EXHIBIT 10.3

CV Therapeutics, Inc.

requests that the marked portions of the exhibit be granted confidential
treatment

under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

COLLABORATION AND LICENSE AGREEMENT

by and between

CV Therapeutics, Inc.

and

PTC Therapeutics, Inc.

June 7, 2006

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

Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as [*]. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

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

COLLABORATION AND LICENSE AGREEMENT

TABLE OF CONTENTS

 

1.

   Definitions    2    1.1    “Active”    2    1.2    “Additional Targets”    2
   1.3    “Affiliate”    2    1.4    “Alliance Manager”    2    1.5    “[*]”   
2    1.6    “[*]”    2    1.7    “Clinical Proof-of-Concept Study”    2    1.8
   “Collaboration Compound”    3    1.9    “Collaboration Know-How”    3    1.10
   “Collaboration Patent Rights”    3    1.11    “Collaboration Technology”    3
   1.12    “Collaboration Term “    3    1.13    “Combination Product”    3   
1.14    “Confidential Information”    3    1.15    “Controlled”    3    1.16   
“CPI”    4    1.17    “CVT Base Know-How”    4    1.18    “CVT Base Patent
Rights”    4    1.19    “CVT Base Technology”    4    1.20    “CVT Net Sales”   
4    1.21    “Development”    4    1.22    “Development Costs”    4    1.23   
“FD&C Act”    4    1.24    “FDA”    5

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

ii

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

 

  1.25    “Field”    5  

1.26

   “First Commercial Sale”    5  

1.27

   “FTE”    5  

1.28

   “FTE Rate”    5  

1.29

   “GAAP”    6  

1.30

   “GEMS”    6  

1.31

   “Hit”    6  

1.32

   “IND”    6  

1.33

   “IND Candidate”    6  

1.34

   “Internal Costs”    6  

1.35

   “Joint Management Committee” or “JMC”    6  

1.36

   “Joint Research Committee” or “JRC”    6  

1.37

   “Know-How”    6  

1.38

   “Lead Compound”    7  

1.39

   “Lead Criteria”    7  

1.40

   “Lead Identification”    7  

1.41

   “Lead Optimization”    7  

1.42

   “Licensed Product”    7  

1.43

   “License Term”    7  

1.44

   “MAA”    7  

1.45

   “Major European Country”    7  

1.46

   “Market Area”    7  

1.47

   “Marketing Exclusivity”    7  

1.48

   “NDA”    8  

1.49

   “Net Sales”    8  

1.50

   “Non-Collaboration Compound”    9  

1.51

   “Out-of-Pocket Costs”    9  

1.52

   “Patent Rights”    9  

1.53

   “Phase I Clinical Study”    10  

1.54

   “Phase II Clinical Trial”    10  

1.55

   “Phase III Clinical Trial”    10

 

iii

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

 

   1.56    “Pre-IND Cost Share”    10    1.57    “Pre-IND Stage”    10    1.58
   “Product”    10    1.59    “PTC Base Know-How”    10    1.60    “PTC Base
Patent Rights”    11    1.61    “PTC Base Technology”    11    1.62    “PTC Net
Sales”    11    1.63    “PTC Product”    11    1.64    “Regulatory Approval”   
11    1.65    “Regulatory Authority”    11    1.66    “Research Collaboration”
   11    1.67    “Research Compound”    11    1.68    “Research Plan”    11   
1.69    “Sublicensee”    11    1.70    “Target”    12    1.71    “Territory”   
12    1.72    “Third Party”    12    1.73    “Valid Claim”    12    Additional
Definitions    12

2.

   Governance    13    2.1    Alliance Manager    13    2.2    Joint Research
Committee and Project Teams    13    2.3    Joint Management Committee    15   
2.4    Control and Decision-Making Authority    17

3.

   Research Collaboration    19    3.1    The Research Collaboration    19   
3.2    Targets    19    3.3    Initial Targets    19    3.4    Additional
Targets    19

 

iv

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

   3.5    Identification of Hits: Screening Assay    20    3.6    Lead
Identification    21    3.7    Lead Optimization    21    3.8    Pre-Clinical
Studies    22    3.9    FTE Resources; Third Party Resources    22    3.10   
Responsibility for Development Costs    22    3.11    Exclusivity Regarding
Targets    23

4.

   Ownership; License Grants    25    4.1    PTC Base Technology    25    4.2   
CVT Base Technology    25    4.3    Collaboration Technology    25    4.4   
Non-Exclusive Research License to PTC Base Technology    25    4.5   
Non-Exclusive Research License to CVT Base Technology    26    4.6    CVT Right
to Take Exclusive Licenses to Collaboration Compounds    26    4.7   
Sublicenses and Transfers    27    4.8    PTC’s Option to Participate in
Subsequent Development and/or Commercialization    27    4.9    No License Taken
By CVT for Collaboration Compounds Which are Active Against a Given Target    33

5.

   Payments    33    5.1    Initial Payment    33    5.2    Access Fee    34   
5.3    Development Costs    34    5.4    Milestones For Collaborative Compounds
or Licensed Products    35    5.5    Royalties for Licensed Products Which Are
Active Against 35 Initial Targets    36    5.6    Royalties For Licensed
Products Which Act Are Active Against Additional Targets    37

 

v

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

 

   5.7    Royalty Rate Increases Under Certain Circumstances    38    5.8   
Third Party Royalties for CVT    38    5.9    Third Party Royalties for PTC   
38    5.10    Royalties to be Paid by PTC for PTC Net Sales of PTC Products   
39    5.11    Duration of CVT Royalty Obligations    39    5.12    Duration of
PTC Royalty Obligations    39    5.13    CVT Payment Terms    40    5.14    PTC
Payment Terms    40    5.15    CVT Reports    41    5.16    PTC Reports    42   
5.17    Withholding of Taxes    43    5.18    Blocked Currency    44    5.19   
Late Payments    44 6.    Diligence    44    6.1    Diligence as to Research
Collaboration    44    6.2    Diligence as to Licensed Products    45 7.   
Intellectual Property    46    7.1    PTC Inventions    46    7.2    CVT
Inventions    47    7.3    Joint Inventions    47    7.4    Inventorship
Disputes    48    7.5    Exclusive Licenses Taken by CVT    48    7.6   
Scientific Publications    48    7.7    Patent Marking    49    7.8   
Trademarks    49

 

vi

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

 

8.

   Intellectual Property Infringement    49    8.1    Notice    49    8.2   
Infringement of Collaboration Patent Rights and Jointly Owned Patent Rights   
49    8.3    Trademarks    50    8.4    Third Party Claims    50

9.

   Confidentiality    50    9.1    Requirements    50    9.2    Confidential
Information    51    9.3    Disclosure Required by Law    51    9.4    Return of
Confidential Information    51    9.5    Disclosure of Agreement    51    9.6   
Survival of Confidentiality    52

10.

   Representations, Warranties and Covenants    52    10.1    Mutual
Representations and Warranties    52    10.2    PTC Representations, Warranties
and Covenants    52    10.3    CVT Representations, Warranties and Covenants   
53    10.4    Disclaimer of Warranty    53

11.

   Indemnification and Insurance    53    11.1    By CVT    53    11.2    By PTC
   54    11.3    Notice and Procedures    54    11.4    Liability    54    11.5
   Insurance    54

12.

   Term, Termination and Expiration    55    12.1    Collaboration Term    55   
12.2    License Term    55

 

vii

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

 

   12.3    CVT Termination Right for Convenience    55    12.4    Effect of
Certain Terminations    55    12.5    Termination for Breach    56    12.6   
Consequence of Breach of Exclusivity Obligations by CVT    57    12.7   
Consequences of Breach of Financial Obligations by CVT    57    12.8   
Consequences of Breach of Exclusivity Obligations by PTC    58    12.9   
Consequences of PTC Breach of Financial Obligations    58    12.10    Bankruptcy
Rights    59    12.11    Survival    59

13.

   Miscellaneous    59    13.1    Force Majeure    59    13.2    Severability   
59    13.3    Assignment    60    13.4    Publicity    60    13.5   
Modifications and Amendments    60    13.6    Notices    60    13.7    Governing
Law    61    13.8    Waiver    61    13.9    No Agency    62    13.10    Dispute
Resolution    62    13.11    Headings    62    13.12    Counterparts    62   
13.13    Entire Agreement    62

Signature Page

   63

Exhibit A: Press Release

  

 

viii

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

COLLABORATION AND LICENSE AGREEMENT

THIS COLLABORATION AND LICENSE AGREEMENT (this “Agreement”) is entered into and
made effective as of the 6th day of June, 2006 (the “Effective Date”) by and
between CV Therapeutics, Inc., a Delaware corporation, having its principal
place of business at 3172 Porter Drive, Palo Alto, California 94304 (“CVT”) and
PTC Therapeutics, Inc., a Delaware corporation, having its principal place of
business at 100 Corporate Court, South Plainfield, New Jersey 07080 (“PTC”). CVT
and PTC are each hereafter referred to individually as a “Party” and
collectively as the “Parties”.

WHEREAS, CVT is a biopharmaceutical company which is focused on the discovery,
development and commercialization of drugs for the treatment of cardiovascular,
metabolic and addictive diseases and disorders, and which has developed
considerable pharmacological know-how and commercial expertise in the discovery,
development and commercialization of drug products for the treatment of
cardiovascular diseases;

WHEREAS, PTC is a biopharmaceutical company which is focused on the discovery,
development and commercialization of small molecules which target
post-transcriptional control of protein expression, and which owns certain
proprietary technologies for developing small molecule drugs by targeting such
post transcriptional control mechanisms, including GEMS (as defined in
Section 1.30 below);

WHEREAS, CVT and PTC wish to collaborate on specific therapeutic targets with a
focus on cardiovascular, metabolic and addictive diseases, and the discovery of
clinical candidate small molecules which act upon such targets; and

WHEREAS, PTC is willing to grant certain rights to CVT to develop and
commercialize small molecule drug products discovered through the use of the
GEMS technology;

 

1

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

NOW THEREFORE, IN consideration of the mutual covenants and conditions contained
herein, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Parties hereby agree as follows:

1. DEFINITIONS

 

1.1 “Active” shall mean, in general, with respect to a given compound in
relation to a given Target, that such compound has [*] for the [*] of such
Target or [*] for [*] of such Target, or such other criteria for activity as
specified in the Research Plan with respect to such Target. The specific
definition of “Active” with respect to the Initial Targets shall be set forth in
the Research Plan, and for compounds directed against a particular Additional
Target, shall be determined in accordance with Section 3.4, in each case
consistent with the foregoing general principles.

 

1.2 “Additional Targets” shall mean those Targets in addition to the Initial
Targets (as defined in Section 3.3) which are selected by the Parties in
accordance with this Agreement for screening under the Research Plan and
designated as Additional Targets pursuant to Sections 2.2(b)(iv), 2.3(c)(ii) and
3.4.

 

1.3 “Affiliate” shall mean, with respect to a Party, any corporation, firm,
limited liability company, partnership or other entity which directly or
indirectly controls or is controlled by or is under common control with a Party
to this Agreement. For purposes of this Section 1.3, “control” shall mean
ownership, directly or indirectly through one or more Affiliates, of fifty
percent (50%) or more of the shares of stock entitled to vote for the election
of directors, in the case of a corporation, or fifty percent (50%) or more of
the equity interests in the case of any other type of legal entity, or status as
a general partner in the case of any partnership, or any other arrangement
whereby a Party controls or has the right to control the Board of Directors or
equivalent governing body or management of a corporation or other entity.

 

1.4 “Alliance Manager” shall mean as to either PTC or CVT, as the case may be, a
full-time employee of either PTC or CVT having primary oversight responsibility
for the implementation of that Party’s obligations under the Research
Collaboration.

 

1.5 “[*]” shall mean [*].

 

1.6 “[*]” shall mean [*].

 

1.7 “Clinical Proof-of-Concept Study” shall mean the Phase II Clinical Trial or
other human clinical study (whether or not designated a Phase II Clinical Trial)
(a) designated by CVT as being the Clinical Proof-of-Concept Study and
(b) intended to provide, when combined with prior results of all other
non-clinical and clinical studies, sufficient evidence to support commencement
of a Phase III Clinical Trial.

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

2

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

1.8 “Collaboration Compound” shall mean, on a Target-specific basis, (i) a
chemical compound that is synthesized or identified by PTC or CVT, or any of
their respective Affiliates or any Third Party working in collaboration with or
on behalf of PTC or CVT or any of their respective Affiliates, in the conduct of
the Research Collaboration and which is determined to be Active, and (ii) any
metabolites, prodrugs, solvates (including without limitation hydrates),
analogs, esters, salts, derivatives, stereoisomers, racemates, tautomers and
polymorphs of such chemical compound which are determined to be Active.
Collaboration Compound shall include any of (i) a Hit, (ii) a Research Compound,
(iii) a Lead Compound or (iv) an IND Candidate.

 

1.9 “Collaboration Know-How” shall mean Know-How developed in the conduct of the
Research Collaboration that is Controlled by a Party and that relates
specifically to a Collaboration Compound.

 

1.10 “Collaboration Patent Rights” shall mean Patent Rights that are Controlled
by a Party and that claim an invention made in the conduct of the Research
Collaboration that relates specifically to a Collaboration Compound.

 

1.11 “Collaboration Technology” shall mean Collaboration Know-How and
Collaboration Patent Rights.

 

1.12 “Collaboration Term” shall have the meaning set forth in Section 12.1.

 

1.13 “Combination Product” shall mean any product that contains, in addition to
a Licensed Product or PTC Product, one or more other ingredients that have
biologic activity as a therapeutic agent when present alone.

 

1.14 “Confidential Information” shall have the meaning set forth in Section 9.2.

 

1.15 “Controlled” shall mean, with respect to any Know-How, Patent Right or
other intellectual property right, possession by a Party, directly or through an
Affiliate controlled by such Party, of the ability to grant the right to access
or use, or to grant a license or a sublicense to, such Know-How, Patent Right or
intellectual property right as provided for herein without violating the terms
of any agreement or other arrangement with any Third Party under which such
rights to access or use are obtained. Any Patent Right, Know-How or other
intellectual property right that is licensed or acquired by a Party following
the Effective Date and that would otherwise be considered to be under the
Control of a Party shall not be deemed to be under the Control of such Party if
the application of such definition in the context of any licenses or sublicenses
granted to the other Party under this Agreement would require the granting Party
to make any additional payments or royalties to a Third Party in connection with
such license or sublicense grants, unless the other Party agrees to pay the
additional payments or royalties to the Third Party.

 

3

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

1.16 “CPI” shall mean the Consumer Price Index — Urban Wage Earners and Clerical
Workers, U.S. City Average, All Items, 1982-84 = 100, published by the United
States Department of Labor, Bureau of Labor Statistics (or its successor
equivalent index).

 

1.17 “CVT Base Know-How” shall mean Know-How Controlled by CVT as of the
Effective Date, and Know-How other than Collaboration Know-How which is
developed by CVT during the Collaboration Term.

 

1.18 “CVT Base Patent Rights” shall mean Patent Rights Controlled by CVT as of
the Effective Date, and Patent Rights other than Collaboration Patent Rights
that claim inventions conceived or reduced to practice by CVT during the
Collaboration Term or that otherwise become Controlled by CVT during the
Collaboration Term.

 

1.19 “CVT Base Technology” shall mean CVT Base Know-How and CVT Base Patent
Rights.

 

1.20 “CVT Net Sales” shall mean Net Sales of CVT or any Affiliate or Sublicensee
of CVT.

 

1.21 “Development” shall mean the conduct of all activities that are reasonably
necessary or desirable to identify, research, develop and obtain Regulatory
Approval of a Collaboration Compound or Licensed Product or label expansions for
a Licensed Product, including but not limited to: (i) identification and early
pre-clinical testing of compounds, (ii) toxicology, regulatory affairs,
pre-clinical studies and clinical trials in accordance with the GLPs, GCPs and
cGMPs or other designated quality standards and applicable laws and regulations;
and (iii) all activities, until such time as manufacturing of Licensed Product
intended for commercial sale commences, relating to developing the ability to
manufacture Licensed Product, including but not limited to formulation, delivery
technologies and devices, scale-up and bulk production, fill/finish,
manufacturing process development and validation, and manufacturing and quality
assurance technical support. “Develop” shall mean to engage in Development.

 

1.22 “Development Costs” shall mean (a) Out-of-Pocket Costs and (b) FTE costs
incurred at the applicable FTE Rate, in each case incurred by a Party for the
Development of a Licensed Product in accordance with an approved Development
plan and an approved Development budget. Development Costs shall not include any
Internal Costs incurred by either Party other than Internal Costs included in
the FTE costs explicitly provided for in clause (b) above.

 

1.23 “FD&C Act” shall mean the United States Federal Food, Drug, and Cosmetic
Act, as amended from time to time, and the regulations promulgated thereunder,
as amended from time to time.

 

4

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

 

1.24 “FDA” shall mean the United States Food and Drug Administration or any
successor agency thereto.

 

1.25 “Field” shall mean the prevention, treatment or diagnosis of all diseases
or conditions in humans or animals.

 

1.26 “First Commercial Sale” shall mean the date of the first commercial sale
(other than for purposes of obtaining Regulatory Approval) of a Licensed Product
by or on behalf of CVT or any Affiliate or Sublicensee of CVT, or of a PTC
Product by or on behalf of PTC or any Affiliate or Sublicensee of PTC.

 

1.27 “FTE” shall mean the equivalent of the scientific or technical work of one
(1) employee full time for one (1) year (consisting of 1[*] hours per year) of
work on or directly related to the Development of Licensed Product(s), carried
out by a qualified employee of a Party. A qualified employee is any individual,
regardless of level within the organization, that is directly associated with
the Development of Collaboration Compounds or Licensed Product(s). Scientific or
technical work may include, but is not limited to, experimental laboratory work
for Collaboration Compounds or Licensed Products, developing manufacturing
processes for Collaboration Compounds or Licensed Products, quality assurance
technical support, recording and writing up results of Development activities
relating to Licensed Products or Collaboration Compounds, reviewing literature
and references or participating in scientific conferences directly relating to
the Development of Collaboration Compounds or Licensed Products, discussions
directly relating to the Development of Collaboration Compounds or Licensed
Products and conducting other Development activities directly relating to the
Development of Collaboration Compounds or Licensed Products. Time incurred by
employees not related to scientific or technical work and time not spent
directly on Collaboration Compound(s) or Licensed Product(s) is not eligible for
FTE reimbursement under this Agreement.

 

1.28 “FTE Rate” shall mean the rate (which shall be the same U.S. dollar amount
for both Parties) at which each Party will charge for its FTEs devoted to
Development of Product(s) under this Agreement. For the period between the
Effective Date and December 31, 2006, the rate shall be U.S. $[*] per FTE. On
January 1, 2007 and on January 1 of each subsequent calendar year, the foregoing
rate shall be increased for the calendar year then commencing by the percentage
increase, if any, in the CPI as of December 31 of the then most recently
completed calendar year with respect to the level of the CPI on December 31,
2005.

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

5

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

 

1.29 “GAAP” shall mean generally accepted accounting principles as applicable in
the United States of America.

 

1.30 “GEMS” shall mean PTC’s proprietary technology referred to as gene
expression modulation by small molecules, and which either constitutes part of
the PTC Base Know-How or is claimed by PTC Base Patent Rights.

 

1.31 “Hit” shall mean a compound that is found by the Parties or their
respective Affiliates during screening under the Research Collaboration to be
Active against a Target.

 

1.32 “IND” shall mean an investigational new drug application (as defined in
Title 21 Section 312 et seq. of the United States Code of Federal Regulations,
as amended from time to time) which is submitted to the FDA, or equivalent
application to the relevant Regulatory Authority of a country or jurisdiction
other than the United States, to commence clinical testing of a drug in humans,
as defined by the FDA or other relevant Regulatory Authority, as the case may
be.

