

 

****

 

******

 

***

 

******

 

******

***

 

***

 

***

 

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***

 

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3

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*** Confidential material redacted and filed separately with the Commission.

 

 

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4

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Exhibit G

 

Press Release

 

Pamela M. Murphy

Vice President, Investor Relations/Corporate Communications

302/498-6944

 

Incyte Announces Major Collaboration and License Agreement for Two
Hematology-Oncology Programs

 

Novartis to Develop and Commercialize Incyte’s Lead JAK1/JAK2 Inhibitor,
INCB18424, for Territories Outside the US and Incyte’s cMET inhibitor,
INCB28060, Worldwide

 

Incyte May Receive Over $1 Billion in Payments, including $150 Million Upfront
Plus an Immediate $60 Million Development Milestone in Addition to Future
Potential Milestones and Royalties

 

WILMINGTON, DE, November 25, 2009 — Incyte Corporation (NASDAQ: INCY) announced
today that it has entered into a collaboration and license agreement with
Novartis for two of its investigational hematology-oncology therapies:
INCB18424, an oral JAK1/JAK2 inhibitor that is in Phase III development for
myelofibrosis, a serious life-threatening neoplastic condition characterized by
varying degrees of bone marrow failure, splenic enlargement and debilitating
constitutional symptoms, and INCB28060, an oral cMET inhibitor that is about to
enter Phase I development as a potential treatment for multiple cancers.

 

Paul A. Friedman, Incyte’s president and CEO, stated, “This agreement reflects
our objective to retain US rights to INCB18424 and puts us in a strong position
to transition Incyte into a successful commercial company with sufficient
resources to continue to advance other promising compounds in our pipeline.
Additionally, the appreciation from Novartis for INCB18424’s potential to treat
the unmet patient need in myelofibrosis and other cancers, and their proven
success in rapidly commercializing new targeted oncology treatments, were
determining factors in our decision to choose Novartis as our collaborative
partner.”

 

Under the terms of the agreement, Incyte will retain exclusive rights for the
development and potential commercialization of INCB18424 in the US. Novartis
will have responsibility for the future development and commercialization of
INCB18424 in all hematology—oncology indications outside of the US. Novartis
will also be responsible for the future worldwide development of INCB28060.

 

Novartis will make an upfront payment of $150 million to Incyte plus an
immediate $60 million milestone payment for the initiation of the European Phase
III trial of INCB18424, COMFORT-II, that began in July of this year. Novartis
will receive ex-US commercialization rights for Incyte’s lead JAK inhibitor and
global commercialization rights for the cMET inhibitor. Each company will be
responsible for costs in their respective territories for the JAK inhibitor,
with costs of collaborative studies shared

 

1

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

 

equally. Incyte may also be eligible over time for additional payments of up to
approximately $1.1 billion if future contingent development and
commercialization milestones are achieved. Incyte is also eligible to receive
tiered, double-digit royalty payments on future ex-US INCB18424 sales. Novartis
will be responsible for all costs and activities for the cMET inhibitor after
the Phase I clinical trial. Incyte is eligible to receive royalties on future
sales of INCB28060 and has retained an option to co-develop and co-promote
INCB28060.

 

About Myeloproliferative Neoplasms (MPNs)

 

MPNs are a related group of hematological neoplasms characterized by dysfunction
of the bone marrow resulting in either over production of blood cells or
ineffective hematopoiesis leading to production of blood cells in the spleen and
resulting in massive splenomegaly. The three main MPNs are polycythemia vera
(PV), essential thrombocythemia (ET) and myelofibrosis (MF). Approximately 10 to
20% of patients with PV and ET progress to MF and MF can also develop without a
prior history of PV or ET. There are no adequately effective therapies to treat
these disorders.

 

About INCB18424

 

INCB18424 is Incyte’s lead internally developed JAK1/JAK2 inhibitor that has
shown positive clinical activity in a number of hematology and inflammatory
conditions. The compound is currently in Phase III for patients with MF and
Phase II for patients with advanced PV and ET. Incyte has retained rights to
develop a topical formulation of INCB18424 which has demonstrated positive
clinical results in a recently completed Phase IIb trial in patients with mild
to moderate psoriasis.

 

About INCB28060

 

cMET is a validated target with significant potential in multiple major oncology
indications. INCB28060 is a potent cMET inhibitor that has demonstrated
favorable pharmacologic activity in relevant cell and animal models and has
demonstrated in those models that it can be dosed safely to achieve levels of
cMET inhibition that are associated with tumor regression in multiple solid
tumors. The investigational new drug application has been cleared by the US Food
and Drug Administration.

 

About Incyte

 

Incyte Corporation is a Wilmington, Delaware-based drug discovery and
development company focused on developing proprietary small molecule drugs for
oncology, inflammation and diabetes.  Incyte’s most advanced compound,
INCB18424, is in Phase III development for myelofibrosis.  For additional
information on Incyte, visit the Company’s web site at www.incyte.com.

 

Forward-Looking Statements

 

Except for the historical information contained herein, the matters set forth in
this press release, including statements with respect to the potential to
receive up to approximately $1.1 billion in future contingent milestone
payments, plans and timing for

 

2

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

 

INCB28060 to enter Phase I development as a potential treatment for multiple
cancers, statements regarding being put in a strong position to transition into
a successful commercial company with sufficient resources to continue to advance
other promising compounds in the pipeline, the potential indications and
benefits of INCB18424 and INCB28060, and the potential benefits from and
payments under the agreement, are all forward-looking statements within the
meaning of the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to risks and
uncertainties that may cause the parties not to achieve some or all of the
commercial and developmental milestones set forth in the collaboration agreement
and that may otherwise cause Incyte’s actual results and timing to differ
materially, including the high degree of risk and uncertainty associated with
drug development and clinical trials, the uncertainty associated with the
regulatory approval processes, risks related to the timing of and patient
enrollment in clinical trials, risks related to the potential failure of
INCB18424 and INCB28060 to demonstrate safety and efficacy in clinical testing;
risks and uncertainty associated with the therapeutic and commercial value of
INCB18424 and INCB28060; risks relating to market competition, risks associated
with Incyte’s dependence on its relationship with its collaboration partners,
and other risks detailed from time to time in Incyte’s filings with the
Securities and Exchange Commission, including its Quarterly Report on Form 10-Q
for the quarter ended September 30, 2009. Incyte disclaims any intent or
obligation to update these forward-looking statements.

 

3

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Novartis gains rights to two oral targeted investigational therapies focusing on
patients with life-threatening blood disorders and cancers

 

·                  Ex-US rights acquired for JAK inhibitor INCB18424 in Phase
III development as first-in-class treatment for myelofibrosis, a
life-threatening blood disorder

 

·                  Global rights acquired for early-stage cMET inhibitor
INCB28060 targeting tumor invasion and drug resistance in certain cancers
including gastric, kidney and lung

 

·                  Novartis to make payments of USD 150 million upfront and
first milestone of USD 60 million; Incyte eligible for milestone payments and
royalties on future sales

 

Basel, November 25, 2009 — Novartis has gained exclusive rights to two oral
targeted investigational therapies for patients with a range of life-threatening
blood disorders and cancers that currently do not have effective treatment
options.

 

Under a licensing agreement with Incyte Corporation, Novartis will have
responsibility for the future development of Incyte’s investigational JAK
inhibitor outside the US and for future development of an early-stage cMET
inhibitor globally.

 

·                  The lead compound is a Janus kinase (JAK) inhibitor with the
investigational name INCB18424. This oral targeted therapy is in Phase III
clinical trials for the treatment of myelofibrosis, a life-threatening
neoplastic condition with no effective medical treatment(1) that is
characterized by varying degrees of bone marrow failure, splenomegaly (enlarged
spleen) and debilitating symptoms. INCB18424 has the potential of becoming a
first-in-class therapeutic agent for the treatment of this and other hematologic
diseases.

