exv10w8






Exhibit 10.8



CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.




Execution Version




LICENSE AGREEMENT




     THIS LICENSE AGREEMENT (“Agreement”) dated as of January 22, 2009 (“Effective
Date”), is entered into between Covella Pharmaceuticals, Inc., a Delaware corporation, having
its principal place of business at P.O. Box 676150, 14530 Calle Carla, Rancho Santa Fe, CA 92067
(“Covella”) and Biogen Idec MA Inc., a Massachusetts corporation, having its principal
executive offices at 14 Cambridge Centre, Cambridge, MA 02142 (“Biogen Idec”).



BACKGROUND





	A.	 	Biogen Idec has a pre-clinical stage development program relating to anti-VLA1 integrin
antibodies (“Anti-VLA1 Antibody Program”). Biogen Idec owns certain patents, know-how and
other intellectual property related to its Anti-VLA1 Antibody Program and has exclusively licensed
certain other patents related to such Anti-VLA1 Antibody Program.
	 
	B.	 	Covella desires to obtain an exclusive license to the patents and certain know-how and other
intellectual property rights owned or controlled by Biogen Idec related to its Anti-VLA1 Antibody
Program in order to research, develop and commercially exploit products and services.



	 
	C.	 	  Biogen
Idec desires to grant an exclusive license to Covella under Biogen Idec’s rights to such patents
and certain know-how and other intellectual property rights upon the terms and conditions set forth
herein.
	 
	D.	 	Concurrently with this Agreement, Biogen Idec is assigning to Covella all of its rights and
obligations under the Boys Town Agreement (as further defined below).
	 
	F.	 	Concurrently with this Agreement, the Parties are entering into a Services and Supply Agreement
(as further defined below) under which Biogen Idec will provide [***] services relating to
materials manufactured for use in the Anti-VLA1 Antibody Program prior to the Effective Date, and
will transfer such materials to Covella, all as set forth therein.





     NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows:



ARTICLE I




DEFINITIONS



     For purposes of this Agreement, the following terms when used with initial capital letters
shall have the respective meanings set forth below in this Article I or elsewhere herein.



     1.1 “Adverse Event” shall mean any untoward medical occurrence in a patient or subject
who is administered a Product, whether or not considered related to the Product, including any
undesirable





 




			
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sign (including abnormal laboratory findings of clinical concern), symptom or disease
temporally associated with the use of such Product.




     1.2 “Affiliate” of a Party shall mean any person, corporation, or other business
entity which, directly or indirectly through one or more intermediaries, controls, is controlled
by, or is under common control with such Party, as the case may be. As used in this Section 1.2,
“control” shall mean: (a) to possess, directly or indirectly, the power to affirmatively
direct the management and policies of such person, corporation, or other business entity, whether
through ownership of voting securities or by contract relating to voting rights or corporate
governance; or (b) direct or indirect beneficial ownership of fifty percent (50%) or more of the
voting share capital in such person, corporation, or other business entity. A “Controlled
Affiliate” is any such person, corporation or other business entity that is controlled,
directly or indirectly, by a Party.



     1.3 “Approval” shall mean all approvals, licenses, registrations or authorizations of
all government agencies in a country, necessary for the manufacture, use, storage, import,
marketing and/or sale of a Product or a Service in such country, including any requisite pricing
and reimbursement approvals.



     1.4 “Biogen Idec Know-How” shall mean all methods, materials (including biological
materials), know-how and other information that (a) were invented, used or generated prior to the
Effective Date in connection with the identification, discovery or development of any Product or
Service under, or any materials used in, the Anti-VLA1 Antibody Program and are set out on
Exhibit 1.4 attached to this Agreement (including any additions to Exhibit 1.4
pursuant to Section 2.10(a)) or (b) are Modified Know-How based on or derived from Biogen Idec
Know-How. For the avoidance of doubt, (i) the Biogen Idec Know-How excludes the Manufacturing
Know-How, and (ii) the Existing Inventory comprises both Biogen Idec Know-How and [***], and is
subject to the terms and restrictions set forth in Section 2.8.



     1.5 “Biogen Idec Patents” shall mean (a) the Patents owned or Controlled by Biogen
Idec or its Controlled Affiliates listed on Exhibit 1.5 attached to this Agreement, (b) the
claims contained within any Patents owned or Controlled by Biogen Idec or its Controlled Affiliates
as of the Effective Date which specifically claim an antibody that binds via its variable region
solely to the VLA1 integrin and whose primary mechanism of action is
through such VLA-1 integrin binding, and (c) the claims contained within any Patents owned or
Controlled by Biogen Idec or its Controlled Affiliates after the Effective Date that [***].



     1.6 “Biogen Idec Technology” shall mean the Biogen Idec Patents, the Biogen Idec
Know-How and the Manufacturing Know-How.



     1.7 “BLA” shall mean a Biologics License Application (or its equivalent, including if
applicable a New Drug Application), as defined in the United States Food, Drug, and Cosmetic Act
and the regulations promulgated thereunder.





 




			
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     1.8 “Boys Town Agreement” shall mean the agreement dated April 21, 2000,
between Biogen Idec (as successor-in-interest to Biogen, Inc.) and the Boys Town National Research
Hospital whereby Boys Town exclusively licensed certain patents and patent applications to Biogen
Idec.



     1.9 “Boys Town Consent” shall mean that certain consent, in the form agreed upon by
Biogen Idec and Covella on or prior to the date hereof, to be executed by Boys Town, Biogen Idec
and Covella pursuant to which Boys Town consents to Biogen Idec’s assigning to Covella the Boys
Town Agreement.



     1.10 “Bulk Drug Substance” has the meaning set forth in the Services and Supply
Agreement.



     1.11 “Change of Control” shall mean with respect to a Party: (1) a sale of all or
substantially all of such Party’s assets or business relating to this Agreement; (2) a merger,
reorganization or consolidation involving a Party in which the stockholders of such Party
immediately prior to such transaction cease to own collectively a majority of the voting equity
securities of a successor entity; or (3) a person or group of persons acting in concert (other
than, in the case of Covella, current stockholders of Covella) acquire fifty percent (50%) or more
of the voting equity securities of such Party.



     1.12 “Commercially Reasonable Efforts” shall mean the carrying out of obligations or
tasks in a sustained manner consistent with the efforts a similarly situated bio-pharmaceutical
company with sufficient resources to advance a program devotes to a product or a research,
development or marketing project of similar market potential, profit potential or strategic value
resulting from its own research efforts, based on general market conditions then prevailing.



     1.13 “Compliant Material” shall have the meaning given to it in the Services and
Supply Agreement.



     1.14 “Control” (including any variations such as “Controlled” and
“Controlling”) in the context of intellectual property rights, shall mean rights to
intellectual property sufficient to grant the applicable license or sublicense under this Agreement
without violating the terms of any agreement or other arrangement with any Third Party, subject to
the condition precedent that if any such agreement or arrangement requires Biogen Idec to pay
additional consideration to such Third Party on account of the sublicense to Covella hereunder of
such Third Party’s intellectual property rights, for such intellectual property rights to be
considered “Controlled” for purposes of this Agreement, Covella must promptly reimburse Biogen Idec
on demand and in full for such additional consideration as it becomes due, failing which such Third
Party intellectual property rights will be deemed not to be Controlled by Biogen Idec.



     1.15 “Current Good Manufacturing Practices” or “cGMP” shall mean the
then-current good manufacturing practices as promulgated under: (a) the United States Food, Drug,
and Cosmetic Act and the regulations promulgated thereunder; and (b) the ICH Good Manufacturing
Practice Guide for Active Pharmaceutical Ingredients (Q7); in each case, to the extent such
practices apply to the storage and/or handling of GMP materials, as such practices may be amended
from time to time and subject to any



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arrangement, additions or clarifications, and the respective roles and responsibilities, agreed
from time to time between the Parties.




     1.16 “Drug Product” has the meaning set forth in the Services and Supply Agreement.



     1.17
“EU Major Market”
 shall mean France, Germany, the United Kingdom and/or Italy.


     1.18
“Existing Inventory” shall have the meaning given to it in the Services and Supply
Agreement.



     1.19 “FDA” shall mean the United States Food and Drug Administration, or any successor
entity thereto performing similar functions.



     1.20 “Field” shall mean the diagnosis, treatment and/or prevention of any human
disease or condition.



     1.21 “First Commercial Sale” shall mean, for each Product or Service in each country,
the first sale for end use or consumption to a Third Party of such Product or Service in the
country by Covella, its Affiliate, or Sublicensee, after the granting of Approval for the Product
or Service (if required) by the relevant Regulatory Authorities. First Commercial Sale excludes any
sale or other distribution for use in a clinical trial or other development activity, or for
compassionate use.



     1.22 “FTE” shall mean the equivalent of the work of one (1) employee full time (i.e.,
one fully committed or multiple partially-committed employees aggregating to one full-time
employee) for one (1) calendar year, based upon a total of forty seven (47) weeks (i.e., one
thousand eight hundred eighty (1,880) hours) per calendar year. An “FTE-day” shall mean
eight (8) hours of FTE time.




      1.23 [***].



     
1.24 “IND” shall mean an Investigational New Drug
Application, as defined in the United States Food, Drug, and Cosmetic Act and the regulations
promulgated thereunder, or similar applications (i.e., a filing that must be made prior to
commencing clinical testing of a pharmaceutical product in human subjects) filed
with a Regulatory Authority in any other jurisdiction.



     1.25 “Indication” shall mean a distinct illness, sickness, interruption, cessation or
disorder of a particular bodily function, system, tissue type or organ, or sign or symptom of any
such items or conditions, regardless of the severity, frequency or route of any treatment, dosage
strength or patient class, for which Regulatory Approval is being sought and which will be
referenced on any Product labeling. For the avoidance of doubt, the indications set forth on
Exhibit 1.25 are each a separate Indication.



     1.26 “Initiation” of a clinical trial shall mean the dosing of the first patient in
such trial.





 




			
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     1.27 “Manufacturing Know-How” shall mean all methods, materials (including
biological materials), know-how and other information that are (a) set out on Exhibit 1.27
attached to this Agreement (including any additions to Exhibit 1.27 pursuant to Section
2.10(b)), or (b) Modified Know-How based on or derived from Manufacturing Know-How.



          (a) “Initial Manufacturing Know-How” shall mean Manufacturing Know-How
that is related to fill-finishing of Drug Product, and analytical and quality control methods for
Bulk Drug Substance and Drug Product testing and release.




          (b) “Conditional Manufacturing Know-How” shall mean Manufacturing
Know-How that is not Initial Manufacturing Know-How, including Manufacturing Know-How related to
Bulk Drug Substance production.




     1.28 “Marketing Approval Application” (or “MAA”) shall mean a BLA submitted to
(and the submission of which has been accepted for review by) the FDA in the United States or a
corresponding application which has been submitted to (and the submission of which has been
accepted for review by) a Regulatory Authority in any other jurisdiction.