 

1.33 “IND Candidate” shall mean, on a Target-specific basis, (a) a Lead Compound
which the JMC has designated for IND-enabling pre-clinical studies and clinical
development in accordance with Section 3.7 and which satisfies the criteria for
IND Candidates set forth in the Research Plan, or (b) a Research Compound or
Lead Compound that CVT uses for IND-enabling pre-clinical studies and clinical
development pursuant to a license obtained by CVT pursuant to Section 4.6.

 

1.34 “Internal Costs” shall mean a Party’s and/or its Affiliate’s costs and
expenses for overhead, personnel, rent, depreciation and amortization,
utilities, equipment leases, general and administrative expenses and similar
items, in each case determined in a manner consistent with GAAP.

 

1.35 “Joint Management Committee” or “JMC” shall mean a committee established by
the Parties in accordance with Section 2.3 to oversee, review, manage and direct
activities and document certain decision-making under this Agreement.

 

1.36 “Joint Research Committee” or “JRC” shall mean a committee established by
the Parties in accordance with Section 2.2 to oversee, review, manage and direct
the Research Collaboration.

 

1.37 “Know-How” shall mean any and all unpatented proprietary ideas, inventions,
discoveries, information (including Confidential Information), compounds or
biologic materials, data, results, formulae, designs, specifications, methods,
processes, formulations, techniques, ideas, technical information (including
structural and functional information), process information, pre-clinical
information, clinical information, and any and all proprietary biological,
chemical, pharmacological, toxicological, assay, control and manufacturing data
and materials.

 

6

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

 

1.38 “Lead Compound” shall mean, on a Target-specific basis, (i) a Research
Compound that is identified as meeting the Lead Criteria and as having potential
utility in the Field and that is selected for a Lead Optimization program by the
JMC, and (ii) any Collaboration Compound synthesized or identified as a result
of such Lead Optimization.

 

1.39 “Lead Criteria” shall mean, on a Target-specific basis, the criteria for
declaring a Lead Optimization program set forth in the Research Plan.

 

1.40 “Lead Identification” shall mean the activities conducted by the Parties
pursuant to the Research Plan for identifying Research Compounds that meet the
Lead Criteria and have potential utility in the Field.

 

1.41 “Lead Optimization” shall mean a program of medicinal chemistry and related
research efforts as set forth in the Research Plan the intent of which is to
develop a Lead Compound into an IND Candidate.

 

1.42 “Licensed Product” shall mean any Product which incorporates a
Collaboration Compound as an active ingredient and the rights to which are
licensed by CVT pursuant to this Agreement.

 

1.43 “License Term” shall have the meaning ascribed in Section 12.2.

 

1.44 “MAA” shall mean an application filed with the relevant Regulatory
Authorities in Europe seeking Regulatory Approval to market and sell any
Licensed Product in Europe or in any country or territory therein within the
Field.

 

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

 

1.45 “Market Area” shall mean any one of the United States, Japan or Europe.

 

1.47 “Marketing Exclusivity” shall mean, with respect to a Licensed Product or a
PTC Product, as the case may be, that the Licensed Product or PTC Product has
been granted marketing exclusivity afforded approved drug products pursuant to
(a) Sections 505(c), 505(J), and 505A of the FD&C Act, and the regulations
promulgated thereunder, as amended from time to time, or its equivalent in a
country other than the United States, or (b) the orphan drug exclusivity
afforded approved drugs designated for rare diseases or conditions under
Sections 526 and 527 of the FD&C Act, and the regulations promulgated
thereunder, as amended from time to time, or its equivalent in a country other
than the United States, and/or (c) the Licensed Product or PTC Product is
covered by a Law which precludes the Regulatory Authority in a country from
granting Regulatory Approval for another product that contains the same active
ingredient as that which is contained in the applicable Licensed Product or PTC
Product.

 

7

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

 

1.48 “NDA” shall mean a new drug application (as defined in Title 21 of the
United States Code of Federal Regulations, as amended from time to time) filed
with the FDA seeking Regulatory Approval to market and sell any Licensed Product
in the United States in the Field.

 

1.49 “Net Sales” shall mean, with respect to sales of Licensed Products by CVT
or its Affiliates or Sublicensees, or sales of PTC Products by PTC or its
Affiliates or Sublicensees, the gross amount invoiced by a Party or any
Affiliate or Sublicensee of a Party, for the sale of the Licensed Product or PTC
Product to a non-Sublicensee Third Party purchaser, less the following
deductions from such amounts which are incurred, allowed, accrued or
specifically allocated with respect to the Licensed Products or PTC Products:

 

  (a) Credits or allowances for rejection of, return of, and for uncollectible
amounts on, previously sold Licensed Products or PTC Products, and to end users
participating in trial support, capitation, market share or other product
compliance incentive programs and/or indigent patient or patient support
programs;

 

  (b) A [*] deduction of [*] percent ([*]%) for those sales-related deductions
which are not accounted for on a Licensed Product-by-Licensed Product basis or
PTC Product-by-PTC Product basis (e.g., outward freight, transportation
insurance, packing materials for dispatch of goods, custom duties or any other
transportation costs directly related to the delivery of the Licensed Product or
PTC Product) and are separately billed;

 

  (c) Taxes, including Deductible Value Added Tax (as defined below), tariffs or
import/export duties based on or levied on Net Sales, transportation, transfer
or delivery of a Licensed Product or PTC Products borne by the seller thereof
but excluding value-added taxes (other than Deductible Value Added Tax) or taxes
assessed on income derived from Net Sales; where “Deductible Value Added Tax”
shall mean value added tax only to the extent that such value added tax is
actually incurred and is not reimbursable, refundable or creditable under the
tax authority of any country; and

 

  (d) Discounts, chargebacks or rebates, including but not limited to trade,
cash, prompt payment, quantity and/or other customary discounts, discounts
and/or rebates to governmental or managed care organizations, chargeback and
other discounts to wholesalers and other distributors of Licensed Products or
PTC Products, retroactive price reductions (including under Medicare, Medicaid
and similar types of rebates), and administrative fees paid to managed health
care organizations with respect to Licensed Products or PTC Products (including
pharmacy benefit managers, group purchasing organizations, health maintenance
organizations and the like).

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

8

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

In determining Net Sales of any Combination Product under this Agreement on a
country-by-country basis, Net Sales shall first be calculated in accordance with
the definition of Net Sales above, then multiplied by the percentage value of
the Licensed Product contained in the Combination Product, such percentage value
being the quotient obtained by dividing the average suggested list price of the
Licensed Product in a country by the sum of the average suggested list price of
the Licensed Product and the other ingredients which are therapeutically active
contained in the Combination Product in such country. The average suggested list
price of each therapeutically active ingredient and of the Licensed Product
shall be for a quantity comparable to that contained in the Combination Product
of the same class, purity and potency. The average suggested list price shall be
determined by taking the average of the suggested list price of the Licensed
Product and each therapeutically active ingredient in the country where such
Combination Product is being sold. When no such average suggested list price is
available for any therapeutically active ingredient or the Licensed Product in a
country, the Party shall calculate in good faith a hypothetical market price for
such country with respect to the Combination Product taking into consideration
the same proportions of costs, overhead and profit as are then allocated to all
similar substances in such country; provided however, that if a Party in good
faith disputes the other Party’s calculation of either the average suggested
list price or the hypothetical market price, the Parties shall refer the issue
for binding resolution to a mutually agreeable individual (not affiliated with
either Party) with expertise in the marketing and sales of similar
pharmaceutical products (including without limitation experience in pricing and
reimbursement), with such resolution to occur within thirty (30) days after such
referral.

 

1.50 “Non-Collaboration Compound” shall mean any Collaboration Compound that
ceases to be subject to the Research Collaboration pursuant to Sections 3.5, 3.6
or 3.7 of this Agreement.

 

1.51 “Out-of-Pocket Costs” shall mean costs and expenses paid to Third Parties
(or payable to Third Parties and accrued in accordance with GAAP) by either
Party after the Effective Date.

 

1.52 “Patent Rights” shall mean the rights and interest in and to any and all
inventor certificates, utility models, pending patent applications including
provisionals, divisionals, substitutions, continuations and continuations in
part, patents issuing from any applications, reissues, reexaminations,
extensions, confirmations, registrations, supplemental protection certificates,
renewals and all letters patent on any the foregoing.

 

9

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

 

1.53 “Phase I Clinical Trial” shall mean any human clinical study of a Licensed
Product that is intended as initial clinical safety testing in healthy
volunteers or a limited patient population, or studies directed toward
understanding the mechanisms or metabolism of the Licensed Product. Each Phase I
Clinical Trial shall be deemed commenced when the first participant has been
enrolled in such study.

 

1.54 “Phase II Clinical Trial” shall mean any human clinical study of a Licensed
Product that is intended to study the safety, dosage and initial efficacy in a
limited patient population, and is prospectively designed to support the
continued testing of the Licensed Product in one or more further Phase II
Clinical Trials or in a Phase III Clinical Trial. Each Phase II Clinical Trial
shall be deemed commenced when the first patient has been enrolled in such
study.

 

1.55 “Phase III Clinical Trial” shall mean a pivotal human clinical study of a
Licensed Product that is prospectively designed to confirm with statistical
significance in an expanded patient population the efficacy and safety of a drug
in a given patient population, and the results of which are intended to form the
basis for approval of an NDA or MAA by a Regulatory Authority. Each Phase III
Clinical Trial shall be deemed commenced when the first patient has been
enrolled in such study.

 

1.56 “Pre-IND Cost Share” shall mean, with respect to Development activities
conducted during the Pre-IND Stage, an amount equal to [*] percent ([*] %) of
the Development Costs incurred by CVT in conducting such Development activities,
plus [*] Percent ([*]%) of such amount. By way of example, if CVT’s total cost
for the Pre-IND Stage was $[*], then the Pre-IND Cost Share would be $[*],
calculated as follows: $[*] (representing [*]% of $[*]) plus $[*] (representing
[*] such $[*]) = $[*].

 

1.57 “Pre-IND Stage” shall mean the phase during which Development activities
are conducted against a Target after Lead Identification and prior to PTC’s
exercise of its Opt-In Right under Section 4.8 (b).

 

1.58 “Product” shall mean any pharmaceutical drug, diagnostic kit, or other
article of manufacture, composition of matter, material, compound, component or
product for use in the Field.

 

1.59 “PTC Base Know-How” shall mean Know-How Controlled by PTC as of the
Effective Date, and Know-How other than Collaboration Know-How which is
developed by PTC during the Collaboration Term.

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

10

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

 

1.60 “PTC Base Patent Rights” shall mean Patent Rights Controlled by PTC as of
the Effective Date, and Patent Rights other than Collaboration Patent Rights
that claim inventions conceived or reduced to practice by PTC during the
Collaboration Term or that otherwise become Controlled by PTC during the
Collaboration Term.

 

1.61 “PTC Base Technology” shall mean PTC Base Know-How and PTC Base Patent
Rights.

 

1.62 “PTC Net Sales” shall mean Net Sales of PTC Products by PTC or any
Affiliate or Sublicensee of PTC.

 

1.63 “PTC Product” shall mean any Product which incorporates a Collaboration
Compound as an active ingredient and the rights to which are licensed or granted
to PTC pursuant to Section 4.9 of this Agreement.

 

1.64 “Regulatory Approval” shall mean any and all approvals (including pricing
and reimbursement approvals), licenses, registrations or authorizations of any
kind by the FDA or other applicable Regulatory Authority reasonably necessary
for the development, pre-clinical and/or human clinical testing, manufacture,
quality testing, supply, use, storage, importation, export, transport, pricing,
marketing, market acceptance, and/or sale of a Licensed Product for use in the
Field in a country or countries of the Territory.

 

1.65 “Regulatory Authority” shall mean any national, supra-national, regional,
state or local regulatory agency, department, bureau, commission, council or
other governmental entity with jurisdiction over the development, manufacture,
distribution, import, export, use, offer for sale or sale of Licensed Products
in the applicable jurisdiction in the Territory. Regulatory Authority shall
include, without limitation, the FDA and the European Medicines Agency.

 

1.66 “Research Collaboration” shall mean the research activities conducted by
the Parties in accordance with the Research Plan.

 

1.67 “Research Compound” shall mean a Hit that has been designated by the JMC as
a modulator of the relevant Target and as meeting the potency, selectivity, and
other criteria established by the JRC for Research Compounds and with respect to
such Target as documented in the Research Plan.

 

1.68 “Research Plan” shall mean the document which sets forth the activities and
methods necessary for carrying out the Research Collaboration, as may be amended
by the JRC from time to time.

 

1.69 “Sublicensee” shall mean a Third Party to whom CVT has granted or
transferred a license or sublicense to make, have made, import, use, sell, or
offer for sale Licensed Products pursuant to Section 4.7 or to whom PTC has
granted or transferred a license or sublicense to make, have made, import, use,
sell, or offer for sale PTC Products pursuant to Section 4.9.

 

11

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

 

1.70 “Target” shall mean any Initial Target or any Additional Target. For
clarity, a Target shall include the protein, as well as the gene and RNA
encoding such protein.

 

1.71 “Territory” shall mean all countries and jurisdictions of the world.

 

1.72 “Third Party” shall mean any party other than CVT or PTC or their
respective Affiliates.

 

1.73 “Valid Claim” shall mean (a) a claim in an issued, unexpired patent that
(i) has not been finally cancelled, withdrawn, abandoned or rejected by any
administrative agency or other body of competent jurisdiction, (ii) has not been
revoked, held invalid, or declared unpatentable or unenforceable in a decision
of a court or other body of competent jurisdiction that is unappealable or
unappealed within the time allowed for appeal, (iii) has not been rendered
unenforceable through disclaimer or otherwise, or (iv) is not lost through an
interference proceeding, or (b) a claim in any pending patent application which
has neither been abandoned nor been pending for more than seven (7) years.

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

 

Definition

 

Section

CVT

 

Preamble

PTC

 

Preamble

Effective Date

 

Preamble

Party

 

Preamble

Parties

 

Preamble

Quarterly JRC Meeting

 

2.2(a)

Project Team

 

2.2(a)

Quarterly JMC Meeting

 

2.3(a)

1[*]

 

3.11(a)(i)

Non-Collaboration Program

 

3.11(a)(ii)

Third Party Activity

 

3.11(e)

CVT Existing Program

 

3.12(b)

Third Party Activity

 

3.12 (e)

Lead Optimization Opt-In Right

 

4.8(a)(i)

IND-Opt-In Right

 

4.8(b)(i)

Proof-of-Concept Budget

 

4.8(b)(i)

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

12

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

Definition

 

Section

Proof-of-Concept Date

  4.8(c)(i)

Registration Budget

  4.8(c)(i)

Co-Promote Agreement

  4.8(c)(ii)

Co-Promote Option

  4.8(c)(iii)

Promissory Note

  5.1(b)

Convertible Promissory Note

  5.1(c)

Excess Amount

  5.3

Third Party Payments

  5.8

PTC Third Party Payments

  5.9

PTC Product License Term

  5.12

Opt-In Rights

  6.1

Competitive Infringement

  8.2

SEC

  9.3

Losses

  11.1

Representatives

  11.1

Indemnified Party

  11.3

Cure Period

  12.5

Dispute

  12.10

 

2. GOVERNANCE

 

2.1 Alliance Manager. Each Party shall appoint one or more Alliance Manager(s)
and notify the other Party of the designation of its respective Alliance
Manager(s), including any changes in such designation from time to time during
the Collaboration Term. The Alliance Manager(s) for each Party shall be
responsible for working with the JRC and the JMC established under this Article
to coordinate and implement the Party’s responsibilities and obligations under
this Agreement. Each Party shall endeavor to assure that any employee it
appoints as an Alliance Manager has appropriate experience and decision-making
powers to support the Alliance Manager role for the then-current stage of the
Agreement.

 

2.2 Joint Research Committee and Project Teams.

 

  (a) Structure of JRC. The Parties shall establish the JRC within fifteen
(15) days of the Effective Date. The JRC shall be comprised of three
(3) representatives from each Party, each with appropriate decision-making
authority. The chairperson of the JRC shall be designated by CVT. The
chairperson of the JRC shall designate a secretary of each meeting, who shall be
responsible for preparing the minutes of the meeting. Such minutes shall provide
a description in reasonable detail of the discussions held at the meeting and a
list of any actions, decisions or determinations approved by the JRC. The
Parties agree that they shall endeavor to ensure that draft minutes of each
meeting will be distributed within fifteen (15) days of the meeting, and final
minutes shall be approved by both Parties within one month of the meeting. The
chairperson shall distribute a draft agenda prior to each meeting of the JRC.
Each Party shall disclose to the other proposed agenda items in advance of each
meeting of the JRC. Subject to Section 2.2(c) regarding formation of Project
Teams, the JRC shall meet periodically as needed, but in no event less than once
during each calendar quarter (each, a “Quarterly JRC Meeting”), in person (with
locations to alternate between the Parties) or by teleconference or other
electronic means as mutually agreed, to discuss matters within its purview.
Subject to the provisions of Article 9, the JRC may invite other representatives
of the Parties with special skills or knowledge to attend meetings where
appropriate. The JRC shall adopt such other procedural rules as shall be
necessary or convenient for its work. Each Party shall be responsible for all
travel and other costs for its representatives to attend meetings of, and
otherwise participate on, the JRC.

 

13

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

  (b) Duties of the JRC or Project Teams (Once Project Teams Formed). In all
cases subject to Section 2.4, the JRC (or, with respect to specific Targets, the
Project Teams, once formed as provided Section 2.2(c) below) shall be
responsible for: (i) promptly developing and agreeing upon the initial version
of the Research Plan and updating the Research Plan as necessary from time to
time; (ii) preparing an annual budget for the activities under the Research Plan
for approval by the JMC; (iii) overseeing and managing performance of the
Research Collaboration by the Parties; (iv) making recommendations regarding
selection of Additional Targets and the definition of “Active” for such Targets
in accordance with Section 3.4, and submitting such recommendations to the JMC
for its approval; (v) making recommendations regarding the screening of
compounds based on the Research Plan and the designation of Hits, Research
Compounds, Lead Compounds and IND Candidates, and submitting such
recommendations to the JMC for its approval; (vi) overseeing and coordinating
Lead Optimization leading to the designation of IND Candidate(s), but only if
PTC has exercised a Lead Optimization Opt-In Right pursuant to Section 4.8(a)
with respect to a given Target; (vii) overseeing and coordinating IND-enabling
and pre-clinical studies, CMC (Chemistry, Manufacturing and Controls) and
clinical development but only if PTC has exercised an IND Opt-In Right pursuant
to Section 4.8(b) for a given Target; (viii) overseeing and coordinating the
submission and approval of any IND (if any) relating to any IND Candidates but
only if PTC has exercised an IND Opt-In Right pursuant to Section 4.8(b) for a
given Target; and (ix) implementing any of the foregoing.

 

  (c) Formation of Project Teams. At any time after selection of a specific
Target, a separate project team (each, a “Project Team”) may be established by
the JRC to manage all activities related to such Target and Collaboration
Compounds that are Active against such Target. After commencement of a Lead
Optimization program for the specific Target, such Project Team shall take over
the duties of the JRC under Section 2.2(b) with respect to such Project Team’s
Target and the Collaboration Compounds that are Active against such Target, and
the JRC will have no further management or oversight responsibilities for such
Target or Collaboration Compounds. The Parties shall agree upon an appropriate
number of representatives from each Party to serve on each Project Team, and CVT
shall appoint a chairperson for each Project Team. The Project Team shall
conduct meetings, prepare minutes, circulate draft agendas, meet at least
quarterly, and otherwise conduct its activities and decision-making in the same
manner as the JRC, as set forth in Section 2.2(a). Once the Project Team has
replaced the JRC with respect to a particular Target and the Collaboration
Compounds that are Active with respect to such Target, the Project Team shall
report directly to the JMC and, subject to Section 2.4 regarding CVT
decision-making authority, the JMC shall have sole decision-making authority
with respect to any recommendations made by the Project Team.