 

·                  The second compound covered in the licensing agreement, a
mesenchymal-epithelial transition factor kinase (cMET) inhibitor with the
investigational name INCB28060, is entering Phase I development. Compounds in
this class are envisioned to become effective cancer therapies through their
ability to block molecular signals leading to tumor cell angiogenesis,
proliferation, survival, invasion and metastasis. Multiple cancers have shown to
be dependent on activation of molecular signals by genetic alterations of the
cMET gene(2).  Emerging evidence indicates that cMET inhibition may be useful in
the treatment of certain cancers, including gastric and kidney cancer(2), and
may help to overcome resistance to some targeted therapies, such as gefitinib in
non-small cell lung cancer(3).

 

“A key Novartis priority is to bring innovative medicines to patients as quickly
as possible,” said David Epstein, President and CEO, Novartis Oncology and
Novartis Molecular Diagnostics. “This agreement leverages these two promising
investigational drugs with Novartis Oncology’s global development and
commercialization expertise and our wide range of multi-targeted approaches to
cancer treatment.”

 

4

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

 

Terms of the agreement

 

Novartis will make an upfront payment of USD 150 million to Incyte and a first
milestone payment of USD 60 million for initiation of the European Phase III
trial of the JAK inhibitor INCB18424 that began in July of this year. The
agreement covers ex-US commercialization rights for the JAK inhibitor and global
commercialization rights for the cMET inhibitor INCB28060. Each company will be
responsible for costs in their respective territories for the JAK inhibitor,
with costs of collaborative studies shared equally.  Novartis will be
responsible for all costs and activities for the cMET inhibitor after the Phase
I clinical trial. After the first milestone, Incyte will be eligible for
additional payments based on achieving defined development and commercialization
milestones and to receive royalties on future sales. Incyte also has an option
to co-promote the cMET inhibitor in the US and to participate in the cMET
inhibitor’s global development.

 

Disclaimer

 

This release contains certain forward-looking statements relating to the
exclusive agreement concluded between Novartis and Incyte. Such forward-looking
statements are not historical facts and can generally be identified by the use
of forward-looking terminology such as “to make,” “eligible,” “will,”
“potential,” “about to enter,” “envisioned to become,” “may,” “promising,” or
similar expressions, or by express or implied discussions regarding potential
future sales or earnings of Novartis; or by discussions of strategy, plans,
expectations or intentions or potential synergies, strategic benefits or
opportunities that may result from the proposed acquisition. Such
forward-looking statements reflect the current plans, expectations, objectives,
intentions or views of Novartis with respect to future events and involve known
and unknown risks, uncertainties and other factors that may cause actual results
to be materially different from any future results, performance or achievements
expressed or implied by such statements. In particular, there can be no
guarantee that the proposed acquisition will be completed in the expected form
or within the expected time frame or at all. Nor can there be any guarantee that
Novartis will achieve any particular future financial results or future growth
rates or that Novartis will be able to realize any of the potential synergies,
strategic benefits or opportunities as a result of the proposed acquisition.
Among other things, the expectations of Novartis could be affected by unexpected
regulatory actions or delays or government regulation generally, as well as
other risks and factors referred to in Novartis AG’s Forms 20-F on file with the
US Securities and Exchange Commission. Novartis is providing the information in
this release as of this date and does not undertake any obligation to update any
forward-looking statements as a result of new information, future events or
otherwise.

 

About Novartis

 

Novartis provides healthcare solutions that address the evolving needs of
patients and societies. Focused solely on healthcare, Novartis offers a
diversified portfolio to best meet these needs: innovative medicines,
cost-saving generic pharmaceuticals, preventive vaccines, diagnostic tools and
consumer health products. Novartis is the only company with leading positions in
each of these areas. In 2008, the Group’s continuing operations achieved net
sales of USD 41.5 billion and net income of USD 8.2 billion. Approximately USD
7.2 billion was invested in R&D activities throughout the Group. Headquartered
in Basel, Switzerland, Novartis Group companies employ approximately 99,000
full-time-equivalent associates and operate in more than 140 countries around
the world. For more information, please visit http://www.novartis.com.

 

# # #

 

References:

 

5

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

(1)          Hellman AJ. Myeloproliferative syndromes: diagnosis and therapeutic
options. Pol Arch Med Wewn. 2008;118:756-759.

(2)          Gentile A, Trusolino L, Comoglio PM. The Met tyrosine kinase
receptor in development and cancer. Cancer Metastasis Rev. 2008 Mar;27(1):85-94.

(3)          Zucali PA, Ruiz MG, Giovannetti E, et al. Role of cMET expression
in non-small-cell lung cancer patients treated with EGFR tyrosine kinase
inhibitors. Ann Oncol. 2008 Sep;19(9):1605-12.

 

Novartis Media Relations

 

Central media line : +41 61 324 2200

 

Eric Althoff

Novartis Global Media Relations

+41 61 324 7999 (direct)

+41 79 593 4202 (mobile)

eric.althoff@novartis.com

Kim Fox

Novartis Oncology

+1 862 778-7692 (direct)

kim.fox@novartis.com

 

e-mail: media.relations@novartis.com

 

Novartis Investor Relations

 

Central phone:

 

+41 61 324 7944

 

 

 

 

Ruth Metzler-Arnold

 

+41 61 324 9980

 

North America:

 

 

Pierre-Michel Bringer

 

+41 61 324 1065

 

Richard Jarvis

 

+1 212 830 2433

John Gilardi

 

+41 61 324 3018

 

Jill Pozarek

 

+1 212 830 2445

Thomas Hungerbuehler

 

+41 61 324 8425

 

Edwin Valeriano

 

+1 212 830 2456

Isabella Zinck

 

+41 61 324 7188

 

 

 

 

 

 

 

 

 

 

 

e-mail: investor.relations@novartis.com

 

e-mail: investor.relations@novartis.com

 

6

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

 

Exhibit H

 

REPLACEMENT PROVISIONS

 

1. THE FOLLOWING SHALL REPLACE THE ENTIRETY OF ARTICLE III UPON A CHANGE OF
CONTROL (WITH THE PARTY EXPERIENCING THE CHANGE OF CONTROL REFERRED TO AS THE
“COC PARTY” AND THE OTHER PARTY BEING REFERRED TO AS THE “NON-COC PARTY”):

 

“GOVERNANCE

 

1.1           Joint Steering Committee.

 