     1.29 “Net Sales” shall mean the gross sales price invoiced or otherwise received by
Covella, its Affiliates or Sublicensees, from sales of Products or Services to Third Party
customers, less reasonable and customary deductions for the following items incurred with respect
to the sale to such customers: (a) credits, allowances, discounts, rebates and charge backs to the
customer (including those granted to managed-care entities and government agencies as well as
entities that manage patient drug benefits), to the extent actually taken by the customer; (b)
freight, postage and insurance costs on shipments to the customer (to the extent included in the
gross sales price); (c) trade, quantity or cash discounts allowed to and actually taken by the
customer on the sale; and (d) sales, value-added and other direct taxes (including customs, duties
and other similar governmental charges) incurred by the seller on the sale, other than franchise or
income tax of any kind whatsoever. If a sale or other disposition with respect to Products or
Service is not at arm’s length, then the Net Sales from such sale or other disposition shall be the
arm’s length fair market value of the Product or
Service, which will mean Covella’s, its Affiliate’s or its Sublicensee’s, as applicable,
average sales price in arm’s length sales of such Product or Service for the calendar quarter in
the country in which the sale took place.



     1.30 “Party” shall mean Biogen Idec or Covella individually and “Parties”
shall mean Biogen Idec and Covella collectively.



     1.31 “Patent(s)” shall mean any patents and patent applications, together with all
additions, divisionals, continuations, continuations-in-part, substitutions, reissues,
re-examinations, extensions, registrations, patent term extensions, Supplementary Protection
Certificates, and renewals of any of the foregoing.



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     1.32 “Phase I Trial” shall mean a human clinical trial, the principal purpose of which
is a determination of metabolism, pharmacokinetics and/or preliminary safety in healthy individuals
or patients with the disease being studied, as further described in 21 C.F.R. §312.21(a) (including
any such equivalent clinical study in any country other than the United States), all in accordance
with the trial protocol.



     1.33 “Phase II Trial” shall mean a human clinical trial conducted on patients with the
disease being studied for the principal purpose of achieving a preliminary determination of
efficacy and selection of the dose regimen(s) to be studied in a Phase III Trial of a Product, as
further described in 21 C.F.R. §312.21(b), and, if the defined end-points are met, is sufficient to
allow the conduct of such a Phase III Trial (including any such equivalent clinical study in any
country other than the United States), all in accordance with the trial protocol. For clarity: (a)
to be a Phase II Trial, the protocol must include at least one primary end-point pertaining to
efficacy; and (b) if a trial is planned as a two-stage trial, in which the first stage is a Phase I
Trial, and if the defined safety endpoints are met as described in the protocol for such trial, the
trial proceeds to a second stage that meets the criteria above for a Phase II Trial, then only such
second, Phase II stage of such trial shall be deemed a Phase II Trial.



     1.34 “Phase III Trial” shall mean a human clinical trial, the principal purpose of
which is to establish safety and efficacy in patients with the disease being studied, as further
described in 21 C.F.R. §312.21(c) (including any such equivalent clinical study in any country
other than the United States), which is designed and intended to be of a size and statistical power
sufficient to serve as a pivotal study to support the filing of an MAA for the Indication being
studied, all in accordance with the trial protocol.



     1.35 “Product” shall mean any one or more of (i) the Existing Product and (ii) Other
Products, defined as follows:



          (a) “Existing Product” shall mean any composition that
contains the antibody hAQC2 described in Exhibit 1.35A or fragment thereof.




          (b) “Other Product” shall mean any composition (other than an Existing Product)
(1) that contains an antibody or antibody fragment derived from any one or more antibodies (or
genetic materials encoding them) provided to Covella within the Biogen Idec Know-How or
Manufacturing Know-How, or otherwise supplied under the Services and Supply Agreement, which
antibody or fragment has binding to the VLA1 integrin as its primary mechanism of action, or (2)
that contains an antibody or antibody fragment which binds solely to the VLA1 integrin and whose
primary mechanism of
action is through such VLA-1 integrin binding and for which the manufacture, use, sale or
importation would, absent the license granted herein, infringe a Valid Claim of the Biogen Idec
Patents.




     1.36 “Prosecution Patents” shall mean the Biogen Idec Patents that are listed
on Exhibit 1.5, excluding the Reserved Prosecution Patents.



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     1.37 “Qualified Purchaser” shall mean an entity that has equity securities traded
publicly on a United States, Japan, or EU national securities exchange with a market capitalization
of at least $[***] determined based on the average closing price over the ten (10) trading days
immediately preceding the closing date of the acquisition.



     1.38 “Regulatory Authority” shall mean the FDA or any regulatory body with similar
regulatory authority in any other jurisdiction.



     1.39 “Reserved Prosecution Patents” shall mean the Biogen Idec Patents identified on
Exhibit 1.5 as members of the [***] family and all additions, divisionals, continuations,
continuations-in-part, substitutions, reissues, re-examinations, extensions, registrations, patent
term extensions, Supplementary Protection Certificates, and renewals of any of the members of the
[***] family.



     1.40 “Service” shall mean any service performed by Covella or its Affiliate or
Sublicensee on a fee-for-service basis for financial consideration when such service (i) involves
the use of a Product (without a disposition of such Product for which royalties are separately
payable hereunder), or (ii) the performance of which, absent the licenses granted hereunder, would
infringe a Valid Claim within the Biogen Idec Patents and which is directly in support of the
development or commercialization of Products.



     1.41 “Services and Supply Agreement” shall mean that certain Services and Supply
Agreement, dated as of the Effective Date, in the form attached
hereto as Exhibit 1.41.




      1.42
“Subject Transaction” shall mean (i) any sublicense under this Agreement to a Third Party that
includes the right to commercialize a Licensed Product within the Territory or any portion thereof,
or (ii) any Change of Control of Covella.



     1.43 “Sublicensee” shall mean a Third Party to whom Covella, an Affiliate of Covella,
or another Sublicensee grants, in accordance with Section 2.5, a sublicense to one or more Products
or Services under the Biogen Idec Technology.



     1.44 “Sublicense Revenue” shall mean all cash payments, the fair market cash value of
any equity consideration (less any amounts paid for such equity consideration), and forgivable
loans (to the extent actually forgiven) received by Covella or its Affiliates in consideration for
the grant of a sublicense under the Biogen Idec Technology, including any upfront payments, license
maintenance fees, milestone payments or the like. Sublicense Revenue will not include: [***].



     1.45 “Supplementary Protection Certificate” shall mean, with respect to Switzerland or
any jurisdiction within the European Union or European Free Trade Association, a certificate
extending exclusive rights (following the expiration of applicable patents) with
respect to a medicinal product, pursuant to Council Regulation (EEC) No. 1768/92 of 18th June
1992, and any equivalent extension of exclusive rights in a medicinal product in any other
jurisdiction in the world.





 




			
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     1.46 “Supply Failure” shall mean Biogen Idec has failed to supply at least
[***] percent ([***]%) of the aggregate amount of Bulk Drug Substance due to be delivered in any
rolling [***] ([***]) calendar month period in accordance with the applicable delivery dates,
unless such failure results from a default by Covella under the definitive document(s) for supply
of Bulk Drug Substance (including but not limited to a failure to properly provide orders).




     1.47
“Territory” shall mean worldwide.


     1.48 “Third Party” shall mean any person, corporation or other business entity, other
than Covella, Biogen Idec and their respective Affiliates.



     1.49 “Valid Claim” shall mean a pending or issued claim of a Patent within the Biogen
Idec Patents which: (a) has not been held unpatentable, invalid or unenforceable by a court or
other government agency of competent jurisdiction in a decision from which no appeal can or has
been taken; and (b) which has not been admitted to be invalid or unenforceable through reissue,
re-examination, disclaimer or otherwise, by a court or other governmental agency of competent
jurisdiction, in a decision that is unappealable or unappealed; and (c) has not expired, been
determined to be unenforceable, been cancelled, withdrawn, abandoned. Notwithstanding the
foregoing, if a claim of a pending patent application within the Biogen Idec Patents has not issued
as a claim of a patent within the following time periods in the following jurisdictions, such claim
shall not be a Valid Claim for the purposes of this Agreement, unless and until such claim issues
as a claim of an issued patent (from and after which time the same shall be deemed a Valid Claim
subject to paragraphs (a) and (b) above): (i) if filed in Japan, thirteen (13) years after the PCT
filing date, or (ii) if filed anywhere else in the world, ten (10) years after the PCT filing date.
With respect to a Valid Claim of a pending patent application, the phrase to “infringe a Valid
Claim” means to engage in an activity that would infringe (i.e., by either directly infringing,
contributorily infringing, or inducing infringement of) such Valid Claim if it were contained in an
issued patent. With respect to any jurisdiction in which a Supplementary Protection Certificate is
in existence that provides exclusivity substantially similar in scope to a Valid Claim that has
expired in such jurisdiction, a Valid Claim shall be deemed to exist in such jurisdiction for the
life of such Supplementary Protection Certificate.



     1.50 Additional Definitions. Each of the following terms shall have the meaning
described in the corresponding section of this Agreement indicated below:



	 	 	 	 	 	 	 	 	 	 	 
	Term	 	Section Defined	 	Term	 	Section Defined
	[***]

	 	1.23	 	 	 	[***]
	 	1.23	 
	Agreement

	 	Introduction
	 	Infringement
	 	11.3(a) 		 
	Anti-VLA1 Antibody Program

	 	Background
	 	Indemnifying Party
	 	    14.3	 	 








 




			
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	Term	 	Section Defined	 	Term	 	Section Defined
	Biogen Idec
	 	Introduction	 	Infringement Action	 	11.3(c)
	Biogen Idec Indemnitees
	 	14.1	 	Initial Manufacturing Know-How	 	Exhibit 1.27
	 
	 	 	 	Transfer Initiation Date	 	 
	Biogen Idec Know-How Transfer
	 	Exhibit 1.4	 	JAMS	 	15.6(a)
	Initiation Date
	 	 	 	 	 	 
	Biogen Idec Notice
	 	3.3(b)	 	Liabilities	 	14.1
	Cell Line License
	 	8.2	 	[***]	 	4.2(a)
	Clinical and Regulatory Milestone
	 	5.2(a)	 	Manufacturing Know-How	 	Exhibit 1.27
	 
	 	 	 	Transfer Initiation Date	 	 
	Closing
	 	5.1(b)	 	Modified Know-How	 	11.1(a)(i)
	Commercial Milestone
	 	5.3	 	Most Recent Equity Securities	 	5.2(e)
	Conditional Manufacturing Know-How
	 	Exhibit 1.27	 	Mutual Confidentiality Agreement	 	10.4
	Transfer Initiation Date
	 	 	 	 	 	 
	Controlling Party
	 	11.3(c)	 	Negotiation Period	 	9.1(c)
	Controlled Affiliate
	 	1.2	 	Notice to Partner	 	9.1(a)
	Core Claims
	 	11.2(a)	 	Observer	 	7.5
	Covella
	 	Introduction	 	Offered Rights	 	3.3(a)
	Covella Indemnitees
	 	14.2	 	Pfizer	 	1.23
	Covella Notice
	 	3.3(a)	 	Other Product	 	1.35(b)
	Definitive Agreement
	 	9.1(c)	 	Preferred Stock	 	5.1(b)
	Definitive Documentation
	 	5.1(e)	 	Proprietary Information	 	10.1
	Disclosing Party
	 	10.1	 	Recipient	 	10.1
	Dispute
	 	15.6(a)	 	Required Countries	 	11.2(a)
	Effective Date
	 	Introduction	 	Right of Negotiation	 	9.1
	End Date
	 	12.4(b)	 	Sublicensee Milestone Payment	 	5.2(c)
	Equity Financing
	 	5.1(b)	 	Term	 	12.1
	Existing Product
	 	1.35(a)	 	Transfer Initiation Date	 	3.1
	Failure Notice
	 	8.1	 	Trigger Event	 	3.2








 




			
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ARTICLE II




GRANT OF LICENSE



     2.1 License to Biogen Idec Patents. Subject to the terms and conditions of this
Agreement, Biogen Idec hereby grants to Covella an exclusive (subject to the rights reserved
to Biogen Idec in Section 2.3), non-transferable (except as provided in Section 15.2) license,
under the Biogen Idec Patents, including the right to sublicense in accordance with Sections 2.4
and 2.5, to research, develop, make, have made, use, offer for sale, sell and import Products and
to perform Services, in each case within the Field in the Territory.