 

14

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

  (d) Meetings and Decision-Making by the JRC or Project Teams. Unless waived by
a Party in writing, at least two (2) JRC (or Project Team) representatives from
each Party must participate in a meeting of the JRC (or Project Team) in order
for there to be a quorum for such meeting. The members of the JRC (or Project
Team) shall seek to make all recommendations to be made by them unanimously
following full discussion thereof (with each Party’s representatives having,
collectively, one (1) vote), and the JRC (or Project Team) shall have the duties
set forth in Section 2.2(b). If the JRC (or Project Team) is unable to reach a
unanimous decision with respect to any matter within the scope of its duties and
decision-making authority, then at any time either Party may refer the dispute
to the JMC for resolution, subject to Section 2.4 regarding CVT decision-making
authority. Changes in designation of JRC (or Project Team) members by each Party
may occur during the Collaboration Term upon notification by the Party.

 

2.3 Joint Management Committee.

 

  (a) Structure of the JMC. The Parties shall establish the JMC within fifteen
(15) days after the Effective Date, which shall be comprised of three
(3) representatives from each Party, each with appropriate decision-making
authority. The chairperson of the JMC will be designated by CVT. The chairperson
shall designate a secretary of each meeting, who shall be responsible for
preparing the minutes of the meeting. Such minutes shall provide a description
in reasonable detail of the discussions held at the meeting and a list of any
actions, decisions or determinations approved by the JMC. The Parties agree that
they shall endeavor to ensure that draft minutes of each meeting will be
distributed within fifteen (15) days of the meeting, and final minutes shall be
approved by both Parties within one month of the meeting. The chairperson shall
distribute a draft agenda prior to, and final meeting minutes reasonably
promptly following, each meeting of the JMC. Each Party shall disclose to the
other proposed agenda items in advance of each meeting of the JMC. The JMC shall
meet

 

15

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

periodically as needed, but in no event less than once during each calendar
quarter (each, a “Quarterly JMC Meeting”), in person (with locations to
alternate between the Parties) or by teleconference or other electronic means as
mutually agreed, to discuss matters within its purview. After the Collaboration
Term ends, subject to Section 2.4, the JMC will meet at least two times in every
calendar year for informational and coordination purposes during the License
Term, unless waived by the Parties in writing. Subject to the provisions of
Article 9, the JMC may invite other representatives of the Parties with special
skills or knowledge to attend meetings where appropriate. The JMC shall adopt
such other procedural rules as shall be necessary or convenient for its work.
Each Party shall be responsible for all travel and other costs for its
representatives to attend meetings of, and otherwise participate on, the JMC.

 

  (b) Meetings and Decision-Making by the JMC. Unless waived by a Party in
writing, at least two (2) JMC representatives from each Party must participate
in a meeting of the JMC in order for there to be a quorum for such meeting. The
members of the JMC shall seek to make all determinations to be made by them
unanimously following full discussion thereof (with each Party’s representatives
having, collectively, one (1) vote). If the JMC is unable to reach a unanimous
decision on any matter within its decision-making authority, including but not
limited to resolution within [*] business days of any referrals of disputes from
the JRC or a Project Team, then the dispute shall be referred to the respective
heads of research of the Parties (or their individual designees), who will
attempt to resolve the matter in good faith discussions. Should the Parties’
respective heads of research fail to reach agreement on a particular matter
within [*] business days, then the dispute shall be referred to the respective
CEOs of the Parties who will attempt to resolve the matter in good faith. If the
Parties’ respective CEOs, are unable to reach agreement on a particular matter
within [*] business days, subject to Section 2.4 regarding CVT decision-making
authority, the JMC shall continue to apply and adhere to the previously agreed
to plans and obligations, including the Research Plan, until such time (if any)
as the dispute can be resolved. Changes in designation of JMC members by each
Party may occur during the Agreement upon written notification by the Party to
the other Party.

 

  (c) Duties of the JMC. In all cases subject to Section 2.4, the JMC shall be
responsible for: (i) monitoring the activities of the JRC and any Project Teams
that have been established for particular Targets; (ii) approving (or not) all
recommendations made by the JRC or any Project Team, including with respect to
annual budgets under the Research Plan, selection of

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

16

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

Additional Targets and Collaboration Compounds (including Hits, Research
Compounds, Lead Compounds, and IND Candidates), the definition of “Active” for
Additional Targets in accordance with Section 3.4, the declaration of Lead
Optimization programs and documenting all such actions in writing;
(iii) documenting in writing any exclusive licenses which are taken by CVT
pursuant to this Agreement, including which Target(s) and Collaboration
Compounds which are Active against such Targets (if any) are licensed by CVT
hereunder; (iv) documenting in writing all designations of Non-Collaboration
Compounds pursuant to Sections 3.5, 3.6 and 3.7 of this Agreement;
(v) establishing policies for presentation or publication of results of the
results of activities carried out under this Agreement; and (vi) managing the
interactions between CVT and PTC which occur with respect to the Development of
Collaboration Compounds. In addition, through the JMC meetings under
Section 2.3(a), CVT shall provide PTC with good faith, annual budget estimates
and annual plans for the Development of Collaboration Compounds, and updates to
such annual budgets and plans. CVT shall also endeavor to provide to PTC advance
drafts of the annual budget estimates and annual plans for Development of
Collaboration Compounds in order to provide advance notice to PTC.

 

2.4 Control and Decision-Making Authority.

 

  (a) Lead Optimization and Lead Optimization Opt-In. The JRC, Project Teams and
JMC shall each have the duties and decision-making authority as set forth in
Sections 2.2 (for the JRC and Project Team) and 2.3 (for the JMC) with respect
to a given Target through the end of Lead Identification for such Target. Unless
PTC has exercised a Lead Optimization Opt-In Right pursuant to Section 4.8(a)
and provided that PTC has not later opted out under Section 4.8(a)(ii), CVT
shall assume final decision-making authority (without any requirement for
referrals to the respective heads of research and CEOs contemplated in
Section 2.3(b)) with respect to such Target (subject to Section 2.4(e)) upon the
expiration of such Lead Optimization Opt-In Right. If PTC exercises a Lead
Optimization Opt-In Right with respect to a given Target pursuant to
Section 4.8(a), for the period through Lead Optimization and up to (but not
including) clinical Development for such Target, the JRC, Project Team and the
JMC shall continue to have the duties and decision-making authority as set forth
in Sections 2.2 and 2.3.

 

  (b) Clinical Development and IND Opt-In. Unless PTC has exercised a Lead
Optimization Opt-In Right under Section 4.8(a) or an IND Opt-In-Right pursuant
to Section 4.8(b), CVT shall assume final decision-making authority (without any
requirement for referrals to the respective heads of research and CEOs
contemplated in Section 2.3(b)) with respect to such Target (subject to
Section 2.4(e)) upon the expiration of such IND Opt-In Right. If PTC has not
exercised its Lead Optimization Opt-In Right for a given Target, but
subsequently exercises an IND Opt-In Right pursuant to Section 4.8(b) for such
Target, then from the date of notice of such exercise through completion of the
applicable Clinical Proof-of-Concept Study for such IND Candidate for such
Target, and notwithstanding the provisions of Section 2.4(a) relating to CVT
decision-making, and provided that PTC has not opted out under
Section 4.8(b)(ii), the Project Team and the JMC shall have the duties and
decision-making authority as set forth in Sections 2.2 and 2.3, and the duties
of the Project Team and the JMC shall be extended to include such Development of
such IND Candidate relating to such Target, such that the Project Team shall be
responsible for preparation and presentation of research plans and study designs
regarding such clinical Development and the JMC shall be responsible for review
and approval of such research plans and study designs regarding such clinical
Development.

 

17

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

  (c) Phase III Clinical Development and Thereafter. Unless PTC has exercised a
Co-Promote Option pursuant to Section 4.8(c), CVT shall assume final
decision-making authority (without any requirement for referrals to the
respective heads of research and CEO’s contemplated in Section 2.3(b)) with
respect to such Target (subject to Section 2.4(e)) upon the expiration of such
Co-Promote Option. If PTC exercises a Co-Promote Option pursuant to
Section 4.8(c) for a given Target and Collaboration Compound(s) which are Active
against such Target exclusively licensed by CVT pursuant to this Agreement, and
provided that PTC has not opted out under Section 4.8(c)(iv), the JMC shall be
responsible for managing the interactions between CVT and PTC with respect to
the development and commercialization of Licensed Products incorporating any
such Collaboration Compound(s) exclusively licensed by CVT, except as may be
superseded by the terms of any Co-Promote Agreement entered into by the Parties
pursuant to Section 4.8(c)(iii).

 

  (d) CVT Decision-Making Authority. In the case where PTC has exercised a Lead
Optimization Opt-In Right, an IND Opt-In Right or a Co-Promote Option with
respect to a given Target, and has not opted out under Section 4.8, CVT shall
assume final decision-making authority (subject to Section 2.4(e)) from
commencement of the first Phase I Clinical Trial and thereafter, with respect to
any IND Candidate and any Licensed Product relating to such Target, after such
referrals to the respective heads of research and CEOs required in
Section 2.3(b), as applicable, have occurred. In the case where PTC has not
exercised a Lead Optimization Opt-In Right, an IND Opt-In Right or a Co-Promote
Option with respect to a given Target, CVT shall assume final decision-making
authority (subject to Section 2.4(e)) from commencement of the first Phase I
Clinical Trial and thereafter, without any requirement for referrals to the
respective heads of research and CEOs contemplated in Section 2.3(b).

 

18

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

 

  (e) Limitations on CVT Decision-Making Authority. Nothing in this Section 2.4
or otherwise in this Agreement shall be construed to mean that CVT in the
exercise of its decision-making authority under this Section 2.4 may override
the provisions of Sections 3.10 (Responsibility for Development Costs), 3.11
(Exclusivity Regarding Targets), Article 5 (Payments), Article 6 (Diligence),
Article 7 (Intellectual Property), Article 8 (Intellectual Property
Infringement), or Article 12 (Term, Termination and Expiration), or the
definition of “Active” with respect to a particular Target established by the
JRC and JMC pursuant to Sections 1.1 and 3.4.

 

3. RESEARCH COLLABORATION

 

3.1 The Research Collaboration. The Research Collaboration shall be conducted by
the Parties in accordance with the initial Research Plan. Thereafter, the
Research Plan shall be reviewed periodically by the JRC and may be amended by
written agreement of the JRC as approved in writing by the JMC. The activities
to be performed by the Parties during the Collaboration Term shall include
(i) selection of Additional Targets, (ii) identification of Hits,
(iii) identification of Research Compounds, (iv) Lead Identification, (v) Lead
Optimization, (vi) identification of IND Candidate(s), (vii) IND-enabling work
for IND Candidates including GLP safety studies, CMC and formulation development
and (viii) management of IND submission.

 

3.2 Targets. The Parties agree that a total of five (5) Targets, including the
Initial Targets and [*] Additional Targets, will be selected by the Parties as
described in Section 3.4 below and in accordance with the Research Plan.

 

3.3 Initial Targets. [*] shall be designated as the Initial Targets for
screening under the Research Plan.

 

3.4 Additional Targets.

 

  (a) The Parties agree that [*] Additional Targets shall be selected for
screening under the Research Collaboration. The process for selection of such
Additional Targets will be as follows:

 

  (i) through the JRC, the Parties will nominate a group of potential Targets
for evaluation of suitability for GEMS, and each Party shall provide to the
other Party the information specified in Section 3.11(a)(ii);

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

19

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

 

  (ii) the nominated Target candidates will be evaluated by PTC in order to
determine the potential for modulating said Target candidates utilizing GEMS;

 

  (iii) PTC will submit to the JRC a ranked list of the nominated Target
candidates along with any literature or experimental evidence, as known at the
time of submission;

 

  (iv) the JRC will analyze the nominated Target candidates evaluated by PTC and
determine which of these Target candidates will be selected as Additional
Targets based on the information provided in subsection 3.4(a)(iii);

 

  (v) if the JRC selects any of the Target candidates to be Additional Targets,
the JRC under Section 2.2(b)(iv) will submit such recommendation and the
proposed definition of “Active” to the JMC for written approval under
Section 2.3(c)(ii); and

 

  (vi) once approved by the JMC under Section 2.3(c)(ii), the Additional Targets
will be screened in the manner described in the Research Plan using the
definition of “Active” approved by the JMC.

 

  (b) The Parties agree that the JRC will select the Additional Targets within
[*] months after the Effective Date. Using the same process set forth in
Section 3.4(a), the JRC may select and the JMC may approve one or more
substitute Target(s) in replacement of any previously selected Target prior to
the commencement of Lead Optimization against such previously selected Target.
If one or more substitute Target(s) are selected, it is understood that
(i) additional FTEs may be required to complete work on these latter Targets,
and (ii) the provisions of Section 3.11 shall no longer apply to the previously
selected Target that has been replaced.

 

3.5 Identification of Hits; Screening Assay. PTC will use its GEMS technology to
screen its compound library against the Targets in order to identify Hits. PTC
shall complete such screening and provide information concerning the Hits to the
JRC and CVT as described in the Research Plan. The JRC shall review the Hits and
determine which Hits meet the Research Compound criteria and provide this
determination to the JMC for written approval. No more than [*] days after the
JRC’s recommendation is presented to the JMC, the JMC shall determine whether
such Hits merit further study and if so, shall designate such Hits as Research
Compounds in writing. Any compounds that are not Active, or otherwise deemed by
the JMC to not be of interest, shall be designated by the JMC in writing under
Section 2.3(c)(iv) as Non-Collaboration Compound(s), which Non-Collaboration
Compounds shall no longer be subject to the Research Collaboration and shall be
available to PTC immediately following such designation. PTC shall have the
right to screen such Non-Collaboration Compounds and to develop and
commercialize products incorporating such Non-Collaboration Compounds with no
royalty or milestone obligations to CVT for such products under this Agreement,
subject, however, to the exclusivity provisions of Section 3.11.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

20

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

3.6 Lead Identification. PTC shall screen the Research Compounds using the
assays as set forth in the Research Plan. PTC shall provide the results of the
screening assays to the JRC and CVT. The JRC shall review the results of the
screening assays, determine which Research Compounds shall be designated as Lead
Compounds and submit its recommendations to the JMC for written approval. No
more than [*] days after the JRC’s recommendation is presented to the JMC, the
JMC shall determine under Section 2.3(c)(iv) whether such Research Compounds
merit further study and if so, shall designate such Research Compounds as Lead
Compounds in writing. Any Research Compounds that are not designated as Lead
Compounds shall remain in the PTC compound library, and shall continue to be
part of the Research Collaboration and subject to the exclusivity provisions of
Section 3.11 until [*] days after the end of the Collaboration Term. After such
[*] day period, if CVT does not take an exclusive license to such compounds
pursuant to Section 4.6, then such Research Compounds shall be deemed
Non-Collaboration Compounds, and PTC shall have the right to screen such
Non-Collaboration Compounds and to develop and commercialize products
incorporating such Non-Collaboration Compounds with no royalty or milestone
obligations to CVT for such products under this Agreement.

 

3.7 Lead Optimization. Upon designation of at least one Lead Compound for a
given Target, the Parties will determine which Party shall primarily conduct
Lead Optimization. The selected Party, in consultation with the other Party,
shall conduct a Lead Optimization program consisting of medicinal chemistry
synthesis of analogs of the Lead Compound(s) and testing of these analogs in a
series of assays to determine efficacy, selectivity and pharmaceutical
properties, as set forth in the Research Plan. Additional pharmacological
studies of analogs may also be performed by the selected Party, as set forth in
the Research Plan. The JRC shall review the results of the assays, determine
which Lead Compound(s) should be designated as IND Candidates, and submit its
recommendations to the JMC for written approval. No more than [*] days after the
JRC’s recommendation is presented to the JMC, the JMC shall determine in writing
under Section 2.3(c)(ii) whether such Lead Compound(s) merit designation as IND
Candidates. After the [*] day period following the end of the Collaboration
Term, if CVT does not take an exclusive license to Collaboration Compounds which
are Active against a particular Target pursuant to Section 4.6, then such
Collaboration Compounds shall be deemed Non-Collaboration Compounds, and PTC
shall have the right to screen such Non-Collaboration Compounds and to develop
and commercialize products incorporating such Non-Collaboration Compounds with
no royalty or milestone obligations to CVT for such products under this
Agreement. If, prior to the [*] day following the end of the Collaboration Term,
CVT exercises its right to obtain an exclusive license pursuant to Section 4.6
to Collaboration Compounds identified as Active against such Target in the
applicable Lead Optimization program (as documented by the JMC pursuant to
Section 2.3(c)(iii)), then such Collaboration Compounds shall be subject to
CVT’s license pursuant to Section 4.6 for so long as such license remains in
effect.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

21

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

3.8 Pre-Clinical Studies. Upon designation of each IND Candidate, the JRC or
Project Team shall oversee the IND-enabling work for such IND Candidate
including GLP-safety studies, CMC and formulation development. Each Party shall
participate based upon expertise and facilities (such as GLP toxicology and GMP
chemical manufacturing). PTC may work on non-GLP characterization of IND
Candidates during this phase. In addition, the JRC or Project Team may propose,
subject to JMC approval and the Parties’ agreement on economic terms, that PTC
continue Lead Optimization to identify and characterize potential backup IND
Candidates.

 

3.9 FTE Resources; Third Party Resources.

 

  (a) The responsibilities of the Parties shall be set forth in the Research
Plan.

 

  (b) FTE resources shall be provided by the Parties as set forth in the
Research Plan.

 

  (c) Third Party resources to be utilized by the Parties in carrying out the
Research Plan shall be set forth in the Research Plan.

 

3.10 Responsibility for Development Costs. The responsibilities of the Parties
with respect to Development Costs through Lead Identification shall be as set
forth in this Section 3.10. [*] will be responsible, on a Target-by-Target
basis, for payment of [*] percent ([*] %) of the Development Costs incurred, in
accordance with budgets therefore set forth in the Research Plan, during all
stages of the Research Collaboration through Lead Identification. Subject to
Section 4.8, CVT shall be responsible for all Development Costs following Lead
Identification. If PTC exercises a Lead Optimization Opt-In Right or an IND
Opt-In Right with respect to a particular Target under Section 4.8, then [*]
will be responsible for payment of [*] percent ([*] %) of the Development Costs
incurred, in accordance with budgets and plan therefor established pursuant to
Section 4.8(a) or 4.8(b), as applicable, after such exercise through the
completion of the applicable Clinical Proof-of-Concept Study. CVT shall provide
to PTC good faith annual budgets and plans through the JMC, as set forth in
Section 2.3(c). The Parties shall reconcile and pay for Development Costs as set
forth in Section 5.3. Notwithstanding the foregoing, CVT shall not be
responsible for any Development Costs with respect to Non-Collaboration
Compounds incurred after such Non-Collaboration Compounds cease to be subject to
the Research Collaboration under Sections 3.5, 3.6 and 3.7.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

22

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

3.11 Exclusivity Regarding Targets.

 

  (a) During the Collaboration Term (including any extensions thereof) and any
period thereafter during which CVT has the right to obtain a license pursuant to
Section 4.6, neither Party nor any of its Affiliates shall conduct any research
program or discovery effort pertaining to the Targets, other than research and
development in the conduct of the Research Collaboration, except as provided in
subsections (i) and (ii) below.