(A)           ESTABLISHMENT.  THE JOINT STEERING COMMITTEE (“JSC”) WILL HAVE THE
RESPONSIBILITY FOR THE OVERALL COORDINATION AND OVERSIGHT OF THE PARTIES’
ACTIVITIES UNDER THIS AGREEMENT.  EACH PARTY’S REPRESENTATIVES AND ANY
SUBSTITUTE FOR A REPRESENTATIVE SHALL BE BOUND BY THE OBLIGATIONS OF
CONFIDENTIALITY SET FORTH IN ARTICLE XII. A REPRESENTATIVE FROM THE NON-COC
PARTY SHALL ACT AS THE CHAIRPERSON OF THE JSC.  THE CHAIRPERSON SHALL NOT HAVE
ANY GREATER AUTHORITY THAN ANY OTHER REPRESENTATIVE ON THE JSC AND SHALL CONDUCT
THE FOLLOWING ACTIVITIES OF THE JSC: (I) CALLING MEETINGS OF THE JSC;
(II) PREPARING AND ISSUING MINUTES OF EACH SUCH MEETING WITHIN THIRTY (30) DAYS
THEREAFTER; (III) ENSURING THAT ANY DECISION-MAKING DELEGATED TO THE JSC IS
CARRIED OUT IN ACCORDANCE WITH SECTION 3.5; AND (IV) PREPARING AND CIRCULATING
AN AGENDA FOR THE UPCOMING MEETING; PROVIDED THAT THE CHAIRPERSON SHALL INCLUDE
ANY AGENDA ITEMS PROPOSED BY THE COC PARTY.  EACH PARTY SHALL BE FREE TO CHANGE
ITS REPRESENTATIVES ON NOTICE TO THE OTHER OR TO SEND A SUBSTITUTE
REPRESENTATIVE TO ANY JSC MEETING; PROVIDED, HOWEVER, THAT EACH PARTY SHALL
ENSURE THAT AT ALL TIMES DURING THE EXISTENCE OF THE JSC, ITS REPRESENTATIVES ON
THE JSC ARE APPROPRIATE IN TERMS OF EXPERTISE AND SENIORITY (INCLUDING AT LEAST
ONE MEMBER OF SENIOR MANAGEMENT) FOR THE THEN-CURRENT STAGE OF DEVELOPMENT AND
COMMERCIALIZATION OF THE LICENSED PRODUCTS AND HAVE THE AUTHORITY TO BIND SUCH
PARTY WITH RESPECT TO MATTERS WITHIN THE PURVIEW OF THE JSC.

 

(B)            RESPONSIBILITIES.  THE JSC SHALL HAVE RESPONSIBILITY FOR THE
ONGOING EXCHANGE OF INFORMATION AND COOPERATION NECESSARY AFTER THE CHANGE OF
CONTROL.

 

1.2           Subcommittees.  The JSC may establish and disband such
subcommittees as deemed necessary by the JSC; provided, however, that the JIPC
shall continue its responsibilities at least with respect to the INCY0039 Patent
Rights in the Novartis Territory.  Each Party shall be free to change its
representatives on notice to the other or to send a substitute representative to
any subcommittee meeting; provided, however, that each Party shall ensure that
at all times during the existence of any subcommittee, its representatives on
such subcommittee are appropriate in terms of expertise and seniority for the
then-current stage of Development and Commercialization of the Licensed Product
in the Field in the Territory and have the authority to bind such Party with
respect to matters within the purview of the relevant subcommittee. Each Party’s
representatives and any substitute for a representative shall be bound by the
obligations of confidentiality set forth in ARTICLE XII.  Except as expressly
provided in this Agreement, no subcommittee shall have the authority to bind the
Parties hereunder and each subcommittee shall report to, and any decisions shall
be made by, the JSC.

 

1

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

 

1.3           Committee Meetings.  Except where a Party fails to appoint a
member or members to the JSC or its subcommittees or fails to participate in
meetings of the JSC or its subcommittees pursuant to Section 3.6, meetings of
the JSC and the subcommittees, respectively, shall be effective only if at least
one (1) representative of each Party is present or participating.  The JSC and
its subcommittees may meet either (i) in person at either Party’s facilities or
at such locations as the Parties may otherwise agree or (ii) by audio or video
teleconference; provided that no less than one (1) meeting during each Calendar
Year shall be conducted in person.  Other representatives of each Party involved
with the Licensed Product may attend meetings as non-voting participants,
subject to the confidentiality provisions set forth in ARTICLE XII.  Each Party
shall be responsible for all of its own expenses incurred in connection with
participating in all such meetings.

 

1.4           Authority.  The JSC and any subcommittee shall have only the
powers assigned expressly to it in this ARTICLE III and elsewhere in this
Agreement, and shall not have any power to amend, modify or waive compliance
with this Agreement.  In furtherance thereof, each Party shall retain the
rights, powers and discretion granted to it under this Agreement and no such
rights, powers or discretion shall be delegated or vested in the JSC or any
subcommittee unless such delegation or vesting of rights is expressly provided
for in this Agreement or the Parties expressly so agree in writing.”

 

1.                                       The following shall replace Section 4.3
upon a Change of Control:

 

“4.3         Development Activities.

 

(A)               TERMINATION OF JOINT DEVELOPMENT ACTIVITIES.  THE NON-COC
PARTY SHALL, IN ITS SOLE DISCRETION, HAVE THE OPTION TO TERMINATE ANY ONGOING
JOINT DEVELOPMENT ACTIVITIES.  IN THE EVENT ANY ONGOING JOINT DEVELOPMENT
ACTIVITIES ARE TERMINATED,

 

(I)            EACH PARTY SHALL HAVE THE RIGHT TO POSSESS, RETAIN AND USE ALL
CLINICAL AND NON-CLINICAL DATA AND RELATED REGULATORY DOCUMENTATION CONTROLLED
BY EITHER PARTY AND GENERATED IN THE COURSE OF JOINT DEVELOPMENT ACTIVITIES
PRIOR TO THE TERMINATION OF SUCH JOINT DEVELOPMENT ACTIVITY IN ORDER TO DEVELOP,
OBTAIN REGULATORY APPROVAL FOR AND COMMERCIALIZE JAK LICENSED PRODUCTS IN THE
JAK FIELD IN SUCH PARTY’S TERRITORY IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT; AND

 

(II)           EACH PARTY HEREBY GRANTS TO THE OTHER PARTY A RIGHT OF REFERENCE
OR USE TO ANY AND ALL SUCH REGULATORY DOCUMENTATION, AND AGREES TO SIGN, AND
CAUSE ITS AFFILIATES TO SIGN, FROM TIME TO TIME, PROMPTLY UPON REQUEST, ANY
INSTRUMENTS REASONABLY REQUESTED BY SUCH OTHER PARTY IN ORDER TO EFFECT SUCH
GRANT.

 

(B)               ONGOING JOINT DEVELOPMENT ACTIVITIES.  WITH RESPECT TO ONGOING
JOINT DEVELOPMENT ACTIVITIES WHICH ARE NOT TERMINATED PURSUANT TO 4.3(A),

 

(I)            EACH PARTY SHALL HAVE THE RIGHT TO POSSESS, RETAIN AND USE ALL
CLINICAL AND NON-CLINICAL DATA AND RELATED REGULATORY DOCUMENTATION CONTROLLED
BY EITHER PARTY AND GENERATED IN THE COURSE OF JOINT DEVELOPMENT ACTIVITIES IN
ORDER TO DEVELOP, OBTAIN REGULATORY APPROVAL FOR AND COMMERCIALIZE JAK

 

2

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

 

LICENSED PRODUCTS IN THE JAK FIELD IN SUCH PARTY’S TERRITORY IN ACCORDANCE WITH
THE TERMS OF THIS AGREEMENT.

 

(II)           EACH PARTY HEREBY GRANTS TO THE OTHER PARTY A RIGHT OF REFERENCE
OR USE TO ANY AND ALL SUCH REGULATORY DOCUMENTATION, AND AGREES TO SIGN, AND
CAUSE ITS AFFILIATES TO SIGN, FROM TIME TO TIME, PROMPTLY UPON REQUEST, ANY
INSTRUMENTS REASONABLY REQUESTED BY SUCH OTHER PARTY IN ORDER TO EFFECT SUCH
GRANT;

 

(III)          EACH PARTY SHALL MAINTAIN COMPLETE AND ACCURATE RECORDS OF ALL
RESULTS, DATA, AND DEVELOPMENTS MADE PURSUANT TO ITS EFFORTS UNDER THE
DEVELOPMENT PLAN.  SUCH RECORDS SHALL APPROPRIATELY REFLECT ALL WORK DONE AND
RESULTS ACHIEVED IN THE PERFORMANCE OF DEVELOPMENT ACTIVITIES IN SUFFICIENT
DETAIL AND IN GOOD SCIENTIFIC MANNER APPROPRIATE FOR PATENT AND REGULATORY
PURPOSES; AND

 

(IV)          IN ANY AGREEMENT BETWEEN EITHER PARTY AND A CLINICAL RESEARCH
ORGANIZATION RELATED TO A JOINT DEVELOPMENT ACTIVITY, THE CONTRACTING PARTY
SHALL USE REASONABLE EFFORTS TO NAME THE OTHER PARTY AS A THIRD PARTY
BENEFICIARY FOR THE PURPOSE OF RECEIVING DATA DERIVED FROM CLINICAL TRIALS
RELATED TO SUCH JOINT DEVELOPMENT ACTIVITY FROM SUCH CLINICAL RESEARCH
ORGANIZATION IN THE EVENT OF A BANKRUPTCY EVENT OF SUCH PARTY.”