     2.2 License to Biogen Idec Know-How and Manufacturing Know-How. Subject to the terms
and conditions of this Agreement, Biogen Idec hereby grants to Covella an exclusive (subject to the
rights reserved to Biogen Idec in Section 2.3), non-transferable (except as provided in Section
15.2) license, under the Biogen Idec Know-How and Manufacturing Know-How, including the right to
sublicense in accordance with Sections 2.4 and 2.5, to research, develop, make, have made, use,
offer for sale, sell and import Products and to perform Services, in each case within the Field in
the Territory.



     2.3 Reserved Rights. Notwithstanding the licenses granted in Sections 2.1 and 2.2,
Biogen Idec shall retain the right, under the Biogen Idec Technology, to research, develop, make,
have made and use Biogen Idec Know-How and Manufacturing Know-How, including compositions that
contain an antibody or antibody fragment (or genetic materials encoding them) provided to Covella
within the Biogen Idec Know-How or Manufacturing Know-How for (i) the research, development and
commercialization of products and services other than Products and Services, and (ii) the research
(excluding, for the avoidance of doubt, any human clinical trials) of a potential Product in the
[***] in accordance with Section 4.2(a). For the avoidance of doubt, the rights retained by Biogen
Idec hereunder shall not include the right to offer for sale, sell and import Products and to
perform Services, in each case within the Field in the Territory.



     2.4 Extension of License to Affiliates. Covella may extend its rights under the
licenses granted in Sections 2.1 and 2.2 to one or more of its Affiliates; provided that Covella
shall remain responsible for such Affiliate’s compliance with all obligations under this Agreement
applicable to such Affiliate.



     2.5 Sublicenses.



          (a) Right to Grant Sublicenses. Subject to the terms and conditions of
this Section 2.5, Covella shall have the right to grant and authorize sublicenses under the
rights granted in Sections 2.1 and 2.2 above.






 




			
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          (b) Sublicense Revenue. Covella shall make payments related to Sublicense
Revenue actually received as set forth in Section 5.6.




          (c) Other Sublicense Requirements. With respect to each sublicense under
the Biogen Idec Technology granted by Covella, any Affiliate, or any Sublicensee to a Third Party:
(i) such sublicense shall not conflict with, and shall be subordinate to, the terms and
conditions of this Agreement; (ii) such sublicense shall contain provisions substantially
equivalent to Article X (Confidentiality) and Sections 11.3(a) (Enforcement — Notice), 11.5
(Labeling and Promotional Materials), 12.5 (Effect of Expiration or Termination), 13.4
(Disclaimer) and 14.4 (Insurance) hereof; (iii) Covella shall provide a copy of such sublicense to
Biogen Idec, with those financial terms not reasonably necessary to determine compliance with this
Agreement and technical information that is not part of the Biogen Idec Technology redacted; and
(iv) Covella shall remain responsible to Biogen Idec for the royalties and payments due under
Article V below with respect to the activities and Net Sales of such Sublicensee.




     2.6 Assignment of Boys Town Agreement. As of the Effective Date, (a) Biogen Idec
hereby sells, assigns, conveys, transfers and delivers to Covella and Covella will acquire and take
delivery of all of Biogen Idec’s right, title and interest in the Boys Town Agreement; and (b)
Covella shall assume and undertake to pay, satisfy and discharge any liability arising out of the
Boys Town Agreement after the Effective Date. On or before the Effective Date, Biogen Idec shall
have delivered to Covella the Boys Town Consent. Except as expressly set forth in Section 5 of the
Boys Town Consent, nothing contained in the Boys Town Consent shall in any way supersede, modify,
replace, amend, change, rescind, exceed, expand, enlarge or in any way affect the provisions,
including warranties, covenants, agreements, conditions, representations, or in general any of he
rights and remedies of Biogen Idec or Covella, and any of the indemnifications of Biogen Idec or
Covella set forth herein, nor shall the Boys Town Consent expand or enlarge any remedies under this
Agreement.



     2.7 No Other Rights. Biogen Idec shall retain ownership of all rights and interest in
and to all Biogen Idec Technology, and no other license, either express or implied, is granted
hereunder with respect to any patent, trade secret, know-how, other information or intellectual
property rights of Biogen Idec except as expressly stated above in this Agreement or the Services
and Supply Agreement. Nothing in this Agreement, shall be interpreted as giving Biogen Idec any
right or license, by implication, estoppel or otherwise, to any intellectual property owned or
Controlled by Covella, except as may be expressly stated in this Agreement or the Services and
Supply Agreement.



     2.8 [***].



          (a) [***].




          (b) [***].






 




			
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     2.9 Supply of Bulk Drug Substance. Covella shall, and shall require its
Affiliates and Sublicensees to, purchase from Biogen Idec their respective requirements for Bulk
Drug Substance in connection with the development and commercialization of Existing Product, unless
and until a Trigger Event has occurred.



     2.10 Inadvertent Omissions.



          (a) If, during the Term, Biogen Idec identifies any methods, materials (including
biological materials), know-how or other information (other than items governed by Section 2.10(b))
in existence and Controlled by Biogen Idec or its Controlled Affiliates as of the Effective Date
(i) that were invented, used or generated prior to the Effective Date in connection with the
identification, discovery or development of any Product or Service under, or any materials used in,
the Anti-VLA1 Antibody Program, and (ii) which Biogen Idec, in its reasonable judgment, believes
may be of value to Covella’s advancement of Covella’s development program for Products, such
method, materials, know-how or other information shall be deemed to be, from the Effective Date,
Biogen Idec Know-How notwithstanding the fact that such item was not listed on Exhibit 1.4
on the Effective Date. The Parties agree to promptly amend Exhibit 1.4 to correct any such
omission. For the avoidance of doubt, this Section 2.10(a) shall not apply to any methods,
materials (including biological materials), know-how or other information (other than any of the
foregoing that have been included on Exhibit 1.4) that is no longer owned or Controlled by
Biogen Idec or its Controlled Affiliates prior to the date upon which Biogen Idec becomes aware of
the omission.




          (b) If, during the Term, Biogen Idec identifies any methods, materials (including
biological materials), know-how or other information in existence and Controlled by Biogen Idec or
its Controlled Affiliates as of the Effective Date that is necessary for the manufacture of the
Existing Product (in the form existing on the Effective Date), such methods, materials, know-how
and other information shall be deemed to be, from the Effective Date, Manufacturing Know-How
notwithstanding the fact that such item was not listed on Exhibit 1.27 on the Effective
Date. The Parties agree to promptly amend Exhibit 1.27 to correct any such
omission. For the avoidance of doubt, this Section 2.10(b) shall not apply to any methods,
materials (including biological materials), know-how or other information (other than any of the
foregoing that have been included on Exhibit 1.27) that is no longer owned or Controlled by
Biogen Idec or its Controlled Affiliates prior to the date upon which Biogen Idec becomes aware of
the omission.





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ARTICLE III




TECHNOLOGY TRANSFER; DATA TRANSFER



     3.1 Initial Know-How Transfer and Assistance. Biogen Idec shall provide its
reasonable assistance to effect the orderly transfer to Covella of the Anti-VLA1 Antibody Program
as specified in this Section 3.1. For this purpose, Biogen Idec will deliver to Covella the items
of Biogen Idec Know-How and Initial Manufacturing Know-How that exist in tangible form within the
time frames set forth on Exhibits 1.4 and 1.27 as applicable (in each instance, the “Transfer
Initiation Date”), provided that Biogen Idec will be entitled to retain any such items that are
necessary or useful for the performance of the Services and Supply Agreement for such period that
such items are needed. Biogen Idec will provide answers to specific questions during normal
business hours, for a period of [***] ([***]) calendar days after the applicable Transfer
Initiation Date, to assist Covella in understanding and implementing the Anti-VLA1 Antibody Program
other than aspects that relate to the Conditional Manufacturing Know-How transfer and assistance
which are addressed in Section 3.2. The Parties will have a [***] at the end of such [***] ([***])
day period, at Covella’s facilities or by telephone as mutually agreed, for a final review. Biogen
Idec will also provide reasonable assistance to Covella in preparing for a pre-IND meeting with the
FDA and, if requested by Covella, will provide such Biogen Idec personnel as reasonably necessary
to facilitate such pre-IND meeting, provided that Biogen Idec’s assistance with respect to such FDA
activities shall be limited to a total of [***] ([***]) FTE-days.



     3.2 Conditional Manufacturing Know-How Transfer and Assistance. Biogen Idec shall have
no obligation to transfer to Covella the Conditional Manufacturing Know-How unless and until (i)
Biogen Idec elects to not enter into negotiations with Covella to obtain the Offered Rights
(defined in Section 3.3 below) under the right of first offer set forth in Section 3.3, (ii)
Covella enters into definitive document(s) with a Third Party for the Offered Rights in accordance
with Section 3.3(c), or (iii) Biogen Idec and Covella do not for any reason enter into definitive
documents with respect to the Offered Rights within [***] ([***]) calendar days, and Covella
determines to manufacture the Bulk Drug Substance itself, or (iv) Biogen Idec and Covella enter
into definitive document(s) for the Offered Rights and Biogen Idec commits a Supply Failure under
such definitive document(s) (each a “Trigger Event”). In the event of the occurrence of a
Trigger Event, Covella may send written notice to Biogen Idec requesting the transfer of the
Conditional Manufacturing Know-How to Covella. Within [***] ([***]) calendar days of the date of
such notice, Biogen Idec shall, at Covella’s sole cost and expense, commence the transfer of the
Conditional Manufacturing Know-How to Covella. Biogen Idec will provide answers to specific
questions during normal business hours for a period of [***] ([***]) calendar days after the
Conditional Manufacturing Know-How Transfer Initiation Date, to assist Covella in understanding and
implementing the Conditional Manufacturing Know-How as it relates to the Anti-VLA1 Antibody
Program. Biogen Idec’s assistance with respect to such activities shall be limited to a total of
[***] ([***]) FTE-days. The Parties will have a [***] at the end of such [***] ([***]) day period,
at Covella’s facilities or by telephone as mutually agreed, for a final review. Following a first
pilot manufacturing run by Covella or





 




			
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a Third Party, Biogen Idec will again make its representatives available to provide answers
to reasonable specific questions during normal business hours for a period of [***] ([***])
calendar days following the end of such pilot run. Biogen Idec’s assistance with respect to such
first pilot manufacturing run activities shall be limited to the number of FTE-days (or parts
thereof), if any, remaining after the conclusion of the FTE support described earlier in this
Section 3.2. Biogen Idec shall have no responsibility for any modification of, or additional
support with respect to, any Biogen Idec process, methods or materials of the Biogen Idec Know-How
or Manufacturing Know-How in order to enable or improve manufacturing or other operations of
Covella or any Third Party.