 

  (i) CVT shall have the right to continue CVT’s currently active internal
program which relates to [*] (the “CVT Existing Program”). CVT (A) shall
implement reasonable measures to separate the research activities and results
relating to the CVT Existing Program from activities and results related to the
[*] Target which are conducted under the Research Collaboration, (B) shall
ensure no Know-How or Patent Rights relating to the CVT Existing Program are
provided to PTC by CVT or used by CVT in the conduct of the Research
Collaboration without PTC’s prior written consent, (C) shall not enter into any
partnership arrangement with any Third Party with respect to the CVT Existing
Program and (D) shall ensure that CVT’s conduct of the CVT Existing Program does
not utilize either PTC Base Technology or Collaboration Technology. In addition,
until such time (if any) as CVT informs PTC in writing that the CVT Existing
Program has been terminated, PTC may choose not to share with CVT the chemical
structures from, or the enabling details of the assay for, PTC’s screening
activities with respect to the [*] Target in the Research Collaboration;
provided, however, that PTC agrees it will make such chemical structures or
enabling details available to a mutually agreeable Third Party adviser to CVT
subject to appropriate confidentiality restrictions.

 

  (ii) When a Target candidate is submitted for nomination to the JRC pursuant
to Section 3.4(i), each Party shall disclose to the other Party as Confidential
Information, whether it is currently conducting any research and development
program which such Party believes in good faith may generate compounds that may
act upon the nominated Target candidate (each, a “Non-Collaboration Program”),
and if so, such Party shall provide to the other Party information pertaining to
the nominated Target candidate, screening assay(s) and biological mechanism of
action for the Non-Collaboration Program(s). If, after such disclosure by a
Party, such nominated Target candidate is approved as an Additional Target
pursuant to Section 3.4, each Party shall be free to continue to conduct its
Non-Collaboration Program(s). Furthermore, the Non-Collaboration Program(s)
shall not be considered to be part of the Research Collaboration, and provided
the Party conducting such Non-Collaboration Program is in compliance with this
Section 3.11(a), any results, discoveries, inventions, patent rights, data,
compounds, or products resulting from any Non-Collaboration Program(s) of a
Party shall not be subject to this Agreement and shall be solely owned by the
Party which is conducting the Non-Collaboration Program. During the
Collaboration Term, in any case in which a Party is pursuing a Non-Collaboration
Program, it (A) shall implement reasonable measures to separate the research
activities and results relating to the Non-Collaboration Program from activities
and results against any related Targets under the Research Collaboration,
(B) shall ensure no Know-How or Patent Rights relating to the Non-Collaboration
Program are provided by the Party pursuing the Non-Collaboration Program to the
other Party, or used by the Party pursuing the Non-Collaboration Program in the
conduct of the Research Collaboration without the other Party’s prior written
consent, and (C) shall ensure that such Party’s conduct of the Non-Collaboration
Program does not use PTC Base Technology (where CVT is the Party pursuing the
Non-Collaboration Program) or CVT Base Technology (where PTC is the Party
pursuing the Non-Collaboration Program) or Collaboration Technology.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

23

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

  (b) Notwithstanding Section 3.11(a), either Party shall be free to conduct any
discovery, development and commercialization program that is related to a
biological target other than a Target (even if, as part of the relevant
metabolic or other biological pathway, such program may impact a Target), so
long as the primary goal of such program as verified by documented activities is
not to discover or develop compounds that: (i) regulate the transcription of a
Target; (ii) regulate the translation of a Target (example: post transcriptional
control by GEMS); or (iii) bind to a Target (example: enzyme inhibition if the
Target is an enzyme); provided, however, that any such program shall not utilize
either the PTC Base Technology (in the case of CVT), the CVT Base Technology (in
the case of PTC), or the Collaboration Technology.

 

24

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

 

  (c) The provisions of this Section 3.11 shall terminate and cease to have any
force or effect with respect to any Target if, at any time after the initial
screening of compounds against such Target in the Research Collaboration, no
Collaboration Compound Active against such Target continues to be developed by
CVT under the Research Collaboration (i.e., all Hits, Research Compounds and
Lead Compounds which relate to such Target have become Non-Collaboration
Compounds, and CVT no longer has the right to obtain an exclusive license
pursuant to Section 4.6 with respect to such Non-Collaboration Compounds).

 

  (d) If CVT obtains an exclusive license pursuant to Section 4.6 with respect
to Collaboration Compounds that are Active against a given Target, PTC shall not
use or permit any Affiliate or Third Party to use any Collaboration Know-How
specifically relating to such Target or to such Collaboration Compounds after
the Collaboration Term for so long as CVT’s exclusive license pursuant to
Section 4.6 remains in effect; provided, however, that nothing in this Agreement
shall restrict PTC from using Collaboration Know-How for the development and
commercialization of Non-Collaboration Compounds or PTC Products which are
directed against targets other than Targets which relate to Collaboration
Compounds for which CVT has an exclusive license under Section 4.6.

 

  (e) The provisions of this Section 3.11 are not intended to apply to any
activity otherwise prohibited by Section 3.11 if a Party’s involvement in such
activity results from such Party’s acquisition by or of a Third Party (by merger
or otherwise), but only if (i) such Third Party, prior to such acquisition or
merger, was already engaged in such prohibited activity (the “Third Party
Activity”) and (ii) no Patent Rights or Know-How of the other Party are used in
connection with such Third Party Activities.

 

4. OWNERSHIP; LICENSE GRANTS

 

4.1 PTC Base Technology. PTC shall own all rights, title and interest in and to
the PTC Base Technology.

 

4.2 CVT Base Technology. CVT shall own all rights, title and interest in and to
the CVT Base Technology.

 

4.3 Collaboration Technology. Regardless of inventorship, PTC shall own all
Collaboration Technology. CVT hereby assigns to PTC all rights, title and
interest in and to the Collaboration Technology, and shall execute all further
documents reasonably necessary or desirable to more fully effectuate such
assignment, at PTC’s expense.

 

4.4 Non-Exclusive Research License to PTC Base Technology. During the
Collaboration Term (as may be extended by the Parties), PTC grants to CVT and
CVT accepts, a non-exclusive, world-wide license under the PTC Base Technology
and Collaboration Technology to conduct research and Development activities with
respect to Targets, Hits, Research Compounds, Lead Compounds and IND Candidates
pursuant to the Research Plan. PTC also grants to CVT the right to sublicense or
transfer, during the Collaboration Term, the rights granted to CVT in this
Section 4.4 under the Collaboration Technology to: (i) Affiliates, without
obtaining PTC’s consent to such sublicense; and (ii) to Third Parties, with
PTC’s consent to such sublicense, which shall not be unreasonably withheld or
delayed; in each case subject to the requirements of the last two sentences of
Section 4.7.

 

25

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

4.5 Non-Exclusive Research License to CVT Base Technology. During the
Collaboration Term, CVT grants to PTC and PTC accepts, a non-exclusive,
world-wide license under the CVT Base Technology to conduct research and
development activities pursuant to the Research Plan, with no right to
sublicense. CVT also grants to PTC the right to sublicense or transfer, during
the Collaboration Term, the rights granted to PTC in this Section 4.5 under the
Collaboration Technology to: (i) Affiliates, without obtaining CVT’s consent to
such sublicense; and (ii) to Third Parties, with CVT’s consent to such
sublicense, which shall not be unreasonably withheld or delayed; provided,
however, that PTC shall in each case comply with the requirements of the last
two sentences of Section 4.7 (substituting “PTC” for “CVT” and vice versa).

 

4.6 CVT Right to Take Exclusive Licenses to Collaboration Compounds. CVT shall
have the right, exercisable on a Target-by-Target basis, to take exclusive
licenses under the PTC Base Technology and the Collaboration Technology pursuant
to this Agreement as set forth hereinbelow. Any such exercise by CVT shall be
documented in writing by the JMC, including the Target and all Collaboration
Compounds identified as Active against the given Target. If CVT desires to
exercise its right to take such an exclusive license, it shall notify the JMC in
writing of its intent and shall identify the Target and the Collaboration
Compounds which it shall exclusively license hereunder, and PTC shall grant, and
CVT shall accept, a transferable (subject to Section 4.7), sublicensable
(subject to Section 4.7), exclusive license under the PTC Base Technology and
the Collaboration Technology in the Territory relating to said Target and all
Collaboration Compounds identified as Active against said Target to make, have
made, use, have used, sell, have sold, offer for sale, distribute, have
distributed, export, have exported, import and have imported Licensed Products
in the Field in the Territory. The period of time during which CVT may exercise
its right to obtain such exclusive licenses shall run, on a Target-by-Target
basis, from the beginning of Lead Identification on Hits that are Active against
a given Target up to [*] days after the end of the Collaboration Term.

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

26

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

 

4.7 Sublicenses and Transfers. PTC also grants to CVT the right to transfer or
sublicense any rights granted to CVT pursuant to Section 4.6 above, in each case
subject to the terms and conditions set forth in this Section 4.7. With respect
to specific Collaboration Compounds or IND Candidates, until the expiration of
the time period during which PTC may exercise its IND Opt-In Right for such
Collaboration Compounds or IND Candidates, CVT shall not enter into any
sublicenses or transfer of licenses with Third Parties without obtaining PTC’s
prior written consent, which shall not be unreasonably withheld or delayed. If
PTC exercised a Lead Optimization Opt-In Right with respect to such
Collaboration Compounds or IND Candidates, after the date on which the IND
Opt-In Right would have expired but for the earlier exercise of PTC’s Lead
Optimization Opt-In Right, CVT shall be free to enter into any sublicenses or
transfer of licenses with Third Parties without obtaining PTC’s prior written
consent. If PTC does not exercise an IND Opt-In Right for a given IND Candidate,
on and after the date of expiration of such Opt-In Right, CVT shall have the
right to enter into sublicenses or transfer of licenses with Third Parties
without obtaining PTC’s consent. In all circumstances and at all times, CVT
shall have the right to enter into sublicenses with, or transfer licenses to,
CVT Affiliates without obtaining PTC’s consent. In addition to obtaining PTC’s
consent when required, CVT shall provide PTC with at least the following
information with respect to each Sublicensee no later than [*] business days
after the execution of each sublicense or transfer of license agreement: (a) the
identity of the Sublicensee, (b) the Collaboration Compound or Licensed Product
which is the subject of the sublicense or transfer of license; and (c) a copy of
the sublicense or transfer of license agreement between CVT and the Sublicensee;
provided, however, that CVT may redact such portions of the sublicense or
transfer of license agreement as are reasonably required to protect the business
interests of such Sublicensee. Each sublicense or transfer of license granted by
CVT shall impose on the Sublicensee the same obligations imposed on CVT (as
applicable to the scope of the sublicense or transfer of license), although not
necessarily the same economic terms as between CVT and such Sublicensee, and CVT
shall remain responsible to PTC for the performance of the obligations of CVT’s
Sublicensees.

 

4.8 PTC’s Option to Participate in Subsequent Development and/or
Commercialization.

 

  (a) PTC Opt-In Right at Lead Optimization Stage.

 

  (i) Within [*] business days after the declaration by the JMC of a Lead
Optimization program with respect to a particular Target, PTC may notify CVT in
writing that PTC is exercising its option to co-fund the costs of Lead
Optimization with respect to the relevant Collaboration Compounds Active against
such Target through the completion of the applicable Clinical Proof-of-Concept
Study (the “Lead Optimization Opt-In Right”). If PTC exercises its Lead
Optimization Opt-In Right with respect to a particular Target, then (A) PTC
shall commit to funding [*] percent ([*] %) of the costs of such Lead
Optimization and Development Costs through the completion of the applicable
Clinical Proof-of-Concept Study for IND Candidates with respect to such Target
in accordance with such budgets as may be established and amended from time to
time consistent with the provisions of Section 3.10 by the JMC, and (B) the
provisions of Section 4.8(b) shall not apply to such Target. If PTC exercises
its Lead Optimization Opt-In Right with respect to a Lead Optimization program
for a particular Target, then the duties of the Project Team and JMC as set
forth in Sections 2.2(b) and 2.3(c) of this Agreement shall be extended with
respect to Lead Optimization and Development of the applicable Collaboration
Compounds and any resulting IND Candidates with respect to the particular
Target, subject to Section 2.4.

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

27

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

  (ii) If PTC has exercised a Lead Optimization Opt-In Right with respect to a
particular Target pursuant to this Section 4.8(a) and subsequently determines
that it does not want to continue the co-funding obligations set forth in this
Section 4.8(a) through the completion of the applicable Clinical
Proof-of-Concept Study, PTC may terminate such Lead Optimization Opt-In Right
and co-funding obligations upon sixty (60) days’ prior written notice to CVT,
and PTC shall continue to pay [*] percent ([*] %) of the costs of Lead
Optimization and Development under Section 4.8(a)(i) and this
Section 4.8(a)(ii), through the date of termination of PTC’s Lead Optimization
Opt-In-Right. If PTC terminates such Lead Optimization Opt-In Right, provided
that PTC has paid for [*] percent ([*] %) of the incurred costs as set forth
above up to termination date of the Opt-In-Right, CVT shall repay PTC for the
financial contribution made by PTC during the period commencing on PTC’s
exercise of the Lead Optimization Opt-In Right and ending upon termination of
the Lead Optimization Opt-in Right by PTC on sixty (60) days’ prior written
notice. Such repayment by CVT shall only be in the form of a royalty of [*]
percent ([*] %) of CVT Net Sales of Licensed Products, in addition to the
royalties owed by CVT pursuant to Sections 5.5 and 5.6 of this Agreement.
Payment of such additional royalty by CVT shall occur up to the point at which
the amount of additional royalties paid by CVT under this Section 4.8(a)(ii) is
equal to the amount of financial contribution made by PTC under
Section 4.8(a)(i) and this Section 4.8(a)(ii), at which point CVT’s repayment
obligation and additional royalty obligation to PTC shall be fully satisfied.
The Parties shall agree in writing on the exact amount to be repaid within [*]
days after PTC’s termination notice (if any) hereunder, and CVT shall have the
right to offset against such repayment obligation hereunder the full amount of
any transition costs incurred by CVT and its Affiliates and Sublicensees
resulting from PTC’s termination of the Lead Optimization Opt-In Right.

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

28

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

  (b) PTC Opt-In Right at IND Submission Stage.

 

  (i) If, with respect to a particular Target, PTC did not exercise its Lead
Optimization Opt-In Right under Section 4.8(a), then at least [*] days prior to
the filing of an IND for any IND Candidate with respect to such Target, CVT
shall provide to PTC a statement of the Pre-IND Cost Share with respect to such
IND Candidate, together with a written non-binding good faith estimate of the
additional Development Costs with respect to the applicable IND Candidate for
clinical studies through the completion of the Clinical Proof-of-Concept Study
(the “Proof-of-Concept Budget”). At any time prior to the date that is [*] days
following PTC’s receipt of written notice from CVT that an IND has been
submitted for the applicable IND Candidate, PTC may notify CVT in writing that
PTC is exercising its option to co-fund Development Costs with respect to the
applicable IND Candidate for a Target through the completion of the applicable
Clinical Proof-of-Concept Study (the “IND Opt-In Right”). If PTC exercises its
IND Opt-In Right with respect to an IND Candidate, then (A) PTC shall pay to CVT
the Pre-IND Cost Share with respect to such IND Candidate within [*] days after
exercising its IND Opt-In Right (provided that PTC shall only be required to pay
the Pre-IND Cost Share once for the costs of any given Lead Optimization
program), and (B) PTC shall commit to funding [*] percent ([*] %) of the
Development Costs through the completion of the applicable Clinical
Proof-of-Concept Study for such IND Candidate in accordance with such budgets as
may be established and amended from time to time by the JMC consistent with the
provisions of Section 3.10. If PTC exercises its IND Opt-In Right for a
particular Target, then the duties of the Project Team and the JMC as set forth
in Sections 2.2(b) and 2.3(c) shall be extended, subject to Section 2.4.

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

29

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

  (ii) If PTC has exercised an IND Opt-In Right with respect to a particular
Target pursuant to this Section 4.8(b) and subsequently determines that it does
not want to continue the co-funding obligations set forth in this Section 4.8(b)
through the completion of the applicable Clinical-Proof-of-Concept Study, PTC
may terminate such IND Opt-In Right and co-funding obligations upon sixty
(60) days’ prior written notice to CVT and PTC shall continue to pay [*] percent
([*] %) of the costs of clinical studies under Section 4.8(b)(i) and this
Section 4.8(b)(ii), through the date of termination of PTC’s IND-Opt-In Right.
If PTC terminates such IND Opt-In Right, provided that PTC has paid for [*]
percent ([*] %) of the costs incurred as set forth above up to the termination
date of the Opt-In Right, CVT shall repay PTC for the financial contribution
made by PTC during the period commencing on PTC’s exercise of the IND Opt-In
Right and ending upon termination of the IND Opt-In Right by PTC on sixty
(60) days’ prior written notice. Such repayment by CVT shall only be in the form
of a royalty of [*] percent ([*]%) of CVT Net Sales of Licensed Products, in
addition to the royalties owed by CVT pursuant to Sections 5.5 and 5.6 of this
Agreement. Payment of such additional royalty by CVT shall occur up to the point
at which the amount of additional royalties paid by CVT under this
Section 4.8(b)(ii) is equal to the amount of financial contribution made by PTC
under Section 4.8(b)(i) and this Section 4.8(b)(ii), at which point CVT’s
repayment obligation to PTC and additional royalty obligation shall be fully
satisfied. The Parties shall agree in writing on the exact amount to be repaid
within [*] days after PTC’s termination notice (if any) hereunder, and CVT shall
have the right to offset against such repayment obligation hereunder the full
amount any transition costs incurred by CVT or its Affiliates or Sublicensees
resulting from PTC’s termination of the IND Opt-In Right.

 

  (c) PTC Opt-In Right at End of Clinical Proof-of-Concept Study.

 

  (i) If PTC has exercised either its Lead Optimization Right pursuant to
Section 4.8(a) with respect to a particular Lead Optimization program against a
Target, or its IND Opt-In Right pursuant to Section 4.8(b) for a particular IND
Candidate, then (and not otherwise), no longer than [*] days after receiving the
final study report for the Clinical Proof-of-Concept Study for the relevant IND
Candidate (the “Proof-of-Concept Date”), CVT shall provide to PTC a written
statement of CVT’s non-binding good faith estimate of additional Development
Costs with respect to such relevant IND Candidate for clinical studies through
Regulatory Approval (the “Registration Budget”). For the purpose of the
preceding sentence, “final” includes any secondary review of the study report or
data contemplated as part of the study design.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

30

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

  (ii) At any time prior to the date that is [*] days following PTC’s receipt of
written notice from CVT that an IND or IND amendment with respect to a Phase III
Clinical Trial has been submitted for the relevant IND Candidate following the
Proof-of-Concept Date, PTC may notify CVT in writing that PTC is exercising its
option to continue to co-fund Development of the relevant IND Candidate and to
co-promote resulting Licensed Products (each, a “Co-Promote Option”).

 

  (iii) At any time following the commencement of a Phase II Clinical Trial for
a particular IND Candidate, PTC may provide CVT with a good faith, non-binding
indication of its interest in exercising a Co-Promote Option with respect to
such IND Candidate. At such time as either PTC exercises a Co-Promote Option
under subsection (ii), or PTC provides CVT with a written indication of interest
under this subsection (iii), the Parties shall commence good faith negotiation
of an agreement (a “Co-Promote Agreement”) pursuant to which they will jointly
commercialize and share equally in profits and losses from commercialization of
resulting Licensed Products and share equally in responsibilities and costs of
detailing and otherwise promoting such Licensed Products. The Parties shall use
their best efforts to achieve negotiation and signature of a Co-Promote
Agreement no later than the date upon which PTC receives written notification
from CVT that an IND or IND amendment with respect to a Phase III Clinical Trial
has been submitted for the particular IND Candidate.