 

3

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Exhibit I

 

Pharmacovigilance Agreement

 

1

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[g363032kg021i001.gif]

 

Pharmacovigilance Agreement for c-MET and JAK Licensed Products

 

PHARMACOVIGILANCE AGREEMENT

 

[  ] November 2009

 

between

 

Incyte Corporation

Experimental Station,

Route 141 & Henry Clay Road

Wilmington, Delaware

USA

(“Incyte”)

 

and

 

Novartis Pharma AG

Lichtstrasse 35

4056 Basel

Switzerland

(“Novartis”)

 

relating to Product(s):

c-MET Licensed Products

 

JAK Licensed Products

 

(together “the Product”)

 

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

 

Confidential

 

Table of contents

 

 

 

 

Table of contents

2

 

 

 

1

Purpose

3

 

 

 

2

Term

3

 

 

 

3

Definitions and Abbreviations

3

 

 

 

4

Databases

4

 

 

 

5

Detailed Description of the Pharmacovigilance System (DDPS)

4

 

 

 

6

Signal Detection (internally identified safety issues)

5

 

 

 

7

Maintenance of Labeling Documents

5

 

 

 

8

Exchange of Individual Case Reports

5

 

 

 

 

8.1

Scope

5

 

 

 

 

 

8.2

Format

6

 

 

 

 

 

8.3

Unblinding

6

 

 

 

 

 

8.4

Follow-up

6

 

 

 

 

 

8.5

Timelines

7

 

 

 

 

9

Individual Report Assessment

7

 

 

 

 

9.1

Labelling

7

 

 

 

 

 

9.2

Requirement for Study Protocols:

8

 

 

 

 

10

Regulatory Reporting Responsibilities

8

 

 

 

 

10.1

Individual Case Safety Reports

8

 

 

 

 

 

10.2

Investigator Notifications

8

 

 

 

 

 

10.3

Preparation and Submission of Annual Reports from Clinical Trials and other
Cumulative Safety Reports

8

 

 

 

 

 

10.4

Periodic SUSAR Reports

9

 

 

 

 

 

10.5

Responses to Regulatory Authority Questions

9

 

 

 

 

 

10.6

Risk Management Plans

10

 

 

 

 

 

10.7

PSUR

10

 

 

 

 

11

SOPs

10

 

 

 

12

Audits

10

 

 

 

13

Dispute Resolution

11

 

 

 

14

Contact Persons

11

 

 

 

15

Miscellaneous

11

 

 

 

16

APPENDIX 1 - Definitions and Abbreviations

12

 

 

 

 

16.1

Definitions

12

 

 

 

 

 

16.2

Acronyms

14

 

 

 

 

17

APPENDIX 2 — Contact Persons

15

 

2

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1                                                            PURPOSE

 

WHEREAS, Incyte and Novartis International Pharmaceutical Ltd. (“NIP”) entered
into a Collaboration and License Agreement dated as of November         , 2009
(the “Collaboration Agreement”);

 

WHEREAS, the Collaboration Agreement required that Incyte enter into this
Pharmacovigilance Agreement with Novartis;

 

WHEREAS, the purpose of this Phamacovigilance Agreement is to define how the
Parties are to cooperate to enable each of them to comply with its respective
obligations under applicable laws, regulations and guidelines with regard to
Adverse Event data collection, analysis and reporting for the Product, and to
enable each Party to satisfy its duty of care;

 

WHEREAS, under this agreement each Party is obliged to inform the other Party
immediately in case of Pharmacovigilance issues (such as risk management
communication, Dear Doctor Letters, urgent safety restrictions) to ensure that
communication between the Parties is aligned, especially if any Regulatory
Authorities are involved;

 

WHEREAS, nothing in this Pharmacovigilance Agreement is intended to limit or
restrict either of the Parties’ obligations under applicable laws, regulations
and guidelines; and

 

WHEREAS, nothing in this Pharmacovigilance Agreement is intended to prevent
either of the Parties from taking any action that it reasonably considers to be
necessary to comply with applicable laws, regulations and guidelines.

 

NOW, THEREFORE, the Parties hereto hereby agree as follows:

 

2                                                            TERM

 

This Pharmacovigilance Agreement shall become effective on the date hereof and,
unless earlier terminated in accordance with the Collaboration Agreement, shall
continue in force for as long as both of the Parties have a legitimate interest
in receiving the information, reports, and notifications provided for.  This
applies to the c-MET program as long as Incyte holds the relevant c-MET IND and
is responsible for the conduct of clinical studies.

 

At the latest this Pharmacovigilance Agreement shall be updated before product
launch and in time to meet the requirements for handling and reporting
spontaneous reports from marketed use.

 

3                                                            DEFINITIONS AND
ABBREVIATIONS

 

The definitions of terms and abbreviations used in this Pharmacovigilance
Agreement are set out in Appendix 1. If any of the relevant regulatory
definitions of the corresponding terms are amended (for example those in the ICH
E2A and ICH E2C Guidelines, or in the US CFR (21 CFR Part 314.80(a) and
312.32(a)), then the Parties shall assess whether the definitions in this
Pharmacovigilance Agreement need to be amended to make them consistent and, if
any

 

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***Confidential material redacted and filed separately with the Commission.

 

amendments are necessary, shall seek to reach written agreement in good faith on
such amendments.

 

The language of all communications and exchanges under this Pharmacovigilance
Agreement shall be English.

 

4                                                            DATABASES

 

Novartis shall establish, hold and maintain the global safety database for the
Product, into which it shall enter information on all SAE/SRs concerning the
Product occurring anywhere in the world and reported to either of the Parties.
For the term of this Pharmacovigilance Agreement, this shall be the reference
database for signal detection. Such database shall comply in all material
respects with all laws reasonably applicable to pharmacovigilance anywhere where
the Products are being or have been Developed or Commercialized (each as defined
in the Collaboration Agreement). Appropriate personnel at Incyte shall have
access to updated data in the database within *** after such data are entered in
the database. Incyte shall be authorized to submit such data to applicable
regulatory authorities as required or permitted by law.

 

The Parties acknowledge that, prior to signature of this Pharmacovigilance
Agreement, Incyte provided to Novartis all SAEs (including expected, unrelated,
placebo and comparator cases) reported to Incyte for the product as of the date
of such transfer, on CIOMS forms or in another format acceptable to Novartis
allowing Novartis to complete the global safety database.

 

Incyte may hold and maintain a parallel safety database for the Product as
needed or required according to local laws, regulations and other legal
requirements.

 

Each Party is responsible for ensuring that all applicable reports are
dispatched to the other Party in accordance with this Pharmacovigilance
Agreement. Novartis and Incyte will perform routine verification and
reconciliation according to their respective SOPs to ensure that all adverse
event reports, both initial and follow up, have been exchanged per Section 9 of
this Pharmacovigilance Agreement.