     3.3
Biogen Idec Right of First Offer with Respect to Manufacture of Bulk Drug Substance. With respect to Covella’s, and its Affiliates’ and Sublicensees’ requirements of
Bulk Drug Substance in addition to the Existing Inventory, Covella hereby grants to Biogen Idec a
right of first offer with respect to the exclusive manufacture and supply of all of such
requirements: (a) In the event that Covella determines to manufacture or procure supply
of Bulk Drug Substance either for itself or its Affiliates or Sublicensees, Covella shall first
offer to Biogen Idec the opportunity to enter into an agreement for the exclusive right to
manufacture and supply the Bulk Drug Substance (the “Offered Rights”) by delivering written
notice to Biogen Idec (the “Covella Notice”).



          (b) Within [***] ([***]) calendar days after Biogen Idec’s receipt of the Covella
Notice, Biogen Idec may elect, by delivery of written notice to Covella (the “Biogen
Idec Notice”), to enter into good-faith negotiations with Covella to obtain the Offered
Rights. Should Biogen Idec elect within such [***] ([***]) day period to enter into such
negotiations with Covella, both Biogen Idec and Covella shall promptly begin to negotiate in good
faith to determine whether they can agree on the terms of the definitive documents pursuant to
which Biogen Idec would be granted the Offered Rights.



          (c) In the event that Biogen Idec and Covella do not for any reason enter into
definitive documents with respect to the Offered Rights within [***] ([***]) calendar days after
Biogen Idec’s receipt of the Covella Notice, Covella may (i) manufacture the Bulk Drug Substance
itself or (ii) offer the Offered Rights to any Third Party upon terms not less favorable in the
aggregate to Covella than those specified in the last detailed written term sheet provided by
Biogen Idec to Covella, or if no such term sheet has been provided, on any terms. Covella may not
enter into an agreement for the Offered Rights on terms equal to or less favorable in the aggregate
to Covella than those specified in the last detailed written term sheet provided by Biogen Idec to
Covella without first re-offering the Offered Rights on such terms to Biogen Idec, and Biogen Idec
shall have [***] ([***]) calendar days to accept such re-Offered Rights. In the event that Biogen
Idec does not accept within such [***] ([***]) calendar days, then Covella shall have the right to
offer the Offered Rights to such other Third Party.



          (d) For the avoidance of doubt, Covella may participate in discussions, without
entering into definitive documents, with a Third Party with respect to the Offered Rights
throughout the periods of time that Covella and Biogen Idec are in good-faith negotiations, if any.
Biogen Idec shall have no





 




			
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obligation to provide any assistance or information to Covella or any Thirty Party in
connection with such discussions.




     3.4 Loss of Biological Materials. For the avoidance of doubt, Biogen Idec shall have
no obligations to replace any biological materials within the Biogen Idec Know-How or Manufacturing
Know-How in its existing inventory that are lost, destroyed, or becomes, for any reason, unsuitable
for Covella’s use as contemplated hereunder.



ARTICLE IV




DILIGENCE



     4.1
General Diligence. Covella shall use Commercially Reasonable Efforts to develop and
commercialize at least one Product or Service, directly or through its Affiliates, Sublicensees
and/or contractors.



     4.2 [***].



          (a) Biogen Idec may, but shall not be obliged to, conduct pre-clinical studies
with the objective of obtaining data concerning the suitability of further researching and
developing an Existing Product for the diagnosis, prognosis, treatment and/or prevention of
[***], as further described on Exhibit 4.2 as it may be amended from time to time by
Biogen Idec, in consultation with Covella, both acting reasonably. Biogen Idec will share all
results from any such preclinical studies with Covella in a timely manner throughout the course
of the studies and will provide Covella with a written report detailing the final results when
the studies are complete.




          (b) [***].




     4.3 Reporting. Covella agrees to keep Biogen Idec reasonably informed as to its
development and commercialization activities with respect to Products and Services. Without
limiting the foregoing, Covella shall provide Biogen Idec with a written report following its first
meeting with FDA and subsequent written reports no less frequently than annually during the Term
(commencing with the first anniversary of the Effective Date) summarizing Covella’s efforts to
develop and commercialize Products or Services hereunder. In addition to such reports, Covella
agrees to provide Biogen Idec with Adverse Event information and product complaint information
relating to Products, but only to the extent relating to the use of Products or Services containing
Compliant Material or other materials supplied by Biogen Idec pursuant to the Services and Supply
Agreement, as compiled and prepared by Covella in the normal course of business in connection with
the development, commercialization or sale of any Product or Service, within time frames consistent
with reporting obligations under applicable laws and regulations. All reports, updates, Adverse
Event complaints (as limited by the previous sentence), and other information provided by one Party
to the other Party under this Agreement (including under this Section





 




			
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4.3), shall be considered Proprietary Information of the Disclosing Party, subject to the
terms of Article X hereof.




ARTICLE V




PAYMENTS AND ROYALTIES



     5.1 Equity Grant.



          (a) In partial consideration of the license and other rights granted by Biogen
Idec to Covella under this Agreement and the Services and Supply Agreement, Covella hereby agrees
to issue shares of its capital stock to Biogen Idec in the number, at the time, with the
attributes and otherwise as more fully described in this Section 5.1.




          (b) [***].




          (c) [***].




          (d) [***].




          (e) [***].




          (f) [***].




          (g) During the period from the Effective Date hereof and until the effective date of
the Definitive Documentation, Covella agrees to provide Biogen Idec
with true and complete copies of (i)
any amendments to its certificate of incorporation or bylaws or any other material agreement
entered into by Covella on or before the Effective Date, and (ii) any material contracts, debt
instruments or agreements or equity related plans entered into, delivered or implemented by Covella
after the Effective Date.




          (h) This Section 5.1 shall terminate upon the issuance of shares of Covella common
stock pursuant to Section 8.1.



     5.2 Clinical and Regulatory Milestones.



          (a) Milestones. In further consideration of the license and rights granted
by Biogen Idec to Covella under this Agreement and subject to Section 5.2(c) below, Covella shall
pay to Biogen Idec the clinical and regulatory milestone payments set out below following the first
achievement by Covella, or any of its Affiliates or Sublicensees, of the corresponding clinical and
regulatory milestone (each, a “Clinical and Regulatory Milestone”) set out below
with respect to the first Existing Product or





 




			
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Other Product for each of the first three (3) Indications; provided that Clinical and
Regulatory Milestones for the Second Indication and the Third Indication shall only be triggered by
the achievement of the relevant milestone in an Indication set forth on Exhibit 1.25, which is not
the First Indication for such Product.




	 	 	 	 	 	 	 
	 	 	 	 	 	 	Milestone Payment
	 	 	Milestone Payment for	 	Milestone Payment	 	for Third
	Clinical and	 	First Indication	 	for Second Indication	 	Indication
	Regulatory Milestone	 	(“Column A”)	 	(“Column B”)	 	(“Column C”)
	1. [***]

	 	$[***] if an Existing

Product
	 	$[***] if an Existing

Product
	 	$[***] if an Existing

Product
	 
	 	 	 	 	 	 
	 

	 	$[***] if an Other

Product
	 	$[***] if an Other
 Product
	 	$[***] if an Other

Product
	 
	 	 	 	 	 	 
	2. [***]

	 	$[***] if an Existing

Product
	 	$[***] if an Existing

Product
	 	$[***] if an Existing

Product
	 
	 	 	 	 	 	 
	 

	 	$[***] if an Other

Product
	 	$[***] if an Other
 Product
	 	$[***] if an Other

Product
	 
	 	 	 	 	 	 
	3. [***]

	 	$[***] if an Existing

Product
	 	$[***] if an Existing

Product
	 	$[***] if an Existing

Product
	 
	 	 	 	 	 	 
	 

	 	$[***] if an Other

Product
	 	$[***] if an Other
Product
	 	$[***] if an Other

Product
	 
	 	 	 	 	 	 
	4. [***]

	 	$[***] if an Existing

Product
	 	$[***] if an Existing

Product
	 	$[***] if an Existing

Product
	 
	 	 	 	 	 	 
	 

	 	$[***] if an Other

Product
	 	$[***] if an Other
 Product
	 	$[***] if an Other

Product






          (b) Milestone Payment Calculations. Payments shall be due for each of the
four Clinical and Regulatory Milestones set forth in Section 5.2(a) as follows:




               (i) In
the first instance of any Existing Product or Other Product achieving
a particular Clinical and Regulatory
Milestone for the first Indication, regardless of whether such Indication is set forth on
Exhibit 1.25, the corresponding payment specified in
“Column A” (i.e., Milestone Payment for
First Indication) of the table in Section 5.2(a) above shall be due with respect to such milestone.
Only one payment shall be due for such Clinical and Regulatory Milestone under Column A of the
table in Section 5.2(a) above under this Agreement.





 




			
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               (ii) In the first instance of any Existing Product or Other Product subsequently
achieving the same Clinical and Regulatory Milestone for a Second Indication that is set forth on
Exhibit 1.25 (i.e., an Indication other than the Indication for which such Clinical and Regulatory
Milestone was already achieved as described in Section 5.2(b)(i) above and which is set forth in
Exhibit 1.25), the corresponding payment specified in “Column B” (i.e., Milestone Payment for
Second Indication) of the table in Section 5.2(a) above shall be due with respect to such
milestone. Only one payment shall be due for such Clinical and Regulatory Milestone under Column B
of the table in Section 5.2(a) above under this Agreement.



               (iii) In the first instance of any Existing Product or Other Product subsequently achieving
the same Clinical and Regulatory Milestone for a Third Indication
that is set forth on Exhibit 1.25
(i.e., an Indication other than the Indications for which such Clinical and Regulatory Milestone
was already achieved as described in Section 5.2(b)(i) and (ii) above), the corresponding payment
specified in “Column C” (i.e., Milestone Payment for Third Indication) of the table in Section
5.2(a) above shall be due with respect to such milestone. Only one payment shall be due for such
Clinical and Regulatory Milestone under Column C of the table in Section 5.2(a) above under this
Agreement.



               (iv) Following one payment for each Clinical and Regulatory Milestone due under Columns A, B
and C of the table in Section 5.2(a) above under this Agreement, no additional milestone payments
shall be due under this Section 5.2 for any subsequent achievement of such Clinical and Regulatory
Milestone by any Product.



               (v) Notwithstanding the foregoing, if clinical development of a particular Indication is
suspended after Covella has made the payment due under Section 5.2(a) above on the achievement of a
particular milestone for such Indication, there shall be no payment due under Section 5.2(a) upon
the accomplishment of the same milestone for a Second Indication provided that the development of
such Second Indication is continuing, and provided further that such Second Indication shall
thereafter be deemed the First Indication for any subsequent First Indication milestones not
achieved by the suspended Indication, and the next Indication to achieve any previously unachieved
Second Indication milestone shall trigger the Second Indication milestone payment under “Column B”
in the table in Section 5.2(a) above. Milestones for the Third Indication relative to the Second
Indication shall be payable in a similar manner as described herein. For the avoidance of doubt,
there shall be no retroactive adjustment of any previously paid milestone payments on account of
the replacement of one kind of Product by another kind of Product as the Product qualifying for a
First or Second Indication.