 

  (A) If PTC provides CVT with a written indication of interest in exercising
its Co-Promote Option under subsection (iii) prior to the completion of patient
enrollment for the first Phase II Clinical Trial for a particular IND Candidate,
but the Parties (despite good faith negotiations) are unable to reach agreement
on a Co-Promote Agreement by the date that is [*] days following PTC’s receipt
of written notice from CVT that an IND or IND amendment with respect to a Phase
III Clinical Trial has been

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

31

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

submitted for the relevant IND Candidate, and PTC has not indicated that it will
withdraw its interest in exercising its Co-Promote Option, then neither Party
shall continue any activities with respect to the particular IND Candidate and
resulting Licensed Product(s) and all programs relating to such IND Candidate
and resulting Licensed Product(s) shall cease. If, following the cessation of
activities related to such IND Candidate and resulting Licensed Product, the
Parties resume negotiations and enter into a Co-Promote Agreement, the Parties
may resume activities related to such IND Candidate and Licensed Product(s)
pursuant to the terms and conditions of this Agreement and the Co-Promote
Agreement.

 

  (B) In any case where PTC has not provided CVT with a written indication of
interest in exercising its Co-Promote Option under subsection (iii) prior to the
completion of patient enrollment for the first Phase II Clinical Trial for a
particular IND Candidate, then the sole obligation of the Parties with respect
to a Co-Promote Agreement shall be to engage in good faith negotiations, and if
(despite good faith negotiations) the Parties are unable to reach agreement on a
Co-Promote Agreement by the date that is [*] days following PTC’s receipt of
written notice from CVT that an IND or IND amendment with respect to a Phase III
Clinical Trial has been submitted for the relevant IND Candidate, then CVT shall
be free to proceed forward with the program as if PTC had not exercised its
Co-Promote Option, and PTC shall have no co-development or co-promote
obligations with respect to such program.

 

  (iv) If PTC has exercised a Co-Promote Option with respect to a particular
Target pursuant to this Section 4.8(c) and subsequently determines that it does
not want to continue the co-funding obligations set forth in this
Section 4.8(c), PTC may terminate such Co-Promote Option and co-funding
obligations upon sixty (60) days’ prior written notice to CVT, and PTC shall
continue to pay [*] percent ([*] %) of the costs of clinical studies through the
date of termination of PTC’s Co-Promote Option.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

32

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

 

 

  (d) Consequences for Termination of Opt-In Rights. If PTC exercises a Lead
Optimization Opt-In Right or IND Opt-In Right and then subsequently terminates
such Lead Optimization Opt-In Right or IND Opt-In Right pursuant to
Section 4.8(a)(ii) or Section 4.8(b)(ii) at any point during the Agreement, it
may not exercise any further Opt-In Rights with respect to the Target which was
the subject of the Lead Optimization Opt-In Right or IND Opt-In Right. If PTC
exercises a Co-Promote Option and then subsequently terminates such Co-Promote
Option pursuant to Section 4.8(c)(iv), it may not exercise a Co-Promote Option
for any other Targets. Notwithstanding the foregoing, if PTC terminates an
Opt-In Right within [*] days of receipt of an invoice under Section 5.3 in
excess of [*] % of the budget for the applicable calendar quarter for
Development Costs, then the provisions of this Section 4.8(d) shall not apply to
such termination.

 

4.9 No License Taken By CVT for Collaboration Compounds Which are Active Against
a Given Target. If CVT does not elect to obtain an exclusive license to
Collaboration Compounds which are Active against a given Target under
Section 4.6, then PTC shall have the exclusive right to commercialize
Collaboration Compounds which are Active against such Target, including an
exclusive, world-wide, sublicensable license under CVT Base Technology to make,
have made, use, have used, offer for sale, sell, have sold, import and have
imported, distribute and have distributed PTC Products which are Active against
such Target in the Field in the Territory. Should PTC subsequently commercialize
a PTC Product that is Active against the applicable Target under this
Section 4.9, then PTC shall pay royalties to CVT as set forth in Section 5.10.

 

5. PAYMENTS

 

5.1 Initial Payment. Within ten (10) days of the Effective Date, CVT shall
deliver to PTC up-front consideration of Ten Million Dollars ($10,000,000) which
shall consist of the following:

 

  (a) Two Million Dollars ($2,000,000) pursuant to Section 5.2(a), which amount
will be unconditional and as such shall not be subject to any offset, credit,
reduction or repayment for any reason whatsoever;

 

  (b) a loan in the amount of Four Million Dollars ($4,000,000) in accordance
with the terms and conditions set forth in the Promissory Note by and between
PTC and CVT, dated as of the Effective Date (the “Promissory Note”); and

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

33

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

 

  (c) a convertible loan in the amount of Four Million Dollars ($4,000,000), in
accordance with the terms and conditions set forth in the Convertible Promissory
Note by and between PTC and CVT, dated as of the Effective Date (the
“Convertible Promissory Note”).

 

5.2 Access Fee. CVT shall pay to PTC a total of Six Million Dollars ($6,000,000)
for access to the PTC Base Technology and the Collaboration Technology during
the Collaboration Term, with no additional fees to be paid for any extension(s)
which occur pursuant to Section 12.1. The payment schedule for the Six Million
Dollar ($6,000,000) access fee shall be as follows:

 

  (a) pursuant to Section 5.1(a), upon the Effective Date, CVT shall pay to PTC,
Two Million Dollars ($2,000,000), which amount shall be unconditional and as
such shall not be subject to any offset, credit, reduction or repayment for any
reason whatsoever;

 

  (b) on the fourteenth (14th) month anniversary of the Effective Date, provided
that the Agreement is still in effect, CVT shall forgive, in accordance with the
Promissory Note, Two Million Dollars ($2,000,000) of the loan amount set forth
in Section 5.1 (b) (except as otherwise provided in the Promissory Note); and

 

  (c) on the twenty eighth (28th) month anniversary of the Effective Date,
provided that the Agreement is still in effect, CVT shall forgive, in accordance
with the Promissory Note, Two Million Dollars ($2,000,000) of the loan amount
set forth in Section 5.1 (b) (except as otherwise provided in the Promissory
Note).

 

5.3 Development Costs. Within [*] days following the end of each calendar
quarter in which the Parties incur Development Costs that are subject to the
cost-sharing provisions of Sections 3.10 and/or 4.8, each Party shall provide to
the other Party a written report, in reasonable detail, of the estimated
Development Costs (excluding any Pre-IND Cost Share amount under
Section 4.8(b)(i)) subject to such cost-sharing provisions incurred by such
Party during such calendar quarter, and then shall provide to the other Party a
final report of such Development Costs within [*] days following the end of each
calendar quarter. CVT shall reimburse PTC for [*] percent ([*] %) of PTC’s
Development Costs incurred during the calendar quarter with respect to PTC’s
activities. PTC shall invoice CVT for such PTC Development Costs within [*] days
after the end of each calendar quarter. CVT shall pay all such invoices within
[*] days after the end of each such calendar quarter. PTC shall reimburse CVT
for [*] percent ([*] %) of CVT’s Development Costs incurred during the calendar
quarter with respect to CVT’s activities. CVT shall invoice PTC for such CVT
Development Costs within [*] days after the end of each calendar quarter. PTC
shall pay all such invoices within [*] days after the end of each such calendar
quarter; provided, however, that following PTC’s exercise of an Opt-In Right,
PTC shall have the right upon written notice to CVT to delay payment of that
portion of any invoice in excess of [*] percent ([*] %) of the budget (as such
budget may be adjusted from time to time pursuant to the terms of this
Agreement) for Development Costs for the applicable calendar quarter, with such
cumulative delayed amount (the “Excess Amount”) to be added to invoices for
subsequent calendar quarters up to the [*] percent ([*] %) budget threshold for
such subsequent quarters until the earlier of when the Excess Amount is fully
paid by PTC or the last quarter for which the applicable program continues and a
budget exists; provided that, in the case where a program has terminated and no
budget exists, any remaining Excess Amount shall be paid by PTC to CVT in six
(6) equal quarterly installments such that the entire Excess Amount is paid at
the end of the sixth (6th) calendar quarter after the calendar quarter following
termination of such program and for which no budget existed; and provided
further, that upon the occurrence of a milestone payment under Section 5.4 for
the applicable Collaboration Compound or Licensed Products (but not otherwise),
CVT shall deduct from the amount of such milestone payment owed to PTC, the
remaining Excess Amount owed by PTC; and provided further, that if upon the
occurrence of a milestone payment under Section 5.4, the remaining Excess Amount
owed by PTC is greater than such milestone payment, no such milestone payment
shall be owed by CVT, and PTC shall pay to CVT the difference between the
remaining Excess Amount and the amount of the milestone that would have been
owed by CVT.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

34

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

5.4 Milestones For Collaboration Compounds or Licensed Products. In
consideration of the grant of licenses by PTC to CVT and subject to other terms
of this Agreement, CVT will pay to PTC, on a Target-by-Target basis for each
Target, (a) [*] percent ([*] %) of the amounts set forth below after the first
achievement of each of the milestones set forth below for the first
Collaboration Compound or Licensed Product that is Active against such Target,
and (b) [*] percent ([*] %) of the amounts set forth in clauses (vi) through
(ix) below after the first achievement of each of the milestones set forth in
clauses (vi) through (ix) for the second Collaboration Compound or Licensed
Product that is Active against such Target:

 

  (i) [*] Dollars ($[*]) upon [*];

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

35

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

 

  (ii) [*] Dollars ($[*]) upon [*];

 

  (iii) [*] Dollars ($[*]) upon the [*];

 

  (iv) [*] Dollars ($[*]) upon the [*];

 

  (v) [*] Dollars ($[*]) upon the [*];

 

  (vi) [*] Dollars ($[*]) upon [*];

 

  (vii) [*] Dollars ($[*]) upon [*];

 

  (viii) [*] Dollars ($[*]) upon first achievement of [*] Dollars ($[*]) in
annual aggregate [*]; and

 

  (ix) [*] Dollars ($[*]) upon first achievement of [*] Dollars ($[*]) in annual
aggregate [*].

No milestone payment under Section 5.4(ii) will be required upon the licensing
of a Research Compound, Lead Compound or IND Candidate by CVT under Section 4.6,
until such Research Compound, Lead Compound or IND Candidate has either been
designated for IND-enabling pre-clinical studies and clinical development under
Section 3.7, or CVT actually commences such IND-enabling pre-clinical studies.
CVT will pay all amounts set forth in this Section 5.4 within [*] days after
achievement of the milestone. In the event that one of the milestones set forth
in clauses (ii) through (v) above is achieved prior to a preceding milestone set
forth in clauses (i) through (iv) above, the preceding milestone shall be deemed
achieved and the milestone payment for such preceding milestone shall become due
upon the achievement of the subsequent milestone.

 

5.5 Royalties For Licensed Products Which Are Active Against Initial Targets. In
consideration of the grant of license by PTC hereunder and subject to the other
terms of this Agreement, CVT shall pay to PTC the following royalties based on
total annual CVT Net Sales of all Licensed Products which are Active against any
Initial Targets:

 

  (i) [*] percent ([*] %) of annual CVT Net Sales of Licensed Products up to [*]
Dollars ($[*]);

 

  (ii) for annual CVT Net Sales of Licensed Products from [*] Dollars ($[*]) to
[*] Dollars ($[*]),[*] percent ([*] %) of annual CVT Net Sales up to [*] Dollars
($[*]) and [*] percent ([*] %) of annual CVT Net Sales over [*] Dollars ($[*])
and up to [*] Dollars ($[*]);

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

36

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

 

  (iii) for annual CVT Net Sales of Licensed Products from [*] Dollars ($[*]) to
[*] Dollars ($[*]),[*] percent ([*] %) of annual CVT Net Sales up to [*] Dollars
($[*]),[*] percent ([*] %) of annual CVT Net Sales over [*] Dollars ($[*]) and
up to [*] Dollars ($[*]), and [*] percent ([*] %) of annual CVT Net Sales over
[*] Dollars ($[*]) and up to [*] Dollars ($[*]); and

 

  (iv) for annual CVT Net Sales of Licensed Products exceeding [*] Dollars
($[*]),[*] percent ([*] %) of annual CVT Net Sales up to [*] Dollars ($[*]),[*]
percent ([*] %) of annual CVT Net Sales over [*] Dollars ($[*]) and up to [*]
Dollars ($[*]),[*] percent ([*] %) of annual CVT Net Sales over [*] Dollars
($[*]) and up to [*] Dollars ($[*]), and [*] percent ([*]%) of annual CVT Net
Sales which exceed [*] Dollars ($[*]).

 

5.6 Royalties For Licensed Products Which Are Active Against Additional Targets.
In consideration of the grant of license by PTC hereunder and subject to the
other terms of this Agreement, CVT shall pay to PTC the following royalties
based on total CVT Net Sales of all Licensed Products which are Active against
any Additional Targets:

 

  (i) [*] percent ([*]%) of annual CVT Net Sales of Licensed Products up to [*]
Dollars ($[*]);

 

  (ii) for annual CVT Net Sales of Licensed Products from [*] Dollars ($[*]) to
[*] Dollars ($[*]),[*] percent ([*] %) of annual CVT Net Sales up to [*] Dollars
($[*]), and [*] percent ([*]%) of annual CVT Net Sales over [*] Dollars ($[*])
and up to [*] Dollars ($[*]);

 

  (iii) for annual CVT Net Sales of Licensed Products from [*] Dollars ($[*]) to
[*] Dollars ($[*]),[*] percent ([*] %) of annual CVT Net Sales up to [*] Dollars
($[*]),[*] percent ([*]%) of annual CVT Net Sales over [*] Dollars ($[*]) up to
[*] Dollars ($[*]), and [*] percent ([*]%) of annual CVT Net Sales over [*]
Dollars ($[*]) and up to [*] Dollars ($[*]); and

 

  (iv) for annual CVT Net Sales of Licensed Products exceeding [*] Dollars
($[*]),[*] percent ([*] %) of annual CVT Net Sales up to [*] Dollars ($[*]),[*]
percent ([*] %) of annual CVT Net Sales over [*] Dollars ($[*]) and up to [*]
Dollars ($[*]),[*] percent ([*] %) of annual CVT Net Sales over [*] Dollars
($[*]) and up to [*]Dollars ($[*]), and [*] percent ([*] %) of annual CVT Net
Sales which exceed [*] Dollars ($[*]).

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

37

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

 

5.7 Royalty Rate Increases Under Certain Circumstances. In the event that PTC
exercises a Lead Optimization Opt-In Right or an IND Opt-In Right pursuant to
Section 4.8(a) or 4.8(b), respectively, the royalty rates payable by CVT to PTC
pursuant to Sections 5.5 or 5.6 above with respect to annual CVT Net Sales of
the corresponding Licensed Products shall be increased by [*] percent ([*]%).

 

5.8 Third Party Royalties for CVT. If CVT determines in good faith, that it is
necessary, in order to exploit a license granted to it under this Agreement in
any country, to make royalty payments to any Third Party (“Third Party
Payments”) under any license agreement that CVT determines, in good faith, is
necessary in connection with the development, manufacture, use or sale of any
Licensed Product, then the royalties due to PTC shall be reduced by an amount
equal to [*] of such Third Party Payments; provided, however, that in no event
shall royalties payable by CVT to PTC for such Licensed Product for any calendar
quarter be reduced by more than [*] percent ([*] %) of what such royalties would
otherwise have been in the absence of such Third Party Payments. If CVT elects
to take any such Third Party license as described herein without having first
determined that it is necessary (as determined by CVT in good faith) in order to
exploit the license(s) granted to it under this Agreement in any country, then
CVT shall not be entitled to the offset under this Section 5.8. If PTC in good
faith disputes CVT’s determination hereunder, the Parties shall submit the
matter promptly to PTC’s Chief Executive Officer and a designated officer of CVT
with settlement authority.

 

5.9 Third Party Royalties for PTC. If PTC determines in good faith, that it is
necessary, in order to exploit a license granted to it under this Agreement in
any country, to make royalty payments to any Third Party (“PTC Third Party
Payments”) under any license agreement that PTC determines, in good faith, is
necessary in connection with the development, manufacture, use or sale of any
PTC Product, then the royalties due to CVT shall be reduced by an amount equal
to [*] of such PTC Third Party Payments; provided, however, that in no event
shall royalties payable by PTC to CVT for such PTC Product for any calendar
quarter be reduced by more than [*] percent ([*] %) of what such royalties would
otherwise have been in the absence of such PTC Third Party Payments. If PTC
elects to take any such Third Party license as described herein without having
first determined that it is necessary (as determined by PTC in good faith) in
order to exploit the license(s) granted to it under this Agreement in any
country, then PTC shall not be entitled to the offset under this Section 5.9. If
CVT in good faith disputes PTC’s determination hereunder, the Parties shall
submit the matter promptly to CVT’s Chief Executive Officer and a designated
officer of PTC with settlement authority.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

38

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

 

5.10 Royalties to be Paid by PTC for PTC Net Sales of PTC Products. In
connection with the commercialization of any PTC Product pursuant to Section 4.9
and solely in the case of Collaboration Compounds which are Active against a
Target for which an IND Candidate was designated prior to the expiration of
CVT’s right to take an exclusive license pursuant to Section 4.6, PTC shall pay
to CVT a royalty [*] percent ([*] %) of PTC Net Sales of such PTC Product.

 

5.11 Duration of CVT Royalty Obligations. CVT’s royalty obligations to PTC under
Sections 5.5 and 5.6 (adjusted, as applicable, under Sections 5.7 and 5.8) shall
expire on a country-by-country basis and Licensed Product-by-Licensed Product
basis on the later of: (i) the expiration of the last-to-expire Valid Claim
within the PTC Base Patent Rights and Collaboration Patent Rights that, in the
absence of a license, would be infringed by the manufacture, sale, distribution
or use of such Licensed Product in such country; (ii) the expiration of any
Marketing Exclusivity for such Licensed Product in such country (or, if earlier,
the date of the first commercial sale of a Third Party product in such country
that contains, as one of its active ingredients, the same active ingredient that
is contained in the Licensed Product); or (iii) the [*] anniversary of the First
Commercial Sale of such Licensed Product in such country by CVT, its Affiliates
or its Sublicensees hereunder. The foregoing provisions of this Article 5
notwithstanding, the royalty rate with respect to CVT Net Sales of Licensed
Products sold in the United States and Japan (as the case may be) shall be
reduced to [*] percent ([*] %) of the rate set forth in Section 5.5 or 5.6 (as
applicable, and adjusted, as applicable, in accordance with Sections 5.7 and
5.8) during the period of time (if any) (x) commencing on the later of (1) the
expiration of the last to expire Valid Claim within the PTC Base Patent Rights
and the Collaboration Patent Rights which covers the Licensed Product in the
United States or Japan (as the case may be) and (2) the expiration of any
Marketing Exclusivity for such Licensed Product in the United States or Japan
(as the case may be), and (y) ending [*] years after the First Commercial Sale
of such Licensed Product in the United States or Japan (as the case may be).

 

5.12 Duration of PTC Royalty Obligations. With respect solely to any license or
commercialization right granted to PTC under Section 4.9, PTC’s royalty
obligations to CVT under Section 5.10 (adjusted, as applicable, under Sections
5.9 and 6.2(b)) shall expire on a country-by-country basis and PTC
Product-by-PTC Product basis on the later of: (i) the expiration of the
last-to-expire Valid Claim within the CVT Base Patent Rights and Collaboration
Patent Rights that, in the absence of such license to PTC (or, in the case of
Collaboration Patent Rights in the absence of PTC’s ownership of the
Collaboration Patent Rights), would be infringed by the manufacture, sale,
distribution or use of such PTC Product in such country, (ii) the expiration of
any Marketing Exclusivity for such PTC Product in such country (or, if earlier,
the date of the first commercial sale of a Third Party product in such country
that contains, as one of its active ingredients, the same active ingredient that
is contained in the PTC Product), or (iii) the tenth (10th) anniversary of the
First Commercial Sale of such PTC Product in such country by PTC, its Affiliates
or its Sublicensees hereunder (such period, the “PTC Product License Term”). The
foregoing provisions of Article 5 notwithstanding, the royalty rate with respect
to PTC Net Sales in the United States and Japan (as the case may be) shall be
reduced to [*] percent ([*]%) of the rate set forth in Section 5.10 (as
applicable and adjusted, as applicable, under Sections 5.9 and 6.2(b)) during
the period of time (if any) (x) commencing on the later of (1) the expiration of
the last to expire Valid Claim within the CVT Base Patent Rights and
Collaboration Patent Rights which covers the PTC Product in the United States or
Japan (as the case may be) and (2) the expiration of any Marketing Exclusivity
for such PTC Product in the United States or Japan (as the case may be ), and
(y) ending [*] years after the First Commercial Sale of such PTC Product in the
United States or Japan (as the case may be).