 

If discrepancies are noted either through the verification process,
reconciliation, or during the course of routine business, both Novartis and
Incyte will work to remediate the discrepancy until resolved to the mutual
satisfaction of both Parties.

 

5                                                            DETAILED
DESCRIPTION OF THE PHARMACOVIGILANCE SYSTEM (DDPS)

 

If required, Incyte shall provide Novartis, within *** from the date requested,
with a Detailed Description of its Pharmacovigilance System in the format
specified by the EMEA (Volume 9A of Rules Governing Medicinal Products in the
European Union; Section 2.2) which may be submitted to the Regulatory
Authorities as required.  The DDPS should comprise an overview of Incyte’s
Pharmacovigilance System, providing information on the key elements of the
System.  Such descriptions should include all vendors and contracted third
parties who have direct involvement in the collection of adverse events for the
Product.

 

4

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***Confidential material redacted and filed separately with the Commission.

 

Each Party shall inform the other in a timely manner of any significant changes
to the Pharmacovigilance System as documented.

 

EU-QPPV: Novartis has an established and dedicated EU-QPPV.  In case of any
change, Novartis shall inform Incyte of the new appointment within ***.

 

6                                                            SIGNAL DETECTION
(INTERNALLY IDENTIFIED SAFETY ISSUES)

 

Using the global safety database, Novartis shall be primarily responsible for
signal detection activities according to its SOP.

 

In case either of the Parties becomes aware of:

 

a)                                      potential signals for new adverse
reactions;

b)                                     increased incidence of known adverse
reactions;

c)                                      increased severity of known adverse
reactions;

d)                                     major findings from newly completed
animal studies; or

e)                                      any proposed changes in the labeling
documents,

 

that Party shall promptly notify the other Party in writing (as soon as possible
but no later than *** after the Party becoming aware of the issue), for
discussion and comment and to agree whether any further action is required.

 

A safety committee with clinical and safety and regulatory representatives from
each Party shall be established and shall discuss on a regular basis, or as
required, the handling of specific or general safety and process issues (eg.
reviewing safety signals, issuing Dear Doctor Letters, ASR preparation meeting
*** prior to the data lock point, etc.).  Each Party shall keep the other Party
informed of any newly identified safety signal, which then will be evaluated by
the Parties in close cooperation, including updates to core safety information. 
No measures will be taken without prior consultation and discussion except in
situations where immediate action is required to protect the health of patients.

 

7                                                            MAINTENANCE OF
LABELING DOCUMENTS

 

Investigator’s Brochure: The Parties shall use an Investigator’s Brochure with a
common core safety section.

 

8                                                            EXCHANGE OF
INDIVIDUAL CASE REPORTS

 

8.1                                                  SCOPE

 

Individual Case Safety Reports concerning the Product which shall be exchanged
under this Pharmacovigilance Agreement include:

 

8.1.1                                        SOLICITED REPORTS:

 

All Serious Adverse Events (SAEs) occurring in clinical trials which are
received by either of the Parties, including blinded, comparator and placebo
cases.

 

5

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***Confidential material redacted and filed separately with the Commission.

 

8.1.2                                        OTHER INCLUDING FINAL STUDY
REPORTS:

 

In addition, the Parties shall exchange all other clinical safety-related
information concerning the Product as may be required or reasonably requested by
the Parties to fulfill the purpose of this Pharmacovigilance Agreement,
including the timely exchange of safety information contained in interim or
final clinical study reports.

 

Data or special arrangements required to fulfill a Risk Management Plan, if
necessary, shall also be included.

 

8.2                                                  FORMAT

 

Individual Case Reports shall be exchanged on CIOMS forms and sent by fax or
secure e-mail if available and mutually agreed upon.

 

Each Party shall assign a company case identification number to each case on
which information is exchanged under this Pharmacovigilance Agreement, and shall
identify each piece of information concerning that case with this number.

 

The receiving Party shall maintain the integrity of the sending Party’s
narrative, but shall add to the case narrative the name of the sending Party and
the sending Party’s case identification number to aid identification of
duplicate reports.

 

8.3                                                  UNBLINDING

 

Unless otherwise agreed with applicable regulatory authorities, for company
sponsored studies, the blind will be broken for serious, unexpected
suspected/related ADRs on an ongoing basis as reasonably required for regulatory
reporting by the sponsor in real time to meet the exchange timelines specified
below. All other SAE’s (not suspected and/or expected) will be exchanged as
blinded during the ongoing clinical trial. Details of the treatment given shall
be distributed only on a need-to-know basis.

 

In exceptional circumstances such as upon receipt of a request from a Regulatory
Authority or a safety data monitoring committee to do so, the Party receiving
the request may need to break the code for any case type(s), or request the
Party sponsoring the relevant clinical trial to do so. In such an event, details
of the treatment given shall be distributed only on a need-to-know basis.

 

At the conclusion of Novartis sponsored clinical trials, Novartis shall transmit
the unblinded ICSRs to Incyte within a reasonable time frame but no later than
*** of receipt of randomization codes by the safety group, unless study size or
complexity requires a longer period, to be notified within *** of receipt of
randomization codes.

 

At the conclusion of Incyte sponsored clinical trials, Incyte will provide
Novartis with the randomization codes within a reasonable time frame but no
later than *** of receipt of randomization codes by the safety group. ICRS
exchange will not apply in this situation.

 

8.4                                                  FOLLOW-UP

 

The Party first receiving the SAE or any other kind of report falling within the
scope of this Pharmacovigilance Agreement shall be responsible for obtaining any
follow-up information

 

6

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from the reporter, which shall be processed as described for the corresponding
type of initial report in this Section 9.  This shall include any targeted
follow up required for risks included in the Risk Management Plan.

 

Each Party may request the other Party to contact the reporter and obtain
additional information if necessary, including missing reporter causality.
Follow-up information shall be exchanged with the same company case
identification number as the original report.

 

8.5                                                  TIMELINES

 

SAEs from clinical trials received by Novartis:

 

Novartis shall notify Incyte of all SAEs from clinical trials which are received
by Novartis or its Affiliates according to the following timelines:

 

a) Causally Suspected and/or study-related fatal or Life-threatening SAEs
(irrespective of labelling) within 4 (four) calendar days of first notification
of the event to any employee of Novartis or its Affiliates;

 

b) Other Causally Suspected and/or study-related SAEs (irrespective of
labelling) within 8 (eight) calendar days of first notification of the event to
any employee of Novartis or its Affiliates; and

 

c) Causally Non-suspected SAEs (i.e. there is no suspected connection between
the study and the SAE) within twenty (20) calendar days or more rapidly if
required for the data-lock for the IND annual safety report preparation.

 

SAE reports from clinical trials received by Incyte:

 

Incyte shall notify Novartis of all SAEs from clinical trials which are received
by Incyte or its Affiliates according to the following timelines:

 

a) Causally Suspected and/or study-related fatal or Life-threatening SAEs
(irrespective of labelling) within four (4) calendar days of first notification
of the event to any employee of Incyte or its Affiliates;

 

b) Other Casually Suspected and/or study-related SAEs (irrespective of
labelling) within 8 (eight) calendar days of first notification of the event to
any employee of Incyte or its Affiliates; and

 

c) Causally Non-suspected SAEs (i.e. there is no suspected connection between
the Product and the SAE) within twenty (20) calendar days.

 

9                                                            INDIVIDUAL REPORT
ASSESSMENT

 

It is agreed between the Parties that each will follow its own procedures for
seriousness, causality and expectedness assessment.

 

9.1                                                  LABELLING

 

Assessment of Listedness/Expectedness: 

 

7

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***Confidential material redacted and filed separately with the Commission.

 

For purposes of databasing in the global safety database, the assessment of
whether the SAE or other kind of report is Listed/Expected shall be made by
Novartis against the Investigator’s Brochure.