          (c) Cross-Credit for Milestone Payments and Sublicense Revenues.
Notwithstanding the provisions of Sections 5.2 and 5.6, if any milestone specified in Section 5.2
is also included as an event triggering the payment of Sublicense Revenues by a Sublicensee to
Covella under any sublicense (“Sublicensee Milestone Payment”), Covella shall only be
required to pay to Biogen Idec the amount of the applicable Clinical and Regulatory Milestone
payment under Section 5.2 plus the applicable percentage of the amount, if any, by which the
Sublicensee Milestone Payment exceeds the




-18-









 







applicable Clinical and Regulatory Milestone payment, in accordance with Section 5.6. Accordingly,
any such payment made under Section 5.2 by Covella shall be credited against (i.e., deducted from)
the base amount for purposes of calculating any Sublicense Revenues that would otherwise be due to
Biogen Idec under Section 5.6 for Sublicensee Milestone Payments.




          (d) Total Clinical and Regulatory Milestone Payments. In no event shall
the cumulative total amounts payable under Section 5.2(a) above exceed [***] Dollars ($[***]) in
the aggregate (i.e., [***] Dollars ($[***]) for the First Indication, assuming an Existing Product
is the first to achieve all applicable milestones, [***] Dollars ($[***]) for the Second
Indication, assuming an Existing Product is the first to achieve all applicable milestones, and
[***] Dollars ($[***]) for the Third Indication, assuming an Existing Product is the first to
achieve all applicable milestones).




          (e) [***].




     5.3 Commercial Milestones. In addition, Covella shall pay Biogen Idec the one-time
commercial milestone payments set forth below following the end of the calendar year in which the
corresponding commercial milestone (each, a “Commercial Milestone”) for the first to occur
commercial milestone with respect to Existing Products or Other Products set out below.



	 	 	 
	Commercial Milestones for Existing Products	 	Milestone Payment
	1. Cumulative Net Sales of Existing Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]
	 
	 	 
	2. Cumulative Net Sales of Existing Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]
	 
	 	 
	3. Cumulative Net Sales of Existing Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]
	 
	 	 
	4. Cumulative Net Sales of Existing Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]
	 
	 	 
	5. Cumulative Net Sales of Existing Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]
	 
	 	 
	6. Cumulative Net Sales of Existing Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]
	 
	 	 
	7. Cumulative Net Sales of Existing Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]








 




			
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	Commercial Milestones for Other Products	 	Milestone Payment
	1. Cumulative Net Sales of Other Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]
	 
	 	 
	2. Cumulative Net Sales of Other Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]
	 
	 	 
	3. Cumulative Net Sales of Other Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]
	 
	 	 
	4. Cumulative Net Sales of Other Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]
	 
	 	 
	5. Cumulative Net Sales of Other Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]
	 
	 	 
	6. Cumulative Net Sales of Other Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]
	 
	 	 
	7. Cumulative Net Sales of Other Products equal or exceed [***]
Dollars ($[***]):

	 	$[***]






     For the avoidance of doubt, the Commercial Milestones set forth in this Section 5.3 shall only
be paid upon the first occurrence of such cumulative Net Sales amounts to be achieved by all
Existing Products, taken cumulatively, and by all Other Products, taken cumulatively.



     5.4 Milestone Reports and Payments.



          (a) Covella shall notify Biogen Idec in writing within (i) [***] ([***]) calendar
days after the achievement of each milestone set out in Section 5.2 by Covella or its Affiliate or
(ii) the later of (A) [***] ([***]) calendar days after the achievement of each milestone set out
in Section 5.2 by a Sublicensee or (B) [***] ([***]) calendar days following receipt by Covella of
notice of such achievement from the Sublicensee or, if earlier, Covella’s becoming aware of such
achievement. Following receipt of such notice, Biogen Idec will notify Covella as to whether or
not it desires to receive equity in lieu of cash in accordance with Section 5.2(e). If Biogen Idec
elects to receive cash, Covella shall pay the appropriate amount to Biogen Idec within [***]
([***]) calendar days following receipt of such notice from Biogen Idec. If Biogen Idec elects to
receive equity, Covella shall issue such equity to Biogen Idec within [***] ([***]) calendar days
following receipt of such notice from Biogen Idec.




          (b) Covella shall notify Biogen Idec in writing within [***] ([***]) calendar
days after the achievement of each milestone set out in Section 5.3, and each such notice shall be
accompanied by the appropriate milestone payment.






 




			
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          (c) For the avoidance of doubt, the milestone payments set forth in Section 5.2
and 5.3 shall not be creditable against future royalties.




     5.5 Royalty Payments; Certain Adjustments.



          (a) Royalty Rate. Covella shall pay to Biogen Idec royalties on Net Sales
of each Product and Service at the rates set out below:




               (i) Existing Products. The royalty rates for each Existing Product and Service based
on such Existing Product shall be as follows:



	 	 	 
	Annual Net Sales of Product	 	Royalty Rate
	Portion of Annual Net Sales of each Existing Product and Services
based on such Existing Product up to and including [***] Dollars
($[***])

	 	[***]%
	 
	 	 
	Portion of Annual Net Sales of each Existing Product and Services
based on such Existing Product in excess of [***] Dollars ($[***]) and
up to and including [***] Dollars ($[***])

	 	[***]%
	 
	 	 
	Portion of Annual Net Sales of each Existing Product and Services
based on such Existing Product in excess of [***] Dollars ($[***]) and
up to and including [***] Dollars ($[***])

	 	[***]%
	 
	 	 
	Portion of Annual Net Sales of each Existing Product and Services
based on such Existing Product in excess of [***] Dollars ($[***])

	 	[***]%






               (ii) Other Products. The royalty rates for Other Products and Services based on such
Other Product shall apply on a Product-by-Product basis as follows: [***] percent ([***]%) of the
rates specified for Existing Products in Section 5.5(a)(i).



          (b) Certain Adjustments.




               (i) Third Party Payments. If Covella, its Affiliate or Sublicensee is required to pay
royalties to a Third Party with respect to an Existing Product or Service based on such Existing
Product under any agreement to license or acquire intellectual property used in the research,
development, manufacture, use, sale or performance of such Existing Product or Service based on
such Existing Product, Covella may deduct [***] percent ([***]%) of the royalties payable to each
such Third Party from the amounts payable to Biogen Idec with respect to such Existing Product or
Service based on such Existing Product pursuant to this Article V (and shall indicate such
deduction in the applicable royalty report pursuant to Section 7.1); provided that in no event
shall the royalties due to Biogen Idec pursuant to Section 5.5(a) with respect to such Existing
Product or Service based on such Existing Product be so reduced by more than [***] percentage
points ([***]%). For the avoidance of doubt, no





 




			
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royalty offset shall be available for any Other Product.




               (ii) One Royalty. No more than one royalty payment shall be due under this Agreement
with respect to a sale of a particular Product or Service (e.g., even if such Product or Service is
covered by multiple Valid Claims). No royalty shall be payable under this Article V with respect to
sales of Products or Services among Covella and its Affiliates and its Sublicensees for resale, nor
shall a royalty be payable under this Article V with respect to any Products transferred for use
in, or performance of Services in, research and/or development, in clinical trials, in
compassionate use programs, as donations to non-profit institutions or government agencies, as
promotional free samples or any similar disposition at or below the manufacturing cost of the
Product for which no other consideration is provided by the recipient.



               (iii) Combination Products. In the event that a Product is sold for a single price in
combination with another therapeutically active ingredient for which no royalty would be due
hereunder if sold separately, Net Sales from such combination product sales in a country for
purposes of calculating the amounts payable by Covella under this Section 5.5 shall be calculated
by multiplying the Net Sales of the combination product by [***]. In the event that separate sales
of such Product (without the additional therapeutically active ingredient) or such additional
therapeutically active ingredient were not made during the applicable royalty period, Net Sales
shall be calculated [***]. Any such estimates shall be determined using criteria approved by Biogen
Idec, such approval not to be unreasonably withheld, conditioned or delayed. Such estimates shall
be reported to Biogen Idec with the reports to be provided pursuant to Section 7.1 hereof. If the
Parties are unable to agree upon criteria to determine commercial value or the commercial value,
the Parties shall submit the matter to arbitration pursuant to Section 15.6, except that the
arbitrator shall use all reasonable efforts to complete any such arbitration within two (2) months
from the issuance of notice of a referral of such dispute and the Parties will cooperate in good
faith to permit such timing.



               (iv) Generically Equivalent Products. With respect to each Existing Product, if there
are one or more generically equivalent products that compete with such Existing Product in a given
country (or in the European Union, which shall be treated as a single market for purposes of this
Section 5.5(b)(iv)) where there is no issued Valid Claim covering the sale of such Existing Product
in such country, and such generically equivalent product(s) have a combined market share of at
least [***] ([***]%) of the market (in units) for such Existing Product in such country (or
throughout the European Union, as the case may be), then (i) the applicable royalty for Net Sales
of such Existing Product in such country (or throughout the European Union, as the case may be)
shall be reduced to [***] percent ([***]%) of the royalties that would otherwise be due under this
Section 5.5, and (ii) no royalty reduction pursuant to Section 5.5(b)(i) shall apply, if otherwise
applicable.



          (c) Royalty Term. Covella’s obligation to pay royalties under this
Section 5.5 shall continue with respect to sales of a Product or Service in a particular country
until the date which is the later of: (i) expiration of the last Valid Claim in such country that
would be infringed by the sale of such Product or Service in such country; or (ii) [***] ([***])
years after the First Commercial Sale of a






 




			
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Product (i.e., the first Product) or Service in such country. Thereafter, no further
royalties shall be due with respect to such Product or Service in such country.




     5.6 Payments With Respect to Sublicense Revenue. In the event Covella or an
Affiliate of Covella sublicenses under Section 2.5, Covella shall pay Biogen Idec a portion of any
Sublicense Revenues resulting from sublicense agreements executed by Covella within the first [***]
([***]) years after the Effective Date, as set forth below:



          (a) If a sublicense agreement is executed in the first [***] ([***]) months after
the Effective Date, Covella shall pay Biogen Idec [***] percent ([***]%) of Sublicense Revenue
actually received by Covella under such sublicense agreement (including any extensions, amendments
and restatements thereof), regardless of when such Sublicense Revenue is accrued or received by
Covella;




          (b) if a sublicense agreement is executed in the second [***] ([***]) months after
the Effective Date, Covella shall pay Biogen Idec [***] percent ([***]%) of Sublicense Revenue
actually received by Covella under such sublicense agreement (including any extensions, amendments
and restatements thereof), regardless of when such Sublicense Revenue is accrued or received by
Covella; and




          (c) if a sublicense agreement is executed in the third [***] ([***]) months after
the Effective Date, Covella shall pay Biogen Idec [***] percent ([***]%) of Sublicense Revenue
actually received by Covella under such sublicense agreement (including any extensions, amendments
and restatements thereof), regardless of when such Sublicense Revenue is accrued or received by
Covella.