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

39

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

5.13 CVT Payment Terms. CVT will pay PTC all royalties owed hereunder on a
quarterly basis within [*] days following the end of each calendar quarter in
which CVT Net Sales occur. For the purpose of determining when the sale of a
Licensed Product occurs, the sale shall be deemed to occur on the earlier of the
(i) date on which the Licensed Product is shipped or (ii) the date of invoice to
the purchaser of the Licensed Product. All consideration due to PTC under this
Agreement will be payable and will be made by check payable to PTC or by wire
transfer to an account designated in writing by PTC to CVT. All such payments
under this Agreement shall be made in United States dollars, regardless of the
country in which sales of Licensed Product occur. When Licensed Products are
sold for monies other than United States dollars, the royalties will first be
determined in the currency of the country in which such Licensed Products were
sold and then converted into equivalent United States dollars. The exchange rate
will be the mid exchange rate quoted on the HPTC screen of Bloomberg L.L.P., on
the last business day of the calendar quarter for which it is quoted and in
which such sales occurred, or such other source as may be mutually agreed by the
Parties in writing.

 

5.14 PTC Payment Terms. PTC will pay CVT all royalties owed hereunder on a
quarterly basis within [*] days following the end of each calendar quarter in
which PTC Net Sales occur. For the purpose of determining when the sale of a PTC
Product occurs, the sale shall be deemed to occur on the earlier of the (i) date
on which the PTC Product is shipped or (ii) the date of invoice to the purchaser
of the PTC Product. All consideration due to CVT under this Agreement will be
payable and will be made by check payable to CVT or by wire transfer to an
account designated in writing by CVT to PTC. All such payments under this
Agreement shall be made in United States dollars, regardless of the country in
which sales of PTC Product occur. When PTC Products are sold for monies other
than United States dollars, the royalties will first be determined in the
currency of the country in which such PTC Products were sold and then converted
into equivalent United States dollars. The exchange rate will be the mid
exchange rated quoted on the HPTC screen of Bloomberg L.L.P., on the last
business day of the calendar quarter for which it is quoted and in which such
sales occurred, or such other source as may be mutually agreed by the Parties in
writing.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

40

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

5.15 CVT Reports.

 

  (a) Beginning with the First Commercial Sale of a Licensed Product in any
country in the Territory, CVT will make quarterly reports to PTC within [*] days
of the end of each calendar quarter for the first three quarters of the calendar
year and within [*] days of the end of the year for the full year reports during
the License Term of this Agreement. Each such report will cover the most
recently completed calendar quarter and will, at a minimum, show (on a Licensed
Product by Licensed Product basis): (a) the gross invoice prices, and CVT Net
Sales of each type of Licensed Product(s) sold (itemizing the applicable gross
proceeds and any deductions therefrom); (b) the quantity of each type of
Licensed Product sold; (c) the country in which each Licensed Product was sold;
(d) royalties, in United States dollars, payable with respect to CVT Net Sales
of Licensed Products; (e) the method used to calculate the royalty, including,
in the case of a Combination Product, the method used to determine the average
suggested list price and/or the hypothetical market price (as applicable) of the
Licensed Product and the other pharmaceutical product(s) contained in such
Combination Product; (f) that any milestones are owed pursuant to
Section 5.4(viii) or Section 5.4(ix); and (g) the exchange rate used if
applicable.

 

  (b) CVT will keep accurate financial books and records pertaining to (i) the
development, manufacture, use, offer for sale, import, and sale of Licensed
Products, (ii) Development Costs incurred by CVT and reported pursuant to
Section 5.3, and (iii) all CVT Net Sales, all milestone payments and royalties,
and all sublicenses granted under the terms of this Agreement. Such financial
books and records will be preserved for at least three (3) years after the date
of the payment or accrual to which they pertain and will be open to inspection
by a nationally recognized independent, public accounting firm which is
acceptable to both PTC and CVT, during regular business hours with at least
fifteen (15) days prior written notice to CVT, solely to determine the accuracy
of CVT’s Development Cost reports and royalty and milestone payments to PTC
hereunder, and provided that such accounting firm has entered into a
confidentiality agreement limiting the use and disclosure of such information to
purposes germane hereto. PTC shall pay the fees and expenses of such
examination. If an error in favor of CVT with respect to Development Costs,
milestone payment and royalty amounts reported in any period of more than five
percent (5%) of the total amounts due for any period under examination is
discovered in any examination, then CVT shall pay to PTC the amount remaining to
be paid (plus interest as set forth in Section 5.19) and shall remit such
underpayment amount, interest and examination fees to PTC within thirty
(30) days of the examination results being provided to both Parties.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

41

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

5.16 PTC Reports.

 

  (a) Beginning with the First Commercial Sale of a PTC Product in any country
in the Territory, PTC will make quarterly reports to CVT within [*] days of the
end of each calendar quarter for the first three quarters of the calendar year
and within [*] days of the end of the year for the full year reports during the
PTC Product License Term of this Agreement. Each such report will cover the most
recently completed calendar quarter and will, at a minimum, show (on a PTC
Product by PTC Product basis): (a) the gross invoice prices, and PTC Net Sales
of each type of PTC Product(s) sold (itemizing the applicable gross proceeds and
any deductions therefrom); (b) the quantity of each type of PTC Product sold;
(c) the country in which each PTC Product was sold; (d) royalties, in United
States dollars, payable with respect to PTC Net Sales of PTC Products; (e) the
method used to calculate the royalty, including, in the case of a Combination
Product, the method used to determine the average suggested list price and/or
the hypothetical market value (as applicable) of the Licensed Product and the
other pharmaceutical product(s) contained in such Combination Product; and
(f) the exchange rates used if applicable.

 

  (b) PTC will keep accurate financial books and records pertaining to (i) the
development, manufacture, use, offer for sale, import, and sale of PTC Products,
(ii) Development Costs incurred by PTC and reported pursuant to Section 5.3, and
(iii) all PTC Net Sales, all royalties, and all sublicenses granted under the
terms of this Agreement. Such financial books and records will be preserved for
at least three (3) years after the date of the payment or accrual to which they
pertain and will be open to inspection by a nationally recognized independent,
public accounting firm which is acceptable to both CVT and PTC, during regular
business hours with at least fifteen (15) days prior written notice to PTC,
solely to determine the accuracy of PTC’s Development Cost reports and royalty
payments to CVT hereunder, and provided that such accounting firm has entered
into a confidentiality agreement limiting the use and disclosure of such
information to purposes germane hereto. CVT shall pay the fees and expenses of
such examination. If an error in favor of PTC with respect to Development Costs
and royalty amounts reported in any period of more than five percent (5%) of the
total amounts due for any period under examination is discovered in any
examination, then PTC shall pay to CVT the amount remaining to be paid (plus
interest as set forth in Section 5.19) and shall remit such underpayment amount,
interest and examination fees to CVT within thirty (30) days of the examination
results being provided to both Parties.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

42

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

  (c) Until the earlier of (1) the payment in full or conversion of the
Promissory Note and the Convertible Promissory Note or (2) PTC becoming a
publicly traded company that makes regular public filings of financial
statements, PTC shall provide the following reports to CVT on a confidential
basis within [*] days after quarter end for the first three quarters of the
calendar year, and within [*] days of the end of the year for the full-year
reports: (i) quarterly financial statements; (ii) PTC balance sheet; (iii) PTC
income statement; and (iv) PTC cash flow statement.

 

5.17 Withholding of Taxes. All payments hereunder shall be made free and clear
of any taxes, duties, levies, fees or charges, except for withholding taxes (to
the extent applicable).

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

43

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

 

5.18 Blocked Currency.

 

  (a) If at any time legal restrictions prevent the prompt remittance of
royalties owed to PTC by CVT with respect to any country where a sublicense is
issued or a Licensed Product is sold, the written notice thereof shall promptly
be given to PTC, and payment of the royalty shall be made by the deposit thereof
in local currency to the credit of PTC in a recognized banking institution
designated by PTC by written notice to CVT. When in any country in the Territory
the law or regulations prohibit both the transmittal and the deposit of
royalties on sales in such country, royalty payments shall be suspended for as
long as such prohibition is in effect and as soon as such prohibition ceases to
be in effect, all royalties that CVT would have been under an obligation to
transmit or deposit but for the prohibition shall forthwith be deposited or
transmitted, to the extent allowable.

 

  (b) If at any time legal restrictions prevent the prompt remittance of
royalties owed to CVT by PTC with respect to any country where a sublicense is
issued or a PTC Product is sold, the written notice thereof shall promptly be
given to CVT, and payment of the royalty shall be made by the deposit thereof in
local currency to the credit of CVT in a recognized banking institution
designated by CVT by written notice to PTC. When in any country in the Territory
the law or regulations prohibit both the transmittal and the deposit of
royalties on sales in such country, royalty payments shall be suspended for as
long as such prohibition is in effect and as soon as such prohibition ceases to
be in effect, all royalties that PTC would have been under an obligation to
transmit or deposit but for the prohibition shall forthwith be deposited or
transmitted, to the extent allowable.

 

5.19 Late Payments. Any amount not paid by either CVT or PTC when due under this
Agreement shall bear interest at a rate of one percent (1%) per month from the
due date until paid in full.

 

6. DILIGENCE

 

6.1 Diligence as to Research Collaboration. Each Party shall use commercially
reasonable efforts consistent with industry standards for biotechnology
companies of similar size and capacity to carry out their respective
responsibilities under the Research Plan. On a Target-specific basis, in the
event that PTC fails to meet the diligence obligations set forth in this
Section 6.1, then as CVT’s sole and exclusive remedy, (i) PTC’s Lead
Optimization Opt-In Right, IND-Opt-In Right, and Co-Promote Option (together,
the “Opt-In Rights”) shall be terminated with respect to such Target, including
any un-exercised Opt-In Rights under Section 4.8, and (ii) the additional
royalty payable by CVT to PTC on CVT Net Sales of Licensed Products relating to
such Target by CVT pursuant to Section 5.7 shall also terminate and be of no
further force and effect.

 

44

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

6.2 Diligence as to Licensed Products.

 

  (a) In connection with any exclusive license(s) taken by CVT pursuant to this
Agreement, CVT shall exercise its commercially reasonable efforts and diligence
consistent with pharmaceutical industry standards to develop and commercialize
Licensed Products in accordance with its business, legal, medical and scientific
judgment and in undertaking investigations and actions required to obtain
appropriate Regulatory Approvals necessary to market Licensed Products in the
Field in the Territory, such reasonable efforts and diligence to be in
accordance with the efforts and resources CVT would use for a compound owned by
it or to which it has rights, which is of similar market potential and
development risk, and at a similar stage in the development as the applicable
Licensed Product, taking into account factors including the competitiveness of
the marketplace, the proprietary position of the Licensed Product, the relative
potential safety and efficacy of the Licensed Product, the regulatory
requirements involved in its development, commercialization and Regulatory
Approval, the cost of goods and availability of capacity to manufacture and
supply the Licensed Product at commercial scale, the profitability of the
applicable Licensed Product and other relevant factors including, without
limitation, technical, legal, scientific or medical factors. CVT may elect to
pursue Regulatory Approval in each Market Area in a sequential rather than
parallel manner and CVT’s choice to pursue Regulatory Approval in each Market
Area in such a sequential manner shall not constitute a lack of diligence. The
Parties agree that the diligence obligations (and remedies for failure) set
forth in this Section 6.2 shall be applicable on a Target-by-Target and Market
Area-by-Market Area basis.

 

  (b) In the event that CVT fails to meet the diligence obligations set forth in
this Section 6.2 with respect to a specific Market Area in connection with a
license for a given Target obtained pursuant to Section 4.6, then as PTC’s sole
and exclusive remedy, PTC shall have the right to terminate CVT’s license with
respect to the given Target and specific Market Area upon [*] days’ prior
written notice to CVT and the consequences set forth in Section 12.4 shall
apply; provided, however, that if such failure is susceptible of cure by CVT
within such [*] day period, and CVT actually cures such failure within such [*]
day period, such termination shall not become effective. If PTC terminates CVT’s
license with respect to a given Target and specific Market Area pursuant to this
Section 6.2(b), PTC will pay to CVT a royalty on sales of Licensed Products sold
by PTC as PTC Products at a rate of [*] percent ([*]%) of the lowest royalty
rate that would have been owed by CVT under the license, until the point at
which the amount of royalties paid by PTC is equal to the amount of financial
contribution made by CVT and its Affiliates and Sublicensees to the relevant
Licensed Product prior to Regulatory Approval in the relevant Market Area, at
which point PTC’s royalty obligation hereunder shall be fully satisfied. The
Parties shall agree in writing on the exact amount to be repaid within [*] days
after the effective date of license termination hereunder, and PTC shall have
the right to offset against such repayment any transition costs incurred by PTC
resulting from PTC’s termination of the relevant CVT license.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

45

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

7. INTELLECTUAL PROPERTY

 

7.1 PTC Inventions. PTC shall own all inventions made prior to or during the
course of and pursuant to activities carried out under this Agreement solely by
employees of, or agents or others obligated to assign inventions to PTC, and
shall be the sole owner of any inventorship certificates, patent applications,
and patents issuing therefrom. In addition, PTC shall own all Collaboration
Technology as provided in Section 4.3. Subject to Section 7.5, PTC shall file
patent applications for all inventions that pertain to Collaboration Technology
and PTC shall be solely responsible at its own cost and expense and in its sole
discretion, for the filing, prosecution, and maintenance of inventorship
certificates and patent applications pertaining to Collaboration Technology, and
patents issuing therefrom. In connection with any such filing(s), prosecution
and maintenance, PTC shall use patent counsel mutually acceptable to both
Parties. PTC shall provide CVT with a copy of any proposed patent application
for review and comment reasonably in advance of filing, and shall keep CVT
reasonably informed of the status of such filing, prosecution and maintenance,
including, without limitation, (A) by providing CVT with copies of all
communications received from or filed in patent office(s) with respect to such
filing, and (B) by providing CVT, a reasonable time prior to taking or failing
to take any action that would affect the scope or validity of any such filing
(including substantially narrowing, canceling or abandoning any claim(s) without
retaining the right to pursue such subject matter in a separate application, or
the failure to file or perfect the filing of any claim(s) in any country), with
prior written notice of such proposed action or inaction so that CVT has a
reasonable opportunity to review and comment. If PTC intends to permanently
cancel or abandon any claims, it shall provide CVT with prior written notice of
its intent to cancel or abandon so that CVT has a reasonable opportunity to
determine whether CVT wishes to maintain such claims. If CVT decides to maintain
such claims, CVT shall assume sole responsibility, at its sole expense, for the
preparation, filing, prosecution and maintenance of such claims, PTC shall
assign its right, title and interest in and to such claims to CVT and shall
execute all documents and take all actions necessary to fully effectuate such
assignment, and CVT shall have no further royalty or milestone obligations under
this Agreement with respect to such claims as they may apply to any products.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

46

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

7.2 CVT Inventions. Subject to Section 4.3, CVT shall own all inventions made
prior to, or during the course, of and pursuant to, activities carried out under
this Agreement solely by employees of, or agents or others obligated to assign
inventions to CVT, and shall be the sole owner of any inventorship certificates,
patent applications, and patents issuing therefrom. CVT shall be solely
responsible at its own cost and expense and in its sole discretion, for the
filing, prosecution, and maintenance of such CVT-owned inventorship
certificates, patent applications, and patents issuing therefrom.

 

7.3 Joint Inventions. Subject to Sections 4.3 and 7.5, inventions made during
the course of and pursuant to activities carried out under this Agreement
jointly by employees of or agents of or others obligated to assign inventions to
CVT and PTC shall be jointly owned by CVT and PTC, and PTC shall be responsible
for filing, prosecution and maintenance of inventorship certificate(s), patent
application(s) and patent(s) issuing therefrom. In connection with any such
filing(s), prosecution and maintenance, PTC will use patent counsel mutually
acceptable to both Parties. The Parties will [*] all reasonable costs and
expenses of the filing(s), prosecution and maintenance of such joint inventions.
Accordingly, PTC shall pay the fees and expenses of such filing(s), prosecution
and maintenance, and CVT shall reimburse PTC for [*] percent ([*]%) of such fees
and expenses within [*]days of receipt of invoice by CVT (sent attn: Accounts
Payable) which details the fees and expenses paid by PTC. PTC will provide CVT
with a copy of any proposed patent application claiming such joint inventions
for review and comment reasonably in advance of filing, and will keep CVT
reasonably informed of the status of such filing, prosecution and maintenance,
including, without limitation, (A) by providing CVT with copies of all
communications received from or filed in patent office(s) with respect to such
filing, and (B) by providing CVT, a reasonable time prior to taking or failing
to take any action that would affect the scope or validity of any such filing
(including substantially narrowing, canceling or abandoning any claim(s) without
retaining the right to pursue such subject matter in a separate application, or
the failure to file or perfect the filing of any claim(s) in any country), with
prior written notice of such proposed action or inaction so that CVT has a
reasonable opportunity to review and comment. If PTC intends to permanently
cancel or abandon any claims, it shall provide CVT with prior written notice of
its intent to cancel or abandon so that CVT has a reasonable opportunity to
determine whether CVT wishes to maintain such claims. If CVT decides to maintain
such claims, CVT shall assume sole responsibility, at its sole expense, for the
preparation, filing, prosecution and maintenance of such claims, PTC shall
assign its right, title and interest in and to such claims to CVT and shall
execute all documents and take all actions necessary to fully effectuate such
assignment, and CVT shall have no further royalty or milestone obligations under
this Agreement with respect to such claims as they may apply to any products.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

47

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

7.4 Inventorship Disputes. Should the Parties fail to agree regarding
inventorship of any invention during the course of and pursuant to activities
carried out under this Agreement, the Parties shall refer the matter to a
mutually agreed-upon outside counsel for resolution. All determinations of
inventive contribution for inventions arising pursuant to Sections 7.1, 7.2 and
7.3 shall be as determined by United States laws of inventorship.

 

7.5 Exclusive Licenses Taken by CVT. With respect to any Collaboration Patent
Rights which are licensed exclusively to CVT pursuant to Section 4.6, effective
upon the granting of such exclusive license and during the period such license
is in effect, CVT shall assume sole responsibility, at its sole expense, for the
preparation, filing, prosecution and maintenance of such Collaboration Patent
Rights. In connection with any such filing(s), prosecution and maintenance, CVT
shall use patent counsel mutually acceptable to both Parties. CVT shall provide
PTC with a copy of any proposed patent application for review and comment
reasonably in advance of filing, and will keep PTC reasonably informed of the
status of such filing, prosecution and maintenance, including, without
limitation, (A) by providing PTC with copies of all communications received from
or filed in patent office(s) with respect to such filing, and (B) by providing
PTC a reasonable time prior to taking or failing to take any action that would
affect the scope or validity of any such filing (including substantially
narrowing, canceling or abandoning any claim(s) without retaining the right to
pursue such subject matter in a separate application, or the failure to file or
perfect the filing of any claim(s) in any country), with prior written notice of
such proposed action or inaction so that PTC has a reasonable opportunity to
review and comment. If CVT intends to permanently cancel or abandon any claims,
it shall provide PTC with prior written notice of its intent to cancel or
abandon so that PTC has a reasonable opportunity to determine whether PTC wishes
to maintain such claims. If PTC decides to maintain such claims, PTC shall
assume sole responsibility, at its sole expense, for the preparation, filing,
prosecution and maintenance of such claims, CVT’s exclusive license with respect
to such claims shall terminate, and PTC shall have no further royalty or
milestone obligations under this Agreement with respect to such claims as they
may apply to any products.