 

For the purposes of reporting to the Regulatory Authorities, the assessment of
expectedness shall be made according to the appropriate Investigator’s Brochure
by the Party responsible for submitting the report to the Regulatory Authority.

 

Assessment of expectedness for comparator and placebo associated reports shall
be made by the Parties according to their respective SOPs.

 

9.2                                                  REQUIREMENT FOR STUDY
PROTOCOLS:

 

Interventional Trials: At the first occurrence of an SAE in a particular
clinical trial at the latest, the Party reporting the SAE shall make available
to the other Party a copy of the relevant study protocol or summary of the study
design. This is to provide a clear understanding of the nature of the exposure
to the Product and to allow a meaningful interpretation of the SAE.

 

10                                                     REGULATORY REPORTING
RESPONSIBILITIES

 

10.1                                           INDIVIDUAL CASE SAFETY REPORTS

 

The Party holding the Regulatory Authority Authorisation for the Product for
clinical trials in a country shall be responsible for submitting SAE reports to
the Regulatory Authority in that country according to the current applicable
laws, regulations and guidelines, regardless of whether the report originated
from that Party or not.  Information on which Party holds the Regulatory
Authority Authorisation for the clinical trials will be exchanged and updated at
the time of the transfer of the reports to the other Party.

 

The Party holding the Regulatory Authority Authorisation for clinical trials
shall be responsible for the electronic submission to the EMEA of all reportable
cases for the Product to Clinical Trial Modules, as required.

 

10.2                                           INVESTIGATOR NOTIFICATIONS

 

Each Party shall prepare and distribute Investigator Notifications according to
their respective SOPs and applicable laws, regulations and guidelines. Each
Party shall make reasonable efforts to notify the other Party of an IN, allowing
*** for comment.  Each Party shall exchange the final Investigator Notifications
to the other Party no more than *** after receipt of the original report which
prompted the Investigator Notification.

 

10.3                                           PREPARATION AND SUBMISSION OF
ANNUAL REPORTS FROM CLINICAL TRIALS AND OTHER CUMULATIVE SAFETY REPORTS

 

As long as Incyte holds an IND for the Product, Incyte will have the
responsibility for the compilation of the IND annual safety reports for the
Product using its own data and data provided by Novartis as required.

 

8

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***Confidential material redacted and filed separately with the Commission.

 

Novartis shall prepare a common European Union Annual Safety Report for clinical
studies. All relevant studies, including investigator initiated studies, shall
be included. Upon request to support preparation of these reports for Incyte or
Novartis studies. Incyte or Novartis shall provide data, including

 

·                  A list of studies (including IIT) that are planned, initiated
or ongoing with a synopsis of the study , phase and the countries involved

 

·                  Planned and total number of patients enrolled in Incyte or
Novartis sponsored studies (including IIT), the actual enrollment and number of
patients receiving active drug during the reporting period.

 

·                  A list of Incyte or Novartis studies that have been analyzed
during the reporting period, including a summary of new safety findings

 

·                  Any new study safety results with potential impact on
risk-benefit profile

 

The request for information shall be made at least *** prior to each Data
Lock-Point, and be provided so that it is received no later than *** after the
Data Lock-Point.  The final report shall be provided to Incyte allowing *** for
review/ comment.

 

The same report shall be submitted by both companies, if both companies have
study sponsorship in the EU.

 

10.4                                           PERIODIC SUSAR REPORTS

 

Novartis will be responsible for the preparation of periodic SUSAR reports and
for the submission of the report to investigators, competent authorities and
Ethics Committees, where and when applicable. Incyte has the right to review and
comment.

 

10.5                                           RESPONSES TO REGULATORY AUTHORITY
QUESTIONS

 

Each Party shall attempt to immediately notify the other (via their respective
appointed pharmacovigilance representatives) upon being contacted by a
Regulatory Authority on any significant regulatory matter pertaining to the
safety profile of the Product or to the subject-matter of this Pharmacovigilance
Agreement, including but not limited to risk management communication, Dear
Doctor Letters, urgent safety restrictions or labelling changes, to ensure that
communication between the Parties is aligned. Each Party shall allow the other
to review its proposed response to any question or request prior to submission
to the Regulatory Authority, unless there is a public health need to respond
immediately.

 

If requested to do so, Novartis shall assist Incyte to respond to questions or
requests for information by Regulatory Authorities by promptly providing data
from the master safety database.

 

Each Party shall copy to the other all significant communication regarding
clinical safety information concerning the Product.

 

9

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***Confidential material redacted and filed separately with the Commission.

 

10.6                                           RISK MANAGEMENT PLANS

 

The Parties agree that there will be one Global Risk Management Plan for each
Licensed Product, authored by Novartis. The Global Risk Management Plan will be
prepared by Novartis in collaboration with Incyte. Incyte shall provide feedback
within *** of receipt from Novartis, or such other time as the Parties mutually
agree.

 

If a REMS (Risk Evaluation and Mitigation Strategy) is required for the Products
by the FDA, Incyte shall be responsible for the authorship and submission. There
shall be no material differences in the description of the important safety
risks between the Global Risk Management Plan and REMS, as the risks are
considered the same in all territories. The REMS will be prepared in
collaboration between Novartis and Incyte. Novartis shall provide feedback
within *** of receipt from Incyte, or such other time as the Parties may
mutually agree.

 

The Parties will exchange all information reasonably requested by a Party that
is necessary to fulfill regulatory requirements (e.g. mandatory PSUR updates)
for the Global Risk Management Plan.  These include, but are not limited to,
providing updates on: safety studies and other pharmacovigilance measures,
progress in implementing risk minimization activities, and assessment of the
performance of any aspect of risk management/minimization related to the
Products.  Prior to submission of the Global Risk Management Plan to a
Regulatory Authority, Novartis shall provide such plan to Incyte for review and
Incyte shall have *** to provide comments, which Novartis shall reasonably
consider.

 

10.7                                           PSUR

 

The Parties agree that Novartis will be responsible for the authoring of the
PSUR, the Core Data Sheet and Investigator Brochure.  Novartis shall provide
drafts of such documents to Incyte within *** after the data lock point, and
Incyte shall have *** to review and provide comments, which Novartis shall
reasonably consider.

 

11                                                     SOPS

 

Each Party shall adhere to its own SOPs unless otherwise explicitly stated here
in this Pharmacovigilance Agreement.

 

12                  Audits

 

The Parties agree that its pharmacovigilance systems/operations or contracted
pharmacovigilance activities will be audited at reasonable intervals to ensure
elements set forth in the pharmacovigilance agreement are being fulfilled for
the appropriate product.  Both Parties will discuss and agree in good faith on
how such an audit will be conducted (audit plan, duration of audit, audit report
and corrective actions).  Each Party’s routine audit will be scheduled no more
frequently than once every ***, with a minimum of *** notice.

 

Audits must be reasonable in scope and in relationship to the Product and must
take place during normal business hours.  Parties will correct audit
observations in a timely manner and communicate those actions to the other
Party.

 

10

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***Confidential material redacted and filed separately with the Commission.

 

In the case of a serious suspected breach of compliance with this
Pharmacovigilance Agreement, a directed audit will be performed by either Party
or an independent third party with notification only and a minimum of ***. The
possibility of a directed audit for serious breach is therefore agreed upon by
way of execution of this agreement.

 

Parties shall allow foreign and local health authorities to inspect their
pharmacovigilance operations as it is necessary for either Party to maintain
registration in the countries where the Product is marketed.  A representative
from the other Party may participate in such inspections.