          (d) Covella shall have no obligation to share Sublicense Revenues with Biogen Idec
resulting from any sublicense agreement executed after [***] ([***]) months after the Effective
Date.




ARTICLE VI




PAYMENTS



     6.1 Royalty and Sublicense Revenue Payment Terms. Royalties and, if applicable,
Sublicense Revenue that have accrued during the period covered by each report provided pursuant to
Section 7.1 shall be due and payable on the date such report is due.



     6.2 Payment Method. Unless otherwise expressly stated in this Agreement, all amounts
specified in, and all payments to be made under, this Agreement shall be in United States Dollars
by wire transfer in immediately available funds to a U.S. account designated by the receiving
Party, or by other mutually acceptable means. If any currency conversion shall be required in
connection with the payment of any royalties or other amounts under this Agreement, such conversion
shall be made by using the average of the interbank exchange rates for the purchase and sale of
United States Dollars reported by The Wall





 




			
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Street Journal (U.S., Western Edition) on the last business day of the calendar
quarter to which such royalty or other payments relate.




     6.3 Exchange Control. If at any time legal restrictions prevent the prompt remittance
of part or all royalties or other amounts with respect to any country in the Territory where
Products or Services are sold, Covella shall have the right, at its option and upon written notice
to Biogen Idec, to make such payments by depositing, or causing to be deposited, the amount of such
payments in local currency to Biogen Idec’s account in a bank or other depository designated by
Biogen Idec in such country. When in any country in the Territory, legal restrictions prohibit both
the transmittal and the deposit of royalties on sales in such country, royalty payments shall be
suspended for as long as such legal restrictions are in effect and as soon as such legal
restrictions cease to be in effect, all royalties that Covella would have been under an obligation
to transmit or deposit but for the legal restrictions shall forthwith be deposited or transmitted,
to the extent allowable.



     6.4 Overdue Payments. In the event the initial license fee, any milestone payment,
royalty payment or payment of Sublicense Revenues payable by Covella to Biogen Idec under this
Agreement is not made when due, such outstanding payment shall accrue interest (from the date such
payment is due through and including the date upon which full payment is made) at a rate of [***]
percent ([***]%) per month from the due date until paid in full, provided that in no event shall
said annual rate exceed the maximum interest rate permitted by law in regard to such payments. Such
royalty payment when made shall be accompanied by all interest so accrued. Said interest and the
payment and acceptance thereof shall not negate or waive the right of Biogen Idec to any other
remedy, legal or equitable, to which it may be entitled because of the delinquency of the payment.



     6.5 Tax Withholding. 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). Covella
shall make any applicable withholding payments due on behalf of Biogen Idec and shall provide
Biogen Idec upon request with such written documentation regarding any such payment as available to
Covella relating to an application by Biogen Idec for a foreign tax credit for such payment with
the United States Internal Revenue Service.





 




			
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ARTICLE VII




REPORTS, RECORDS AND ACCOUNTING



     7.1 Reports. After the first receipt by Covella of Sublicense Revenue pursuant to
Section 5.6 or the First Commercial Sale, whichever is earlier, Covella shall furnish to Biogen
Idec a written report for each calendar quarter during the remaining term of this Agreement
showing, on a country-by-country and Product-by-Product (or Service-by-Service) basis:


          (a) the gross sales of all Products and Services sold by Covella, its Affiliates
and Sublicensees during such calendar quarter and the calculation of Net Sales of the Products and
Services from such gross sales;


          (b) the applicable royalty rates and the royalties, payable in United States
Dollars, which shall have accrued under this Agreement based upon such Net Sales;


          (c) the amount of any Sublicense Revenue received by Covella during such calendar
quarter, if relevant;


          (d) the exchange rates used in determining the amount of royalties or Sublicense
Revenue, as applicable, payable in United States Dollars, as more specifically provided in Section
6.2; and


          (e) any reductions to or deductions from payments taken by Covella in accordance
with this Agreement.



     Reports to be provided by Covella to Biogen Idec under this Section 7.1 shall be due [***]
([***]) calendar days following the end of each calendar quarter (unless Covella has sublicensed
rights to commercialize Products or Services, in which event such reports shall be due within [***]
([***]) calendar days following the end of each calendar quarter). If for any quarter following the
first receipt by Covella of Sublicense Revenue pursuant to Section 5.6 or the First Commercial
Sale, whichever is earlier, there were no Net Sales, and no Sublicense Revenues were received by
Covella in such quarter, a report stating such facts shall be due within [***] ([***]) calendar
days following the end of such quarter. A responsible financial officer of Covella (or that
officer’s responsible designee) shall certify in writing that each such report is correct and
complete.



     7.2 Records. Covella shall keep, and shall require that its Affiliates and
Sublicensees keep, complete and accurate books of account and records in sufficient detail to
enable the amounts payable under this Agreement to be determined. Such books and records shall be
kept at the principal place of business of Covella, its Affiliate or Sublicensee, as the case may
be, for at least [***] ([***]) months following the end of the calendar year to which such books
and records pertain.





 




			
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     7.3 Audits.


          (a) Audit Rights. Upon reasonable prior written notice from Biogen Idec
and not more than once in each calendar year nor more frequently than once with respect to records
covering any specific period of time, Covella shall permit, and shall require its Affiliates and
use Commercially Reasonable Efforts to require its Sublicensees, to permit, an independent
certified public accounting firm of nationally recognized standing selected by Biogen Idec and
reasonably acceptable to Covella to have access during normal business hours to such books of
account and records of Covella, and its Affiliates and Sublicensees, at such party’s principal
place of business, as may be reasonably necessary to verify the accuracy of the reports and
milestone payments provided by Covella pursuant to Section 7.1 for any calendar year ending not
more than [***] ([***]) months prior to the date of such request. If Covella is unable to obtain
from any Sublicensee such a right for Biogen Idec to audit the books of account and records of
such Sublicensee, Covella shall obtain for itself a reasonably comparable right for Covella to
have an independent certified public accounting firm of nationally recognized standing inspect and
audit such Sublicensee’s books and records, and (if Covella has not conducted such audit within
the preceding twelve (12) months and provided the results thereof to Biogen Idec in accordance
with Section 7.3(b)) shall exercise such audit rights on behalf and at the expense of Biogen Idec
upon Biogen Idec’ written request, using an independent certified public accounting firm of
nationally recognized standing selected by Covella and reasonably acceptable to Biogen Idec, and
disclose the results of any such audit to Biogen Idec in accordance with Section 7.3(b).


          (b) Audit Results. If as a result of such audit, it is established that
additional royalties, milestone payments and/or Sublicense Revenue were owed to Biogen Idec during
the period covered by such audit pursuant to Section 7.3(a), Covella shall promptly remit to
Biogen Idec the amount of such additional royalties, milestone payments and/or Sublicense Revenue,
together with interest on such amount which shall be calculated pursuant to Section 6.4. The fees
charged by such accounting firm in connection with any audit pursuant to this Section 7.3 shall be
paid by Biogen Idec; provided, however, that if a discrepancy in favor of Biogen Idec of more than
[***] percent ([***]%) of the payments due hereunder for any calendar year within the period being
audited is established, then Covella shall pay the fees and expenses charged by such accounting
firm in connection with such audit.


          (c) Materiality. For the avoidance of doubt, any material breach of this
Section 7.3 shall be deemed to be a material breach of this Agreement.



     7.4 Confidential Financial Information. Biogen Idec shall treat all financial
information subject to review under this Article VII as the Proprietary Information of Covella, and
shall cause its accounting firm to retain all such financial information in confidence, except to
the extent necessary for Biogen Idec to enforce its rights under this Agreement.



     7.5 [***]





 




			
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ARTICLE VIII




[***]



     8.1 [***]



     8.2 [***]



ARTICLE IX




RIGHT OF NEGOTIATION



     9.1 Right of Negotiation. Covella hereby grants to Biogen Idec a right of negotiation (the
“Right of Negotiation”) with respect to each Subject Transaction on the following terms:


          (a) [***]


          (b) [***]


          (c) [***]




                 (i) [***]


          (d) [***]



ARTICLE X




CONFIDENTIALITY



     10.1 Proprietary Information. Except as otherwise provided in this Article X, during the term
of this Agreement and for a period of [***] ([***]) years thereafter, each Party (the “Recipient”)
shall maintain in confidence and use only for purposes of this Agreement any confidential
information, data and materials supplied to such Party by the other
Party (the “Disclosing Party”)
under this Agreement; provided that, unless the confidentiality of any information, data or
materials is expressly provided for in this Agreement, if any such information, data or materials
are in tangible form, they are marked “Confidential” or “Proprietary,” or if disclosed orally, they
are identified as confidential or proprietary when disclosed and are confirmed in writing as
confidential or proprietary within [***] ([***]) calendar days following such disclosure (such
information, data and materials so disclosed, collectively






 




			
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“Proprietary Information”). The Biogen Idec Know-How, the Manufacturing Know-How
and any unpublished patent application within the Biogen Idec Patents shall be deemed to be the
Proprietary Information of Biogen Idec without regard to the foregoing marking requirements, and
without limiting or in any way affecting the licenses set forth in Article II. The reports
delivered to Biogen Idec under Section 7.1, and data and results from clinical trials of Products
or other research or development involving Services conducted by Covella and its Affiliates and
Sublicensees, shall be deemed to be the Proprietary Information of Covella without regard to the
foregoing marking requirements. The obligations of the Recipient under this Article X not to
disclose or use Proprietary Information received from the Disclosing Party shall not apply,
however, to the extent that any such information, data or materials:



          (a) are or become generally available to the public, or otherwise part of the
public domain, other than by acts or omissions of the Recipient in breach of this Agreement;


          (b) are disclosed to the Recipient, other than under an obligation of
confidentiality, by a Third Party who had no obligation to the Disclosing Party not to disclose
such information to others;


          (c) were already rightfully in the possession of the Recipient, other than under
an obligation of confidentiality, prior to disclosure by the Disclosing Party, as shown by
Recipient’s written records existing prior to such disclosure; or


          (d) are subsequently and independently developed by the Recipient without use of,
or reference to, the Proprietary Information of the Disclosing Party, as shown by written records
prepared contemporaneously with such disclosure.



     10.2 Permitted Disclosures. To the extent it is reasonably necessary or appropriate to
fulfill its obligations or exercise its rights under this Agreement:


          (a) a Recipient may disclose Proprietary Information which it is otherwise
obligated under this Article X not to disclose, to its legal advisers who are subject to a duty of
confidentiality to the Recipient, to its Affiliates, and, in each case whether actual or potential,
to: Sublicensees or other collaboration partners, assignees, contractors (including manufacturers
and researchers), acquirers, investors, and medical, scientific, business and financial advisors,
on a need-to-know basis in accordance with such Recipient’s exercise of its rights or performance
of its obligations under this Agreement; provided that such persons agree to be bound by
obligations of confidentiality with respect to such Proprietary Information which are substantially
similar in scope and duration as those set forth in this Article X.