 

7.6 Scientific Publications. Neither Party shall publish or present the results
of activities carried out under this Agreement except in compliance with written
policies to be established by the JMC.

 

48

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

7.7 Patent Marking. CVT will mark all Licensed Products made, used or sold under
the terms of this Agreement or their containers in accordance with the
applicable patent marking laws.

 

7.8 Trademarks. Each Party shall control the preparation, prosecution and
maintenance of applications related to its trademarks in the Territory, at its
sole cost and in its sole discretion.

 

8. INTELLECTUAL PROPERTY INFRINGEMENT

 

8.1 Notice. If, during the Collaboration Term or any License Term, either Party
learns of any actual, alleged or threatened infringement by a Third Party of any
Collaboration Patent Rights or any jointly owned Patent Rights, such Party shall
promptly notify the other Party and shall provide such other Party with
available evidence of such infringement.

 

8.2 Infringement of Collaboration Patent Rights and Jointly Owned Patent Rights.
PTC shall have the first right (but not the obligation), at its own expense, to
bring suit (or take other appropriate legal action) against any actual, alleged
or threatened infringement of the Collaboration Patent Rights or any jointly
owned Patent Rights, with legal counsel of its own choice. If PTC does not file
any suit or take any other appropriate action against such infringement within
[*] days after CVT’s notice to PTC under Section 8.1, then CVT shall have the
right (but not the obligation), at its own expense, to bring suit (or take other
appropriate legal action) against such infringement, with legal counsel of its
own choice. Notwithstanding the foregoing, if the infringing activity relates to
a Licensed Product that CVT has exclusively licensed under Section 4.6
(“Competitive Infringement”), CVT shall have the first right (but not the
obligation), at its own expense, to bring suit (or take other appropriate legal
action) against such Competitive Infringement. If CVT does not file any suit or
take any other appropriate action against a Competitive Infringement within [*]
days after PTC’s notice to CVT under Section 8.1, then PTC shall have the right
(but not the obligation), at its own expense, to bring suit (or take other
appropriate legal action) against such Competitive Infringement, with legal
counsel of its own choice. In any event, the Party not controlling such suit or
other legal action shall have the right, at its own expense, to be represented
in (but not to control) any such suit or action by counsel of its own choice.
Any damages, monetary awards or other amounts recovered, whether by judgment or
settlement, pursuant to any suit, proceeding or other legal action taken under
this Section 8.2 shall first be applied to reimburse the costs and expenses
(including attorneys’ fees) of the Party bringing such suit or proceeding or
taking such other legal action, then to the costs and expenses (including
attorneys’ fees), if any, of the other Party. Any amounts remaining shall be
allocated as follows: (A) if CVT is the Party bringing such a suit or proceeding
or taking such other legal action, [*] percent ([*] %) to CVT and [*] percent
([*] %) to PTC, (B) if PTC is the Party bringing such suit or proceeding or
taking such other legal action, [*] ([*] %) to PTC and [*] percent ([*] %) to
CVT and (C) if the suit is, by agreement of the Parties, brought jointly, [*]
percent ([*] %) to each Party. If a Party brings any such action or proceeding
hereunder, the other Party agrees to be joined as party plaintiff if necessary
to prosecute such action or proceeding, and to give the Party bringing such
action or proceeding reasonable assistance and authority to file and prosecute
the suite; provided, however, that neither Party shall be required to transfer
any right, title or interest in or to any property to the other Party or any
Third Party to confer standing on a Party hereunder.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

49

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

8.3 Trademarks. Each Party shall notify the other Party promptly upon learning
of any actual alleged or threatened infringement of a trademark applicable to a
Licensed Product or a PTC Product in the Territory or of any unfair trade
practices, trade dress imitation or like offenses relating to Licensed Product
and PTC Products in the Territory. All of the costs, expenses and legal fees in
bringing a suit or claim relating to trademarks, and any damages or other
recovery, shall be the owning Party’s sole responsibility and taken in its sole
discretion.

 

8.4 Third Party Claims. If any Third Party claims that intellectual property it
owns or controls claims or covers any aspect of a Licensed Product or PTC
Product or its manufacture, use or sale, the Party with notice of such claim
shall notify the other Party promptly, and the Parties shall as soon as
practicable thereafter discuss in good faith regarding the best response to such
notice.

 

9. CONFIDENTIALITY

 

9.1 Requirements. Each Party agrees not to use Confidential Information (as
hereinafter defined) furnished by the other Party for any purpose other than for
purposes of exercising rights explicitly granted to it or performing its
obligations under this Agreement. Each Party will treat Confidential Information
furnished by the other Party with the same degree of care as it treats its own
proprietary information and will not disclose the same, for a period of [*]
years after the expiration or earlier termination of this Agreement, to any
Third Party without the prior written consent of the Party which furnished such
information.

If, to carry out its obligations under this Agreement, a Party must disclose
Confidential Information of the other Party to a Third Party, such disclosing
Party shall first require any such Third Party to be bound by the
confidentiality provisions of this Agreement by requiring such Third Party to
enter into an appropriate written confidentiality agreement.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

50

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

 

9.2 Confidential Information. “Confidential Information” refers to all
proprietary scientific, technical, business, marketing and sales information and
materials of the other Party disclosed or provided by one Party to the other.
Notwithstanding the foregoing or any other provision in this Agreement to the
contrary, a Party’s Confidential Information shall not include:

 

  (a) information which at the time of disclosure is in the public domain or
thereafter becomes part of the public domain through no breach of this Agreement
by the receiving Party;

 

  (b) information which the receiving Party can establish by competent written
proof was in its possession at the time of disclosure by the disclosing Party
and was not acquired, directly or indirectly, from the disclosing Party;

 

  (c) information which the receiving Party receives from a Third Party;
provided, however, that such information was not obtained by said Third Party,
directly or indirectly from the disclosing Party; or

 

  (d) information or data which is independently developed by the receiving
Party without the reference to or any other use of the disclosing Party’s
Confidential Information.

 

9.3 Disclosure Required by Law. Notwithstanding anything else in this Agreement,
the receiving Party shall not be prohibited from disclosing Confidential
Information of the disclosing Party to the extent such information is required
to be disclosed to governmental agencies or by legal process or applicable laws
or regulations, including without limitation the rules or regulations of any
stock exchange, NASDAQ or the United States Securities and Exchange Commission
(the “SEC”), in which case the receiving Party will notify the disclosing Party
in advance of the need for such disclosure and reasonably cooperate with the
disclosing Party’s efforts to seek confidential treatment of the information.

 

9.4 Return of Confidential Information. Upon termination of this Agreement, at
the request of the disclosing Party, the receiving Party shall return all such
Confidential Information and copies thereof in its possession, except that each
Party may keep one (1) copy of such Confidential Information in its Law
Department (or equivalent) confidential files solely for archival and compliance
purposes and this copy will not be distributed in any manner without the express
prior written permission of the disclosing Party.

 

9.5 Disclosure of Agreement. Except as expressly provided otherwise in
Section 7.6 or Section 13.4, neither PTC nor CVT shall release to any Third
Party or publish in any way any non-public information with respect to the terms
of this Agreement or concerning their cooperation without the prior written
consent of the other, which consent will not be unreasonably withheld or
delayed.

 

51

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

Notwithstanding the foregoing, either Party may disclose the terms of this
Agreement to the extent required to comply with applicable laws, including
without limitation the rules or regulations of any stock exchange, NASDAQ or the
SEC, and the Party intending to disclose the terms of this Agreement shall
provide the non-disclosing Party an opportunity to review and comment on the
intended disclosure which is reasonable under the circumstances (provided,
however, that once such disclosure has been reviewed hereunder, the Parties may
reuse such disclosure without further review hereunder). In addition, either
Party may disclose the terms of this Agreement, under written obligations of
confidentiality substantially similar to those set forth in this Agreement, to
investors, lenders, acquirers, investment bankers, contractors, licensees and
sublicensees and potential investors, lenders, acquirers, investment bankers,
contractors, licensees and sublicensees.

 

9.6 Survival of Confidentiality. All obligations of confidentiality and non-use
of Confidential Information imposed upon the Parties under this Agreement shall
continue for [*] years after termination or expiration of this Agreement. This
Article 9 supersedes any confidential disclosure agreements between the Parties
as of the Effective Date of this Agreement.

 

10. REPRESENTATIONS, WARRANTIES AND COVENANTS

 

10.1 Mutual Representations and Warranties. CVT and PTC each represent, warrant
and covenant to the other that: (a) it has the authority and right to enter into
and perform this Agreement; (b) its execution, delivery and performance of this
Agreement will not conflict with the terms of any other agreement or obligation
to which it is or becomes a party or by which it is or becomes bound; (c) it
shall comply in all material respects with all laws, rules, regulations and
other governmental requirements applicable to its actions under this Agreement;
and (d) no consent of any Third Party is required for either Party to grant the
licenses and rights granted to the other Party under this Agreement and/or to
perform its obligations hereunder.

 

10.2 PTC Representations, Warranties and Covenants. PTC hereby represents
warranties and covenants to CVT as follows:

 

  (a) PTC owns or controls that PTC Base Technology which is developed as of the
Effective Date;

 

  (b) PTC has not as of the Effective Date, and during the term of the Agreement
will not, grant any right to any Third Party that would conflict with any of the
rights granted to CVT under this Agreement;

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

52

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

 

  (c) To the best of PTC’s knowledge as of the Effective Date, the practice of
PTC Base Technology owned by PTC as of the Effective Date as contemplated under
this Agreement would not infringe any intellectual property rights of any Third
Party; and

 

  (d) As of the Effective Date, PTC has not received any notices or
communications that the practice of the PTC Base Technology as contemplated
under this Agreement would infringe any intellectual property rights of any
Third Party.

 

10.3 CVT Representations, Warranties and Covenants. CVT hereby represents,
warranties and covenants to PTC as follows:

 

  (a) CVT owns or controls that CVT Base Technology which is developed as of the
Effective Date;

 

  (b) CVT has not as of the Effective Date, and during the term of the Agreement
will not, grant any right to any Third Party that would conflict with any of the
rights granted to PTC under this Agreement;

 

  (c) To the best of CVT’s knowledge as of the Effective Date, the practice of
CVT Base Technology owned by CVT as of the Effective Date as contemplated under
this Agreement would not infringe any intellectual property rights of any Third
Party; and

 

  (d) As of the Effective Date, CVT has not received any notices or
communications that the practice of the CVT Base Technology as contemplated
under this Agreement would infringe any intellectual property rights of any
Third Party.

 

10.4 Disclaimer of Warranty. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
EXPLICITLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY
CONCERNING ITS PATENT RIGHTS OR INFORMATION LICENSED UNDER THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION THE VALIDITY OR SCOPE OF ITS PATENT RIGHTS OR THAT
PATENT RIGHTS OR PRODUCTS WILL BE FREE FROM INFRINGEMENT OF THE PATENT RIGHTS OF
THIRD PARTIES AND EACH PARTY DISCLAIMS ANY WARRANTY OF ANY TECHNOLOGY’S,
COMPOUND’S OR PRODUCT’S MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NONINFRINGEMENT.

 

11. INDEMNIFICATION AND INSURANCE

 

11.1 By CVT. CVT hereby agrees to indemnify, defend and hold harmless PTC and
its Affiliates, and their respective officers, directors, agents and employees
from and against any and all Third Party suits, claims, actions, demands,
liabilities, expenses and/or loss, including reasonable legal expenses and
attorneys’ fees (collectively, “Losses”) resulting from (a) the development,
use, manufacture, handling, storage, transport, distribution, sale or other
disposition of Licensed Products by CVT, its Affiliates, agents or Sublicensees,
except to the extent that such Losses result from the gross negligence or
intentional wrongdoing of PTC, its Affiliates, sublicensees, agents or employees
(Affiliates, Sublicensees, (or in the case of PTC, sublicensees), agents,
representatives or employees of either Party shall be collectively referred to
herein as such Party’s “Representatives”); or (b) CVT’s breach of any of its
obligations, covenants, representations or warranties under this Agreement.

 

53

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

11.2 By PTC. PTC hereby agrees to indemnify, defend and hold harmless CVT and
its Affiliates, and their respective officers, directors, agents and employees
from and against any and all Losses resulting from (a) the development, use,
manufacture, handling, storage, transport, distribution, sale or other
disposition of PTC Products by PTC, its Affiliates, agents or Sublicensees,
except to the extent that such Losses result from the gross negligence or
intentional wrongdoing of CVT and/or its Representatives; or (b) PTC’s breach of
any of its obligations, covenants, representations or warranties under this
Agreement.

 

11.3 Notice and Procedures. In all cases where a person or entity seeks
indemnification by a Party under this Article 11, the person or entity seeking
indemnification (the “Indemnified Party”) shall promptly notify the indemnifying
Party of receipt of any claim or lawsuit covered by such indemnification
obligation and shall cooperate fully with the indemnifying Party in connection
with the investigation and defense of such claim or lawsuit. The indemnifying
Party shall have the right to control the defense with counsel of its choice,
provided that the Indemnified Party shall have the right to be represented by
advisory counsel at its own expense. The indemnifying Party shall not settle or
dispose of the matter in any manner that could negatively and materially affect
the rights or liability of the Indemnified Party without the Indemnified Party’s
prior written consent, which shall not be unreasonably withheld or delayed.

 

11.4 Liability. NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY WITH RESPECT TO
ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT
LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR (A) ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, SPECIAL, EXEMPLARY, MULTIPLE OR PUNITIVE DAMAGES OR LOST PROFITS
OR (B) COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES. NOTHING
IN THIS SECTION 11.4, HOWEVER, IS INTENDED TO LIMIT OR RESTRICT ANY PAYMENT
OBLIGATION UNDER THIS AGREEMENT OR THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF
EITHER PARTY.

 

11.5 Insurance. Each Party hereby represents, warrants and covenants that it
currently carries in full force and effect, and shall maintain at its sole cost
and expense, liability insurance against claims, judgments, liabilities and
expenses for which it is obligated to indemnify the other Party under this
Article 11, in such amounts and with such deductibles as are customary at the
time for companies engaged in a similar business. Each Party shall provide the
other Party with written evidence of such insurance coverage upon request.

 

54

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

12. TERM, TERMINATION AND EXPIRATION

 

12.1 Collaboration Term. The term of the Research Collaboration (the
“Collaboration Term”) shall commence on the Effective Date and end three and
one-half (3.5) years after the Effective Date. The Collaboration Term may be
extended for two (2) additional one (1)-year terms by written agreement of the
Parties.

 

12.2 License Term. With respect to any exclusive license obtained by CVT
pursuant to Section 4.6, and any Licensed Products in the Territory covered by
said license, the term of said exclusive license shall commence on the date CVT
obtains such applicable license and shall expire on a country-by-country basis
upon expiration of CVT’s royalty payment obligation to PTC under Sections 5.5 or
5.6 with respect to such Licensed Products in such country (the “License Term”).
Upon any such expiration of the License Term, CVT’s license under Section 4.6
with respect to such Licensed Product in such countries shall convert to a fully
paid-up, non-royalty-bearing, perpetual, sublicensable, transferable
nonexclusive license.

 

12.3 CVT Termination Right for Convenience. Following expiration of the
Collaboration Term, including any extensions thereof, CVT may terminate the
Agreement upon sixty (60) days’ prior written notice to PTC.

 

12.4 Effect of Certain Terminations. Upon termination of this Agreement by CVT
pursuant to Section 12.3 above, or upon termination of CVT’s license with
respect to a given Target and specific Market Area under Section 6.2(b), or upon
termination by PTC of this Agreement under Sections 12.6 or 12.7(a) or of one or
more licenses to CVT under Section 12.7(b), then as of the effective date of any
such termination, all licenses granted to CVT pursuant to Section 4.6 in the
case of termination of this Agreement under Section 12.3, 12.6 or 12.7(a) (or
only the license terminated by PTC for the applicable Market Area under
Section 6.2(b) or terminated by PTC under Section 12.7(b)) shall terminate and
CVT shall transfer and assign to PTC the following in each case, only as it
relates to Lead Compounds, IND Candidates and Licensed Products covered by such
licenses (or license) so terminated: (i) all non-clinical and clinical data and
information relating to the Lead Compounds, IND Candidates and Licensed Products
in CVT’s, its Affiliates’ or Sublicensees’ possession; (ii) regulatory
documentation with respect to the Lead Compounds, IND Candidates and Licensed
Products, including all INDs, all Regulatory Approvals with respect to Licensed
Products and drug master files and drug dossiers with respect to Licensed
Products; (iii) copies of all reports, records, regulatory correspondence and
other documents and/or materials in CVT’s, its Affiliates’ or Sublicensees’
possession relating to the non-clinical and clinical development, Regulatory
Approval, manufacture, distribution and/or sale of the Lead Compounds, IND
Candidates and Licensed Products as reasonably required, to transition all data
and information relating to development, manufacturing and commercialization
activities with respect to the Lead Compounds, IND Candidates and Licensed
Products to PTC, including without limitation safety databases and such reports,
records, regulatory correspondence and other materials relating to process
conditions, in-process controls, analytical methodology and formulation, in each
case as developed by CVT, its Affiliates or Sublicensees and relating to the
manufacture of the Lead Compounds, IND Candidates or Licensed Products; and
(iv) with respect to product trademarks or trademark applications (specifically
excluding general corporate trademarks of CVT) used in commerce that relate
solely to Licensed Products, CVT’s, its Affiliates’ and Sublicensees’ rights in
and to such product trademarks. In addition, in each case only as it relates to
Lead Compounds, IND Candidates and Licensed Products covered by the licenses (or
license) terminated under this Section 12.4, CVT shall grant to PTC a
transferable (subject to Section 4.7), sublicensable (subject to Section 4.7),
non-exclusive license under the CVT Base Technology in the Territory relating to
said Lead Compounds, IND Candidates and Licensed Products, for so long as such
said Lead Compounds, IND Candidates and Licensed Products are marketed, to make,
have made, use, have used, sell, have sold, offer for sale, distribute, have
distributed, export, have exported, import and have imported said Lead
Compounds, IND Candidates and Licensed Products in the Field in the Territory.
To the extent CVT, or any of its Affiliates or Sublicensees, is engaged in the
manufacture of Lead Compounds, IND Candidates or Licensed Products which are
covered by such terminated licenses (or license), as of the date of notice of
termination by CVT under Section 12.3 (or by PTC under Sections 12.6, 12.7, or
6.2(b)), CVT or such Affiliate or Sublicensee shall, if requested in writing by
PTC, manufacture and supply PTC’s requirements for such Lead Compounds, IND
Candidates and/or Licensed Products from the effective date of such termination
until the earlier of such time as PTC secures an alternative commercial
manufacturing source, or until [*] months from the effective date of termination
in the case of supply of a Lead Compound or an IND Candidate, or until [*]
months from the effective date of termination in the case of supply of a
marketed Licensed Product, in any case at [*] percent ([*] %) of CVT’s, its
Affiliates’ or Sublicensees’ cost of goods (as determined in accordance with
generally accepted accounting principles in the United States) or [*] percent
([*] %) of CVT’s, its Affiliates’ or Sublicensees’ out-of-pocket procurement
cost. Nothing herein shall require CVT or its Affiliates or Sublicensees to
transfer any equipment or facilities to PTC.