 

Parties shall communicate urgent or critical issues affecting the other Parties
pharmacovigilance activities within *** of receipt of documented findings cited
during a health authority inspection.  Once corrective actions are determined,
the inspected Party will provide a summary of the relevant inspection findings
with associated corrective actions where the other Party is impacted.

 

13                                                     DISPUTE RESOLUTION

 

In case of dispute over PSURs, responses to queries or labelling activities, for
example CCSI, every effort will be made to achieve a consensus and resolve the
dispute by the pharmacovigilance department of each Party. If disputes cannot be
resolved they will be referred to upper drug safety management of the Parties
for resolution. If disputes cannot be resolved at the upper management level
they will be resolved in accordance with the Collaboration Agreement.

 

14                                                     CONTACT PERSONS

 

The contact persons for each Party are identified in Appendix 2.

 

Each Party may change its contact persons by notifying the other Party in
writing in accordance with Section 15.6 of the Collaboration Agreement. 

 

15                                                     MISCELLANEOUS

 

The provisions of Sections 15.1-15.3, 15.5 and 15.7-15.16 of the Collaboration
Agreement shall be deemed incorporated into this Pharmacovigilance Agreement to
the same extent as if set forth herein.

 

This Pharmacovigilance Agreement has been agreed and signed in duplicate by the
following respective Parties.

 

Place/Date:

Place/Date:

 

11

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16                                                     APPENDIX 1 - DEFINITIONS
AND ABBREVIATIONS

 

16.1                                           DEFINITIONS

 

16.1.1                                 “SPONTANEOUS REPORTS” FROM PATIENT
SUPPORT PROGRAMS OR MARKETING RESEARCH PROGRAMS INCLUDES ALL ADVERSE REACTIONS
REPORTED FROM ANY PROGRAM DESIGNED TO ENCOURAGE THE HCP OR CONSUMER TO
VOLUNTARILY CONTACT THE COMPANY FOR EDUCATIONAL MATERIAL OR SUPPORT.  ANY
PROGRAM WHICH DOES NOT SYSTEMATICALLY INCLUDE ANY QUESTIONS THAT REQUEST SAFETY
INFORMATION IN RESPONSE.

 

16.1.2                                 “SOLICITED REPORTS” FROM PATIENT SUPPORT
PROGRAMS OR MARKETING RESEARCH PROGRAMS INCLUDES ALL ADVERSE REACTIONS REPORTED
FROM A PROGRAM WHERE TARGETED SAFETY QUESTIONS ARE SYSTEMATICALLY INCLUDED (IN
EITHER THE SCRIPT OR CONTACT FORM).

 

16.1.3                                 “ADVERSE DRUG REACTION” MEANS ALL NOXIOUS
AND UNINTENDED RESPONSES TO A MEDICINAL PRODUCT RELATED TO ANY DOSE. THE
‘RESPONSES TO A MEDICINAL PRODUCT’ MEANS THAT A CAUSAL RELATIONSHIP BETWEEN A
MEDICINAL PRODUCT AND AN ADVERSE EVENT IS AT LEAST A REASONABLE POSSIBILITY.

 

16.1.4                                 “ADVERSE EVENT” MEANS ANY UNTOWARD
MEDICAL OCCURRENCE IN A PATIENT OR CLINICAL INVESTIGATION SUBJECT ADMINISTERED A
PHARMACEUTICAL PRODUCT AND THAT DOES NOT NECESSARILY HAVE A CAUSAL RELATIONSHIP
WITH THIS TREATMENT. AN ADVERSE EVENT CAN THEREFORE BE ANY UNFAVORABLE AND
UNINTENDED SIGN (INCLUDING AN ABNORMAL LABORATORY FINDING), SYMPTOM, OR DISEASE
TEMPORALLY ASSOCIATED WITH THE USE OF A MEDICINAL (INVESTIGATIONAL) PRODUCT,
WHETHER OR NOT RELATED TO THE MEDICINAL (INVESTIGATIONAL) PRODUCT.

 

16.1.5                                 “CAUSALLY SUSPECTED ADVERSE EVENT” MEANS
AN ADVERSE EVENT (EXPERIENCE) FOR WHICH A CAUSAL RELATIONSHIP BETWEEN A
MEDICINAL PRODUCT AND ITSELF IS AT LEAST A REASONABLE POSSIBILITY.  IN GENERAL,
ALL SRS ARE CONSIDERED SUSPECTED FOR EXPEDITING PURPOSES.

 

16.1.6                                 “CAUSALLY NON-SUSPECTED ADVERSE EVENT”
MEANS AN ADVERSE EVENT (EXPERIENCE) FOR WHICH A CAUSAL RELATIONSHIP BETWEEN A
MEDICINAL PRODUCT AND ITSELF IS NOT A REASONABLE POSSIBILITY. IN GENERAL, ALL
SRS ARE CONSIDERED “SUSPECTED” FOR EXPEDITING PURPOSES.

 

16.1.7                                 “COLLABORATION AGREEMENT” SHALL HAVE THE
MEANING SET FORTH IN SECTION 1 OF THIS PHARMACOVIGILANCE AGREEMENT.

 

16.1.8                                 “COMPANY CORE SAFETY INFORMATION” MEANS
ALL RELEVANT SAFETY INFORMATION CONTAINED IN THE COMPANY CORE DATA SHEET
PREPARED BY THE MARKETING AUTHORISATION HOLDER AND WHICH THE MARKETING
AUTHORISATION HOLDER REQUIRES TO BE LISTED IN ALL COUNTRIES WHERE THE COMPANY
MARKETS THE DRUG, EXCEPT WHEN THE LOCAL REGULATORY AUTHORITY SPECIFICALLY
REQUIRES A MODIFICATION.

 

16.1.9                                 “EXPECTED ADVERSE EVENT” MEANS AN ADVERSE
EVENT (EXPERIENCE), THE SPECIFICITY OR SEVERITY OF WHICH IS CONSISTENT WITH THE
INVESTIGATOR’S BROCHURE FOR AN UNAPPROVED INVESTIGATIONAL PRODUCT.

 

16.1.10                          “INTERNATIONAL BIRTHDATE” MEANS THE DATE OF THE
FIRST MARKETING AUTHORISATION FOR THE DRUG OR PRODUCT GRANTED IN ANY COUNTRY.

 

16.1.11                          “INVESTIGATOR’S BROCHURE” MEANS A COMPILATION
OF THE CLINICAL AND NON-CLINICAL DATA ABOUT AN INVESTIGATIONAL DRUG OR PRODUCT
THAT IS RELEVANT TO ITS STUDY IN HUMANS.

 

16.1.12                          “INVESTIGATOR NOTIFICATION” OR “IN” MEANS A
NOTIFICATION FOR ALL PARTICIPATING INVESTIGATORS OF ANY SERIOUS ADVERSE EVENT
(EXPERIENCE) WHICH IS UNEXPECTED AND SUSPECTED OR ANY FINDINGS THAT SUGGEST A
SIGNIFICANT RISK FOR THE PATIENT.

 

12

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16.1.13                          “LABELLED ADVERSE EVENT” MEANS ANY ADVERSE
EVENT (EXPERIENCE), THE SPECIFICITY OR SEVERITY OF WHICH IS CONSISTENT WITH THE
LOCAL PACKAGE INSERT FOR AN APPROVED PRODUCT.

 

16.1.14                          “LIFE-THREATENING ADVERSE EVENT” MEANS AN
ADVERSE EVENT (EXPERIENCE) THAT PLACES THE PATIENT OR SUBJECT IN THE VIEW OF THE
INVESTIGATOR, AT IMMEDIATE RISK OF DEATH FROM THE EVENT (EXPERIENCE) AS IT
OCCURRED, I.E. DOES NOT INCLUDE AN ADVERSE EVENT (EXPERIENCE) THAT, HAD IT
OCCURRED IN A MORE SERIOUS FORM, MIGHT HAVE CAUSED DEATH. “LIFE-THREATENING
SERIOUS ADVERSE EVENT” SHALL HAVE THE CORRESPONDING MEANING IN RELATION TO
SERIOUS ADVERSE EVENTS.