          (b) a Recipient may disclose Proprietary Information of the Disclosing Party to
government or other regulatory authorities to the extent that such disclosure is (i) required by
applicable law (including all applicable securities laws), regulation, agency or court order, or
(ii) is reasonably necessary in connection with the prosecution of any Patent, to obtain any
authorization to conduct




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clinical studies, or to obtain any Approval; provided that, in case of any disclosures required as
described in clause (i) above, the Recipient shall provide reasonable advance notice to the
Disclosing Party to allow such Party to oppose such disclosure or to request confidential
treatment of such Proprietary Information; provided, further, that Biogen Idec shall only be
permitted to disclose Proprietary Information of Covella under clause (ii) above with respect to
Biogen Idec Patents exclusively licensed hereunder and for no other purpose.




     10.3 Manufacturing Know-How. In addition to the obligations of confidentiality
applicable to the Confidential Information of Biogen Idec pursuant to this Article X, until such
time as Biogen Idec ceases to maintain the Manufacturing Know-How as a trade secret, Covella (a)
shall maintain in confidence all Manufacturing Know-How, and (b) shall not use such Manufacturing
Know-How for any purpose except in manufacturing or having manufactured Products or Services under
the license granted under Section 2.2 of this Agreement or pursuant to the sublicense rights of
Section 2.4 of this Agreement.



     10.4 Prior Agreement. This Agreement supersedes the Mutual Confidentiality Agreement
between Covella and Biogen Idec, Inc., a Delaware corporation and a Controlled Affiliate of Biogen
Idec, dated February 1, 2008 (the “Mutual Confidentiality Agreement”). All information exchanged
between the Parties under the Mutual Confidentiality Agreement shall be deemed to have been
disclosed under this Agreement on a going-forward basis and shall be subject to the terms of this
Article X as of the Effective Date.



     10.5 Terms of Agreement. The terms of this Agreement shall not be disclosed by either
Party without the prior written consent of the other Party, which shall not be unreasonably
withheld; provided, however that either Party may make such a disclosure (a) to the extent required
by law or by the requirements of any nationally recognized securities exchange, quotation system or
over-the-counter market on which such Party has its securities listed or traded, or (b) to any
Affiliates, legal advisors, accountants, and, in each case whether actual or potential, to:
contractors (including contract manufacturers and researchers); licensees, sublicensees or other
collaboration partners; acquirers, investors; lenders and other potential financing sources, who
are obligated to keep such information confidential. In the event that such disclosure is required
as described in clause (a) of the preceding sentence, the disclosing Party shall make reasonable
efforts to provide the other Party with notice beforehand and to coordinate with the other Party
with respect to the wording, timing and any redactions of any such disclosure.



     10.6 Press Release. Covella, upon or after the Effective Date, shall have the right to
issue a press release with respect to this transaction, subject to Biogen Idec’s prior written
consent, which shall not be unreasonably withheld, conditioned or delayed. Such press release shall
not include any financial terms of this transaction. Once such press release or any other written
statement is approved for disclosure by Biogen Idec, Covella may make subsequent public disclosure
of the contents of such statement without the further approval of Biogen Idec. Notwithstanding the
foregoing, as of the Effective Date, both Parties shall have the right to disclose to Third
Parties, without the need for a



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confidentiality agreement, the following information: (i) Biogen Idec has exclusively licensed the
rights to its Anti-VLA1 Antibody Program to Covella, and/or (ii) Biogen Idec is a stockholder of
Covella.




ARTICLE XI




INTELLECTUAL PROPERTY AND INFRINGEMENT



     11.1 Ownership of Inventions.


          (a) Modified Cell Lines and Antibodies.



               (i) In the event that Covella (or its Affiliate or Sublicensee) modifies any cell line
received from Biogen Idec as Biogen Idec Know-How or Manufacturing Know-How under this Agreement,
Biogen Idec shall solely own all intellectual property rights in and to such modified cell lines
and antibodies produced by such modified cell lines (other than antibodies derived from the Biogen
Idec Know-How and owned by Covella as set forth in Section 11.1(a)(ii)), and all derivatives of
such materials, whether such materials result from the activities of Covella, its Affiliates or any
Sublicensee (“Modified Know-How”). Covella, on behalf of itself and its Affiliates, hereby makes
all assignments, and agrees to execute all documents, necessary to perfect Biogen Idec’s ownership
of such intellectual property rights as set forth in the preceding sentence, and shall require its
Sublicensees to make all such necessary assignments and execute all such necessary documents;
provided, however, that (i) Covella and its Affiliates and Sublicensees shall retain an exclusive
license under such intellectual property rights to use (and authorize others to use) Modified
Know-How (which shall be deemed to be Biogen Idec Know-How or Manufacturing Know-How according to
the categorization of the original cell line) in the exercise of licenses or rights conveyed under
this Agreement without additional payment to Biogen Idec.



               (ii) As between the Parties, Covella (or its Affiliates or Sublicensees) shall solely own all
intellectual property rights, other than pre-existing Patents or other intellectual property rights
of Biogen Idec or its licensors, in any inventions or improvements made by Covella (or its
Affiliates or Sublicensees) after the Effective Date relating to or comprising (A) anti-VLA1
integrin antibodies produced by cell lines within the Biogen Idec Know-How, and all derivatives of
such materials (including anti-VLA1 integrin antibodies and fragments thereof produced by modified
versions of such cell lines and derivatives thereof), and (B) genetic materials encoding the
foregoing.


          (b) General. Except as expressly set out in Section 11.1(a), as between
the Parties, title to all inventions and other intellectual property made solely by personnel of
Covella in connection with this Agreement shall be owned by Covella, and title to all inventions
and other intellectual property made solely by personnel of Biogen Idec in connection with this
Agreement shall be owned by Biogen Idec.



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     11.2 Patent Prosecution and Maintenance.


          (a) By Covella. Covella shall have the right, at its expense, to control
the preparation, filing, prosecution and maintenance solely of the Prosecution Patents. As used in
this Section 11.2, “prosecution” shall include interferences, re-examinations, reissues,
oppositions, obtaining certificates of correction, patent term extensions, Supplementary Protection
Certificates, and the like. Covella shall consult with Biogen Idec in good faith regarding the
preparation, filing, prosecution and maintenance of the Prosecution Patents. Covella shall provide
Biogen Idec with semiannual updates on the status of prosecution of the Prosecution Patents in
every jurisdiction and shall, in any event, provide notice to Biogen Idec of any action that may be
taken with respect to a Prosecution Patent (i) with the U.S. Patent and Trademark Office at least
[***] calendar days prior to the deadline for such action, and (ii) with or any foreign patent
office at least [***] calendar days prior to the deadline for such action, or if shorter, the
maximum period allowed by such foreign patent office. Covella shall have the right to apply for an
extension of the term of any Patent within the Prosecution Patents if available under the Drug
Price Competition and Patent Term Restoration Act of 1984 and/or European, Japanese and other
foreign equivalents of this law, including any foreign laws extending marketing exclusivity for a
Product or Service, such as a Supplementary Protection Certificate. Covella shall, at a minimum, to
the extent supported by the disclosure of each Prosecution Patent, diligently prosecute claims
within the Prosecution Patents covering the monoclonal antibody hAQC2 composition of matter and
claims within the Prosecution Patents covering the use of anti-VLA-1 antibodies in the treatment of
the following indications: [***] (the “Core Claims”) within the jurisdictions set forth in Exhibit
10.2A (the “Required Countries”).


          (b) By Biogen Idec. If Covella determines not to prosecute any claim or
Patent within the Biogen Idec Patents (other than prosecution of the Core Claims in the Required
Countries, for which, for the avoidance of doubt, Covella has the obligation of prosecution), then
Covella shall provide Biogen Idec with written notice of such decision at least [***] ([***])
calendar days prior to the deadline for filing any such prosecution action for any claim or Patent
or the date on which the abandonment of any such claim or Patent would become effective. In such
event, Biogen Idec shall have the right, but not the obligation, at its option and expense, to
control the preparation, filing, prosecution and maintenance of such claim or Patent. If Covella or
any of its Affiliates or Sublicensees subsequently uses, makes, offers for sale, sells or imports a
Product in any jurisdiction in which Biogen Idec has assumed patent prosecution under this Section
11.2(b), Covella shall, at the time of First Commercial Sale in such jurisdiction, reimburse Biogen
Idec for the out-of-pocket costs of such patent prosecution actually incurred, which costs shall
not be offset against any other amounts due under this Agreement. For the avoidance of doubt,
Biogen Idec shall, at all times, have exclusive control over the prosecution of the Reserved
Prosecution Patents, including enforcement rights, at its own expense.


          (c) Cooperation. Each Party shall cooperate with the other Party in
connection with activities relating to the preparation, filing, prosecution and maintenance of the
Biogen Idec Patents undertaken by the other Party pursuant to this Section 11.2, including: (i)
making available to such other Party in a timely manner any documents or information reasonably
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such other Party’s preparation, filing, prosecution and maintenance of any Biogen Idec
Patent; and (ii) if and as appropriate, signing (or causing to have signed) all documents relating
to the preparation, filing, prosecution and maintenance of any Biogen Idec Patent by such other
Party. Each Party shall also promptly provide to the other Party all information reasonably
requested by such other Party with regard to such Party’s activities pursuant to this Section
11.2.



     11.3 Enforcement.


          (a)Notice. In the event either Party learns of any infringement of the
Biogen Idec Patents by the manufacture, use, sale, offer for sale or importation of any product or
service in the Field (an “Infringement”), it shall promptly provide written notice to the other
Party of such Infringement and shall supply such other Party with all evidence it possesses
pertaining to such Infringement.


          (b) Infringement Action. Covella (directly or through its nominee) shall
have the first right, but not the obligation, to seek to abate any Infringement of a Prosecution
Patent, or to file suit against an infringing party. In the event that Covella or its nominee
does not, within [***] ([***]) calendar days from date of a request by Biogen Idec to do so, take
action to abate such Infringement, Biogen Idec shall have the right, but not the obligation, to
enforce the Biogen Idec Patents in connection with such Infringement in its own name, and at its
own cost and expense. For the avoidance of doubt, Biogen Idec has the exclusive right to seek to
abate any Infringement of Reserved Prosecution Patents.


          (c) Cooperation. In any suit, action or other proceeding in connection
with an Infringement (an “Infringement Action”), the Party assuming the primary role in the
Infringement Action (“Controlling Party”) shall keep the non-Controlling Party reasonably informed
of the progress of such Infringement Action. The non-Controlling Party shall cooperate fully with
the Controlling Party, including by joining as a nominal party and executing such documents as the
Controlling Party may reasonably request, provided that Biogen Idec shall not be required to
transfer any right, title or interest in or to any of the Biogen Idec Patents to Covella or any
Third Party to confer standing to bring an Infringement Action. In any case, the non-Controlling
Party shall have the right, even if not required to be joined, to participate in any Infringement
Action with counsel of its own choice at its own expense.


          (d) Costs and Recoveries. The Controlling Party with respect to any
Infringement Action may not settle any such action, or otherwise consent to any adverse judgment in
any such action, that restricts the scope of, or admits the unenforceability or invalidity of, any
Biogen Idec Patent without the express written consent of the non-Controlling Party, which consent
shall not be unreasonably withheld. 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 11.3 shall applied as follows:



               (i) First, to reimburse the Parties for their
respective costs and expenses (including reasonable attorneys’ fees and costs) incurred in
prosecuting such Infringement Action;





 




			
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portions.