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

55

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

12.5 Termination for Breach. If either Party believes that the other Party is in
material breach of this Agreement, then the non-breaching Party may deliver
notice of such breach to the other Party. The allegedly breaching Party shall
have sixty (60) days from such notice to cure such material breach, or ten
(10) business days from such notice if such breach consists of a failure to pay
monies due and payable to the other Party hereunder (in each case, the “Cure
Period”). If the Party receiving notice of material breach fails to cure such
breach within the applicable Cure Period, the remedies set forth in Sections
12.6, 12.7, 12.8, or 12.9 below as applicable, shall be available to the
non-breaching Party; provided, however, that the sole and exclusive remedy of
CVT for breach of diligence by PTC under Section 6.1 shall be as set forth
therein and the sole and exclusive remedy of PTC for breach of diligence by CVT
under Section 6.2 shall be as set forth therein.

 

56

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

12.6 Consequence of Breach of Exclusivity Obligations by CVT. In the event of a
material breach by CVT of the exclusivity obligations of CVT set forth in
Section 3.11 of this Agreement, as its sole and exclusive remedy, and subject to
the notice and cure provisions of Section 12.5, PTC may terminate all licenses
granted by PTC to CVT under Section 4.6, and the consequences set forth in
Section 12.4 shall apply, provided that any valid Sublicensee of CVT that has
sold and is continuing to sell Licensed Products as of the effective date of
such termination shall not have its sublicense terminated but will instead be
considered a direct licensee of PTC unless the breach by CVT occurred as a
result of the actions of such Sublicensee or such Sublicensee has breached its
obligations under its sublicense agreement with CVT.

 

12.7 Consequence of Breach of Financial Obligations by CVT. In the event of
material breach by CVT of the payment obligations of CVT set forth in this
Agreement, the following shall apply:

 

  (a) if CVT breaches its co-funding obligations under the Research Plan and
Section 3.10 or its payment obligations under Sections 4.8, 5.1 or 5.2 during
the Collaboration Term, as the sole and exclusive remedy and subject to the
notice and cure provisions of Section 12.5, PTC may terminate the Agreement, and
the consequences of Section 12.4 shall apply, provided that any valid
Sublicensee of CVT that has sold and is continuing to sell Licensed Products as
of the effective date of such termination shall not have its sublicense
terminated but will instead be considered a direct licensee of PTC unless the
breach by CVT occurred as a result of the actions of such Sublicensee or such
Sublicensee has breached its obligations under its sublicense agreement with
CVT; or

 

  (b) if CVT breaches its payment obligations under Section 4.8 after the end of
the Collaboration Term, or its royalty or milestone payment obligations set
forth in Sections 5.4, 5.5, 5.6 or 5.7, as the sole and exclusive remedy and
subject to the notice and cure provisions of Section 12.5, PTC may terminate the
license or licenses granted by PTC to CVT under Section 4.6 with respect to the
given Target(s) impacted by uncured breach of such payment, royalty or milestone
obligations, and the consequences of Section 12.4 shall apply with respect to
such license or licenses terminated hereunder, provided that any valid
Sublicensee of CVT that has sold and is continuing to sell Licensed Products as
of the effective date of such termination shall not have its sublicense
terminated but will instead be considered a direct licensee of PTC unless the
breach by CVT occurred as a result of the actions of such Sublicensee or such
Sublicensee has breached its obligations under its sublicense agreement with
CVT.

 

57

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

12.8 Consequence of Breach of Exclusivity Obligations by PTC. In the event of
material breach by PTC of the exclusivity obligations of PTC set forth in
Section 3.11, as the sole and exclusive remedy, and subject to the notice and
cure provisions of Section 12.5, all licenses granted to CVT under Section 4.6,
as well as any licenses CVT chooses to obtain pursuant to Section 4.6 within 90
days of the expiration of any cure period under Section 12.5 (provided that CVT,
rather than the JMC, shall document such exercise of its license rights as
provided in Section 4.6), shall convert and be deemed granted as fully paid-up,
non-royalty-bearing, perpetual, sublicensable, transferable exclusive licenses
as of the effective date of such termination.

 

12.9 Consequence of PTC Breach of Financial Obligations. In the event of a
material breach by PTC of the payment obligations of PTC set forth in this
Agreement, the following shall apply:

 

  (a) if PTC breaches its co-funding obligations under the Research Plan and
Section 3.10 or its payment obligations under Section 4.8 during the
Collaboration Term, as the sole and exclusive remedy and subject to the notice
and cure provisions of Section 12.5, CVT may terminate the Agreement and
effective immediately upon such termination date, all licenses granted to CVT
under Section 4.6, as well as any licenses CVT chooses to obtain pursuant to
Section 4.6 within 90 days of the expiration of any cure period under
Section 12.5 (provided that CVT, rather than the JMC, shall document such
exercise as provided in Section 4.6), shall automatically convert to (and be
deemed granted as) fully paid-up, non-royalty-bearing, perpetual, sublicensable,
transferable exclusive licenses as of the effective date of such termination; or

 

  (b) if PTC breaches its payment obligations under Section 4.8 after the end of
the Collaboration Term, or its royalty obligations set forth in Section 5.10, as
the sole and exclusive remedy and subject to the notice and cure provisions of
Section 12.5, effective immediately upon such termination date, the licenses
granted to CVT under Section 4.6 with respect to Targets which are impacted by
the uncured breach of PTC’s payment obligations, as well as any licenses CVT
chooses to obtain pursuant to Section 4.6 with respect to such Targets within 90
days of the expiration of any cure period under Section 12.5 (provided that CVT,
rather than the JMC, shall document such exercise as provided in Section 4.6),
shall automatically convert to (and be deemed granted as) fully paid-up,
non-royalty-bearing, perpetual, sublicensable, transferable exclusive licenses
as of the effective date of such termination.

 

58

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

 

12.10 Bankruptcy Rights. In the event that this Agreement is terminated or
rejected by a Party or its receiver or trustee under applicable bankruptcy laws
due to such Party’s bankruptcy, then all rights and licenses granted under or
pursuant to this Agreement by such Party to the other Party are, and shall
otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code
and any similar law or regulation in any other country, licenses of rights to
“intellectual property” as defined under Section 101(52) of the Bankruptcy Code.
The Parties agree that all intellectual property rights licensed hereunder,
including without limitation, any patents or patent applications of a Party in
any country covered by the license grants under this Agreement, are part of the
“intellectual property” as defined under Section 101(52) of the Bankruptcy Code
subject to the protections afforded the non-terminating Party under the
Section 365(n) of the Bankruptcy Code, and any similar law or regulation in any
other country.

 

12.11 Survival. The provisions of this Agreement set forth in the last sentence
of Section 3.5, the last sentence of Section 3.6, the last two sentences of
Section 3.7, the last sentence of Section 3.10, Section 3.11, Section 4.1,
Section 4.2, Section 4.3, Section 4.6, Section 4.7, Section 4.9 and in Articles
1, 5, 7, 8, 9, 11, 12 and 13 shall, to the extent applicable and according to
their terms, survive the expiration or termination of this Agreement.
Termination of this Agreement shall not relieve either Party of any liability
which accrued hereunder prior to the effective date of such termination nor
preclude either Party from pursuing all rights and remedies it may have
hereunder or at law or in equity with respect to any breach of this Agreement
nor prejudice either Party’s right to obtain performance of any obligation.
Except as otherwise expressly provided in this Agreement, the remedies provided
under this Article 12 are cumulative and are not exclusive of other remedies
available to a Party in law or equity.

 

13. MISCELLANEOUS

 

13.1 Force Majeure. Neither Party shall be liable to the other for failure of or
delay in performing obligations set forth in this Agreement, and neither shall
be deemed in breach of its obligations, if such failure or delay results from an
act of God, war conditions, sabotage, governmental regulations or actions,
embargo, fire, strike, labor trouble or any other cause beyond the affected
Party’s reasonable control. Upon the occurrence of any such event which results
or will result in failure or delay to perform hereunder as described above, the
Party whose performance is hereby prevented or delayed shall promptly give
written notice of such occurrence and the effect and/or anticipated effect of
such occurrence on the performance of such Party to the other Party. The Party
whose performance is so affected shall use reasonable efforts to minimize
disruptions in performance and to resume full performance hereunder as soon as
possible under the circumstances.

 

13.2 Severability. If and to the extent that any provision (or any part thereof)
of this Agreement is held to be invalid, illegal or unenforceable, such holding
shall in no way affect the validity, legality or enforceability of the remainder
of this Agreement. In the event any provision of this Agreement shall be held to
be invalid, illegal or unenforceable, the Parties shall negotiate in good faith
to substitute a valid, legal and enforceable provision which, insofar as
practical, implements the purposes hereof.

 

59

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

13.3 Assignment. This Agreement shall not be assignable nor the rights hereunder
transferred in any way by either Party except by prior written consent of the
other Party, except that either Party may assign this Agreement (a) to an
Affiliate or (b) to a Third Party in connection with the sale of all or
substantially all of such Party’s business or assets relating to this Agreement,
whether by merger or other purchase and sale transaction.

 

13.4 Publicity. The Parties agree that the public announcement of the execution
of this Agreement shall be in the form of the press release attached as Exhibit
A. Any other publication, news release or other public announcement relating to
this Agreement or to the performance hereunder shall first be reviewed and
approved by both Parties, which approval shall not be unreasonably withheld or
delayed; provided, however, that a Party may use previously approved disclosure
without having to re-obtain the other Party’s consent. Either Party shall have
the right to use the name of the other Party in materials associated with
regulatory submissions to the extent necessary to comply with regulatory
requirements with respect to obtaining Regulatory Approval without the need for
prior review or approval.

 

13.5 Modifications and Amendments. This Agreement shall not be modified or
otherwise amended except pursuant to an instrument in writing executed and
delivered by each of the Parties hereto.

 

13.6 Notices. Any notice to be given hereunder by either Party to the other
Party shall be in writing and delivered personally, or sent by overnight
delivery service or postage prepaid registered or certified U.S. Mail and shall
be deemed given when delivered, if by personal delivery or overnight delivery
service, or upon five (5) days after deposit in the mail if so sent by U.S.
mail, and shall be addressed:

 

60

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

 

If to PTC:

   PTC Therapeutics, Inc.   

100 Corporate Court

  

South Plainfield, NJ 07080

  

Attention: Legal Department

  

Facsimile No. 1-908-222-1128

  

With an email copy to:

  

legal@ptcbio.com

  

With a copy to:

  

Wilmer Cutler Pickering Hale & Dorr LLP

  

60 State Street

  

Boston, Massachusetts 02109

  

USA

  

Attention: Steven D. Singer, Esq.

  

Facsimile No. 1-617-526-5000

If to CVT:

  

CV Therapeutics, Inc.

  

3172 Porter Drive

  

Palo Alto, CA 94304

  

Attention: General Counsel

  

Facsimile No. 1-650-858-0388

  

With a copy to:

  

William Davisson, Esq.

  

Latham & Watkins, LLP

  

140 Scott

  

Menlo Park, CA 94025

  

Facsimile No. 1-650- 463-2600

or to such other address as either Party shall hereafter designate by written
notice given in accordance with this Section. Additionally, any phone number or
other contact information specified for a Party in this Agreement may be changed
at any time by such Party upon providing written notice to the other Party of
such change.

 

13.7 Governing Law. This Agreement shall be governed by and shall be construed
in accordance with the laws of the State of New York, without reference to any
of its conflicts of laws provisions that would require the application of the
laws of any other jurisdiction.

 

13.8 Waiver. The failure of either Party to require the performance of any term,
or the waiver of either Party of any breach of this Agreement, shall not prevent
a subsequent exercise or enforcement of such terms or be deemed a waiver of any
subsequent breach of the same or any other term.

 

61

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

 

13.9 No Agency. Nothing in this Agreement shall be construed to make the
relationship of the Parties herein a joint venture, association or partnership
or make the Parties agents of one another. The Parties are not authorized to act
as agents of one another as to any matter or make any representations to any
Third Parties indicating or implying the existence of any such agency
relationship.

 

13.10 Dispute Resolution. If any dispute between the Parties arises during the
term of this Agreement that relates to either Party’s rights and/or obligations
hereunder or otherwise relates to the validity, enforceability or performance of
this Agreement, including disputes relating to alleged breach or termination of
this Agreement, but excluding any determination of the validity of the Parties’
patents (hereinafter a “Dispute”), either may, by written notice to the other
Party, refer the Dispute to the Parties’ respective Chief Executive Officers for
consideration of whether a resolution can be achieved through good faith
discussions commencing reasonably promptly after such notice is received;
provided, however, that if the subject matter of such Dispute is within the
purview of the JRC or JMC, the Parties’ representatives on the JMC shall first
attempt to resolve such Dispute as provided in Article 2 before referring it to
the Parties’ Chief Executive Officers. If the Parties’ Chief Executive Officers
are unable to resolve any Dispute within [*] days after referral to the Chief
Executive Officers, either Party shall be free to pursue any remedy that may be
available to it at law or in equity, except as otherwise expressly provided in
this Agreement. Notwithstanding the foregoing, nothing in this Agreement shall
restrict either Party at any time from seeking equitable relief to prevent
irreparable harm that may be caused by the other Party’s actual or threatened
breach of this Agreement.

 

13.11 Headings. The Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning and
interpretation of this Agreement.

 

13.12 Counterparts. This Agreement may be executed in two or more counterparts,
and signatures may be delivered by facsimile, each of which shall be deemed to
be an original and all of which shall be deemed to constitute the same
Agreement.

 

13.13 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the Parties and supersedes all previous and
contemporaneous understandings, agreements and representations between the
Parties, written or oral, with respect to the subject matter hereof.

[Remainder of page intentionally left blank.]

 

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

[*] Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

62

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

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.

 

PTC THERAPEUTICS, INC.

    CV THERAPEUTICS, INC.

By:

 

/s/ Stuart Peltz

 

    By:  

/s/ Louis G. Lange, M.D., Ph.D.

 

Title:

 

President & CEO

   

Title:

 

Chairman & CEO

Date:

 

6/7/06

   

Date:

 

6/7/06

 

63

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

LOGO [g16453logo2.jpg]

 

EXHIBIT A- PRESS RELEASE

 

FOR IMMEDIATE RELEASE    Investor Contacts:    Media Contacts: Christopher Chai
   John Bluth Vice President, Treasury and Investor Relations    Senior
Director, Corporate Communications CV Therapeutics, Inc.    CV Therapeutics,
Inc. (650) 384-8560    (650) 384-8850    Jane Baj    Associate Director,
Corporate Development    PTC Therapeutics, Inc.    (908) 222-7000 x167

 

PTC THERAPEUTICS AND CV THERAPEUTICS

ANNOUNCE COLLABORATION AND LICENSE ARRANGEMENT

SOUTH PLAINFIELD, NJ, and PALO ALTO, CA, June 12, 2006 – PTC Therapeutics, Inc.
and CV Therapeutics, Inc. (NASDAQ: CVTX) announced today that they have entered
into an exclusive research collaboration and licensing arrangement for the
development of orally bioavailable small molecules through the application of
PTC’s proprietary GEMS (Gene Expression Modulation by Small-Molecules)
technology. Pursuant to the collaboration, PTC and CV Therapeutics will jointly
select five targets, including targets with the potential to raise HDL, through
a collaborative process of determining the applicability of the GEMS technology
to targets of interest.

Under the terms of the collaboration and license agreement, CV Therapeutics will
make an initial payment to PTC of $10 million. The initial payment consists of a
cash upfront payment of $2 million and two loans for an aggregate of $8 million.
One of the loans is forgivable over the course of the research term provided the
agreement remains in effect, and the other is convertible into PTC equity. CV
Therapeutics has the exclusive option to enter into one or more worldwide,
exclusive licenses, on a target-by-target basis, for collaboration compounds it
decides to take forward, and will be obligated to pay PTC royalties on worldwide
net sales of products developed pursuant to the collaboration. If CV
Therapeutics licenses and commercializes a product based on each of the five
selected targets during the term of the agreement, PTC could earn milestone
payments of up to $335 million if all specified development, regulatory and
commercial goals are achieved over the product life cycle. PTC retains the
option to co-fund research and development for increased royalties or
co-promotion rights.

“We are very excited to start our collaboration with PTC, which we believe has
the potential to deliver innovative oral treatments for well-validated targets
in important areas of cardiovascular disease, such as dyslipidemia and
diabetes,” said Brent K. Blackburn, Ph.D., senior vice president, drug discovery
and development of CV Therapeutics. “This alliance complements our internal
research efforts with PTC’s proprietary GEMS technology that allows the
potential development of small molecule drugs to address challenging targets.”

 

 

CV Therapeutics, Inc.     3172 Porter Drive     Palo Alto, CA 94304     Tel
650.384.8500     Fax 650.858.0390     www.cvt.com

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

LOGO [g16453logo2.jpg]

 

“We are extremely pleased to enter into this collaboration with CV
Therapeutics,” said Stuart Peltz, president and chief executive officer of PTC
Therapeutics. “This collaboration is part of our strategy of applying our GEMS
technology to therapeutic areas outside of our core research areas through
collaborators who bring disease-specific expertise. With CV Therapeutics, we
have a collaborator with a significant presence and experience in molecular
cardiology and drug development.”

About CV Therapeutics

CV Therapeutics, Inc., headquartered in Palo Alto, California, is a
biopharmaceutical company focused on applying molecular cardiology to the
discovery, development and commercialization of novel, small molecule drugs for
the treatment of cardiovascular diseases.

CV Therapeutics’ approved products include Ranexa® (ranolazine extended-release
tablets) and ACEON® (perindopril erbumine) Tablets. Ranexa is indicated for the
treatment of chronic angina in patients who have not achieved an adequate
response with other antianginal drugs, and should be used in combination with
amlodipine, beta-blockers or nitrates. In addition, CV Therapeutics co-promotes
ACEON®, an ACE inhibitor, for reduction of the risk of cardiovascular mortality
or nonfatal myocardial infarction in patients with stable coronary artery
disease and treatment of essential hypertension.

CV Therapeutics also has other clinical and preclinical drug development
candidates and programs, including regadenoson, which is being developed for
potential use as a pharmacologic stress agent in myocardial perfusion imaging
studies. Regadenoson has not been approved for marketing by any regulatory
authorities.

CV Therapeutics Disclosure Statement

Except for the historical information contained herein, the matters set forth in
this press release, including statements as to drug research and development,
clinical studies, regulatory review and approval, and commercialization of
products, are 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
actual results to differ materially, including, early stage of development;
regulatory review and approval of our products; the conduct and timing of
clinical trials; commercialization of products; market acceptance of products;
and other risks detailed from time to time in CV Therapeutics’ SEC reports,
including its Quarterly Report on Form 10-Q for the quarter ended March 31,
2006. CV Therapeutics disclaims any intent or obligation to update these
forward-looking statements.

About PTC

PTC is a biopharmaceutical company focused on the discovery and development of
orally administered, proprietary small-molecule drugs that target
post-transcriptional control processes. Post-transcriptional control processes
regulate the rate and timing of protein production and are of central importance
to proper cellular function. PTC has assembled proprietary technologies and
extensive knowledge of post-transcriptional control processes that it applies in
its drug discovery and development activities. PTC’s current pipeline of
clinical and preclinical product

 

 

CV Therapeutics, Inc.     3172 Porter Drive     Palo Alto, CA 94304     Tel
650.384.8500     Fax 650.858.0390     www.cvt.com

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

LOGO [g16453logo2.jpg]

 

candidates addresses multiple indications, including genetic disorders,
oncology, and infectious diseases.

About GEMS

Gene Expression Modulation by Small-molecules (GEMS) is PTC’s novel and
proprietary screening technology for the identification of small-molecules that
modulate post-transcriptional control mechanisms. Compounds identified through
the GEMS technology modulate gene expression by targeting the
post-transcriptional control processes that act through the untranslated regions
(UTRs) of messenger RNA (mRNA) molecules. GEMS was the basis for the discovery
of PTC’s product candidate, PTC299 and also for compounds in PTC’s Hepatitis C
virus program. PTC is using GEMS in multiple ongoing drug discovery programs.

###

 

 

CV Therapeutics, Inc.     3172 Porter Drive     Palo Alto, CA 94304     Tel
650.384.8500     Fax 650.858.0390     www.cvt.com