 

16.1.15                          “LISTED” MEANS ANY ADVERSE EVENT (EXPERIENCE),
THE SPECIFICITY OR SEVERITY OF WHICH IS CONSISTENT WITH THE COMPANY CORE SAFETY
INFORMATION.

 

16.1.16                          “PARTY” MEANS ONE OF THE PARTIES SET FORTH IN
THE HEADING TO THIS PHARMACOVIGILANCE AGREEMENT, AND “PARTIES” MEANS BOTH
PARTIES.

 

16.1.17                          “PRODUCT” MEANS THE PRODUCT DEFINED IN THE
HEADING OF THIS PHARMACOVIGILANCE AGREEMENT.

 

16.1.18                          “REGULATORY AUTHORITY” MEANS ANY GOVERNMENTAL
AGENCY RESPONSIBLE FOR GRANTING HEALTH OR PRICING APPROVALS, REGISTRATIONS,
IMPORT PERMITS, AND OTHER APPROVALS REQUIRED BEFORE THE PRODUCT MAY BE USED IN A
CLINICAL TRIAL OR MARKETED IN ANY COUNTRY.

 

16.1.19                          “REGULATORY AUTHORITY AUTHORISATION” MEANS AN
APPROVAL GRANTED BY A REGULATORY AUTHORITY TO CONDUCT A CLINICAL TRIAL (E.G.
IND) OR TO MARKET A PRODUCT (NDA) IN A PARTICULAR COUNTRY.

 

16.1.20                          “SERIOUS ADVERSE EVENT” MEANS ANY UNTOWARD
MEDICAL OCCURRENCE THAT AT, ANY DOSE:

(A)     RESULTS IN DEATH;

(B)     IS LIFE-THREATENING;

(C)     REQUIRES INPATIENT HOSPITALIZATION OR PROLONGATION OF EXISTING
HOSPITALIZATION;

(D)     RESULTS IN PERSISTENT OR SIGNIFICANT DISABILITY/INCAPACITY; OR

(E)     IS A CONGENITAL ANOMALY/BIRTH DEFECT.

 

IN THE CASE OF OTHER SIGNIFICANT EVENTS, MEDICAL AND SCIENTIFIC JUDGMENT SHOULD
BE EXERCISED IN DECIDING WHETHER EXPEDITED REPORTING IS APPROPRIATE. SUCH EVENTS
MAY BE IMPORTANT MEDICAL EVENTS THAT MAY NOT BE IMMEDIATELY LIFE-THREATENING OR
RESULT IN DEATH OR HOSPITALIZATION BUT WHICH MAY JEOPARDIZE THE PATIENT OR MAY
REQUIRE INTERVENTION TO PREVENT ONE OF THE OTHER OUTCOMES LISTED IN THE
DEFINITION ABOVE. SUCH EVENTS SHOULD USUALLY BE CONSIDERED SERIOUS ADVERSE
EVENTS.

 

16.1.21                          “SPONTANEOUS ADVERSE EVENT REPORT” MEANS ANY
ADVERSE EVENT (EXPERIENCE) SPONTANEOUSLY REPORTED BY HEALTH PROFESSIONALS,
CONSUMERS, HEALTH AUTHORITIES OR OTHER REGULATORY BODIES, SCIENTIFIC PAPERS,
POISON CENTRES, PHARMACOVIGILANCE INSTITUTES, LAWYERS, OR ANY OTHER SOURCE

 

16.1.22                          “STUDY PROTOCOL” MEANS A DOCUMENT THAT
DESCRIBES THE OBJECTIVE(S), DESIGN, METHODOLOGY, STATISTICAL CONSIDERATIONS, AND
ORGANIZATION OF A TRIAL. THE PROTOCOL USUALLY ALSO GIVES THE BACKGROUND AND
RATIONALE FOR THE TRIAL. THIS TERM INCLUDES ALL AMENDMENTS TO THE PROTOCOL.

 

16.1.23                          “UNEXPECTED ADVERSE EVENT” MEANS AN ADVERSE
EVENT (EXPERIENCE), THE SPECIFICITY OR SEVERITY OF WHICH IS NOT CONSISTENT WITH
THE INVESTIGATOR’S BROCHURE FOR AN UNAPPROVED INVESTIGATIONAL PRODUCT.

 

16.1.24                          “UNLABELLED” MEANS ANY ADVERSE EVENT
(EXPERIENCE), THE SPECIFICITY OR SEVERITY OF WHICH IS NOT CONSISTENT WITH THE
LOCAL PACKAGE INSERT FOR AN APPROVED PRODUCT.

 

16.1.25                          “UNLISTED” MEANS ANY ADVERSE EVENT
(EXPERIENCE), THE SPECIFICITY OR SEVERITY OF WHICH IS/IS NOT CONSISTENT WITH THE
COMPANY CORE SAFETY INFORMATION.

 

13

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16.2

Acronyms

 

 

 

 

 

 

16.2.1

ASR

Annual Safety Report for the EMEA (Clinical Studies)

 

 

 

 

16.2.2

CFR

Code of Federal Regulations

 

 

 

 

 

16.2.3

CIOMS

Council for International Organisations of Medical Sciences

 

 

 

 

16.2.4

FDA US

Food and Drug Administration

 

 

 

 

 

16.2.5

EMEA

European Medicines Evaluation Agency

 

 

 

 

 

16.2.6

GCP

Good Clinical Practice

 

 

 

 

 

16.2.7

IB

Investigator’s Brochure

 

 

 

 

 

16.2.8

ICH

International Conference on Harmonisation of the Technical Requirements for
Registration of Pharmaceuticals for Human Use

 

 

 

 

16.2.9

IN

Investigator’s Notification

 

 

 

 

 

16.2.10

IND

Investigational New Drug

 

 

 

 

 

16.2.11

NDA

New Drug Application

 

 

 

 

 

16.2.12

PSUR

Periodic Safety Update Report

 

 

 

 

 

16.2.13

SAE

Serious Adverse Event

 

 

 

 

 

16.2.14

SOP

Standard Operating Procedure

 

 

 

 

 

16.2.15

SR

Spontaneous Adverse Event Report

 

 

14

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*** Confidential material redacted and filed separately with the Commission.

 

17                                                     APPENDIX 2 — CONTACT
PERSONS

 

Incyte

***

 

15

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

 

*** Confidential material redacted and filed separately with the Commission.

 

Novartis

***

 

16

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

 

*** Confidential material redacted and filed separately with the Commission.

 

Schedule 1.14

 

c-MET Licensed Back-Up Compounds

 

***

 

2

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

 

*** Confidential material redacted and filed separately with the Commission.

 

Schedule 1.60

 

JAK Licensed Back-Up Compounds

 

***

 

1

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

 

*** Confidential material redacted and filed separately with the Commission.

 

Schedule 4.1

 

***

 

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

 

*** Confidential material redacted and filed separately with the Commission.

 

Schedule 4.1(c)(i)

 

***

 

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

 

*** Confidential material redacted and filed separately with the Commission.

 

Schedule 11.3

 

Exceptions to Representations and Warranties

 

***

 

2

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

 

*** Confidential material redacted and filed separately with the Commission.

 

***

 

3

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

 

*** Confidential material redacted and filed separately with the Commission.

 

***

 

4

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

 

*** Confidential material redacted and filed separately with the Commission.

 

***

 

5

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

 

*** Confidential material redacted and filed separately with the Commission.

 

***

 

6

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