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               (ii) Second, if and to the extent lost sales are specifically determined by the
adjudicating authority, to Covella in reimbursement for lost sales (net of royalties) associated
with Products or Services and to Biogen Idec in reimbursement for lost royalties owing hereunder
based on such lost sales;



               (iii) Third, any amounts remaining shall be allocated [***] percent
([***]%) to the Controlling Party and [***] percent ([***]%) to the non-Controlling Party.



     For the avoidance of doubt, if any settlement results in the granting to the alleged infringer
of a sublicense of any of the Biogen Idec Technology with running royalties payable on
post-settlement sales by the alleged infringer, such alleged infringer shall be deemed to be a
Sublicensee and such royalties on post-settlement sales (x) shall be subject to all applicable
royalty obligations hereunder, and (y) shall not be subject to this Section 11.3(d); provided, that
any upfront or milestone payments or the like shall be deemed monetary awards and subject to this
Section 11.3(d).



     11.4 Defense of Infringement Claims. If any Product manufactured, used or sold, or
any Service performed, by Covella, its Affiliates, or Sublicensees, becomes the subject of a Third
Party’s claim or assertion of infringement of a Patent relating to the manufacture, use, sale,
offer for sale or importation of such Product or Service, the Party first having notice of the
claim or assertion shall promptly notify the other Party, and the Parties shall promptly confer to
consider the claim or assertion and the appropriate course of action. Any such claim naming Biogen
Idec as a defendant shall be subject to Section 14.1. In any event, each Party shall reasonably
assist the other Party and cooperate in connection with any litigation in which such Party is not
named as a defendant, at the defending Party’s request and expense.



     11.5 Labeling and Promotional Materials. Subject to applicable laws and regulations,
labeling on all Products and Services sold by or on behalf of Covella, its Affiliates, or
Sublicensees pursuant to this Agreement and on all package inserts will identify Biogen Idec as
licensor of the Biogen Idec Patents and will comply with all patent marking requirements as
specified in 35 USC § 287.





 




			
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Securities and Exchange Commission. Confidential treatment has been requested with respect to
the omitted portions.




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ARTICLE XII




TERM AND TERMINATION



     12.1 Term. This Agreement shall commence on the Effective Date and, unless terminated
earlier pursuant to Sections 8.1, 12.2, 12.3 or 12.4 shall continue in full force and effect on a
country-by-country basis until no further royalties would be due in such country (the “Term”). Upon
expiration (but not early termination of this Agreement) in a given country in accordance with this
Section 12.1, the licenses and rights granted by Biogen Idec under this Agreement will continue on
a fully paid-up, royalty-free basis in such country.



     12.2 Termination for Material Breach. If either Party materially breaches this
Agreement at any time, the non-breaching Party shall have the right to terminate this Agreement by
written notice to the breaching Party, if such material breach is not cured within ninety (90)
calendar days after written notice is given by the non-breaching Party to the breaching Party
specifying the material breach. If the material breach set forth in such written notice is not
reasonably capable of cure within ninety (90) calendar days, the breaching Party shall be entitled
to an additional ninety (90) calendar days to attempt to cure such material breach, provided that
within the initial ninety (90) day period the breaching Party has submitted a cure plan that is
reasonably acceptable to the non-breaching Party.



     12.3 Termination for Financial Insecurity. In the event that either Party files for
protection under bankruptcy laws, makes an assignment for the benefit of creditors, appoints or suffers
appointment of a receiver or trustee over its property, files a petition under any bankruptcy or
insolvency act or has any such petition filed against it which is not discharged within ninety (90)
calendar days of the filing thereof, then the other Party may terminate this Agreement effective
immediately upon written notice to such Party.




     12.4
Termination by Covella or Biogen Idec.


          (a) This Agreement may be terminated by Covella, in its sole discretion, upon
sixty (60) calendar days written notice to Biogen Idec.


          (b) This Agreement may be terminated by Biogen Idec, in its sole discretion, upon
written notice to Covella at any time after the date (the “End Date”) which is thirty (30)
calendar days following Biogen Idec’s delivery of the initial stability testing of the Existing
Inventory pursuant to the Services and Supply Agreement establishing that the drug substance
within the Existing Inventory qualifies as Compliant Material, if and only if Biogen Idec has not
received, on or prior to the End Date, the equity consideration under the terms required by and in
full satisfaction of Section 5.1 of this Agreement. This Agreement may be terminated by Biogen
Idec pursuant to Section 8.1 herein, if such provision is applicable.



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     12.5 Effect of Expiration or Termination.


          (a) Upon termination of this Agreement in accordance with Sections 8.1, 12.2,
12.3 or 12.4:



               (i) The licenses and rights granted by Biogen Idec to Covella under Article II will
immediately terminate; provided that, any sublicenses granted in accordance with Section 2.5 prior
to the date of the corresponding notice of breach (in the case of Section 12.2) or termination (in
the case of Section 8.1, 12.3 or 12.4) shall survive if the relevant Sublicensee agrees in writing
to be bound by the terms of this Agreement as such terms apply to such Sublicensee (in which event,
such Sublicensee will be deemed a direct licensee of Biogen Idec); provided, further, that any such
Sublicensee shall only be responsible for any payments that become due as a result solely of such
Sublicensee’s activities after the effective date of any such termination. For clarity,
Sublicensees who agree to be bound by the terms of this Agreement pursuant to this Section
12.5(a)(i) will not be responsible for: (A) any payments due to Biogen Idec under Section 5.6 and
that Section shall be terminated upon the termination of this Agreement between Covella and Biogen
Idec; nor (B) any milestone payments already paid by Covella prior to the effective date of any
such termination, nor any milestone payments that may accrue as a result of the activities of any
other Sublicensee after the effective date of any such termination of this Agreement; but for
purposes of determining the amount of milestone payments under Section 5.2 and/or Section 5.3, any
milestone that was met and for which payment has been made by or on behalf of Covella prior to such
termination shall be deemed to have been paid by the Sublicensee.



               (ii) Covella shall return to Biogen Idec all written Biogen Idec Know-How and Manufacturing
Know-How, and all copies and any other tangible and electronic embodiments thereof in Covella’s
possession, subject to the rights of any surviving Sublicensee.



     12.6 Survival of Certain Obligations. The expiration or termination of this
Agreement for any reason shall not relieve either Party of any obligation accruing on or prior to
such expiration or termination, or which is attributable to a period prior to such expiration or
termination, nor preclude either Party from pursuing any rights and remedies it may have under this
Agreement, or at law or in equity, which accrued or are based upon any event occurring prior to
such expiration or termination. The following provisions shall survive the expiration or
termination of this Agreement for any reason: Article I (Definitions); Article VI (Payments);
Article X (Confidentiality); Article XIV (Indemnification and Insurance); Article XV
(Miscellaneous); Section 5.1 (Equity Grant); Section 7.2 (Records); Section 7.3 (Audits); Section
11.1 (Ownership of Inventions); Section 12.5 (Effect of Termination); Section 13.4 (Disclaimer);
and this Section 12.6 (Survival of Certain Obligations).



     12.7 Rights in Bankruptcy. All rights and licenses granted under or pursuant
to this Agreement by either Party are, and will otherwise be deemed to be, for purposes of Section
365(n) of Title 11 of the United States Code (the “U.S. Bankruptcy Code”), licenses of rights
to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code.



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ARTICLE XIII




REPRESENTATIONS AND WARRANTIES



     13.1 General Representations and Warranties. Each Party represents and warrants to the
other Party that, as of the Effective Date:


          (a) it is a corporation duly organized and validly existing under the laws of the
jurisdiction in which it is incorporated;


          (b) it has full corporate power and authority, and has obtained all approvals,
permits and consents necessary, to enter into this Agreement and to perform its obligations
hereunder;


          (c) this Agreement is legally binding upon it and enforceable in accordance with
its terms; and


          (d) the execution, delivery and performance of this Agreement does not conflict
with any agreement, instrument or understanding, oral or written, to which it is a party or by
which it may be bound, nor violate any material law or regulation of any governmental or regulatory
authority having jurisdiction over it.



     13.2 Additional Warranties of Biogen Idec. Biogen Idec hereby covenants, represents
and warrants to Covella that:


          (a) Biogen Idec has the right to grant the licenses to Covella that are set forth
in this Agreement and owns or Controls all right, title and interest in and to the Biogen Idec
Technology;


          (b) Biogen Idec has not granted any rights in the Biogen Idec Technology that are
inconsistent with or that limit the rights granted to Covella under this Agreement;


          (c) The Biogen Idec Know-How has been obtained, evaluated, analyzed, reviewed and
prepared in a manner consistent with Biogen Idec programs for other products at a similar stage of
development; and


          (d) A true and complete copy of the Boys Town Agreement as of the Effective Date
is attached hereto as Exhibit 13.2D. Biogen Idec has not, prior to the Effective Date,
sublicensed, assigned or otherwise transferred any of the rights which were granted to it under the
Boys Town Agreement.



     13.3 Additional Warranties of Covella. Covella hereby covenants, represents and
warrants to Biogen Idec that:



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          (a) Covella has delivered to Biogen Idec true and complete copies of: (i) all documents,
agreements, instruments and term sheets relating to its founding and initial capitalization
including, without limitation, relating to any debt issued or contemplated to be issued thereby
and any stockholder, investor, voting or similar agreements entered into by Covella, in respect
thereof, (ii) any term sheet (whether binding or not and whether accepted or not) received by
Covella in respect of its initial issuance of its preferred stock, if any, and (iii) the currently
effective Certificate of Incorporation and bylaws of Covella, in all cases, as such agreements are instruments have
been amended through the Effective Date;


          (b) The development, testing, and use by Covella, its Affiliates or Sublicensees,
including in clinical trials, of any products or materials comprising, or incorporating, any
Compliant Materials shall comply with applicable cGMP and all other applicable laws, rules,
regulations or requirements;


          (c) Covella (i) shall use any products or materials supplied by Biogen Idec
hereunder solely for purposes of research and development, clinical trials, and other
non-commercial purposes, and (ii) shall not use such products or materials in the commercial form
of any Product, nor permit any third party to do so. The preceding sentence shall not apply to any
cell lines owned solely by Biogen Idec, [***]; and


          (d) Covella has performed the fair market value determination required of Covella
by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules promulgated
thereunder (16 C.F.R. 801.1 et seq.) and concluded that the transactions contemplated by this
Agreement do not meet the reporting requirements thereunder.



     13.4 DISCLAIMER. Nothing in this Agreement is or shall be construed as a warranty or
representation by either Party as to the validity or scope of any Patent licensed hereunder or a
warranty or representation that anything made, used, sold or otherwise disposed of under any
license granted pursuant to this Agreement is or will be free from infringement of patents,
copyrights, and other rights of third parties. Except as expressly set forth in this Agreement,
NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED. NEITHER PARTY REPRESENTS OR WARRANTS THAT THE ANTI-VLA1 ANTIBODY PROGRAM WILL BE
SUCCESSFUL OR HAVE ANY PARTICULAR RESULT, OR THAT ANY TECHNOLOGY TRANSFERRED HEREUNDER WILL BE
SUFFICIENT TO ADVANCE THE ANTI-VLA1 ANTIBODY PROGRAM OR PRODUCE ANY PARTICULAR RESULT. THERE ARE NO
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF
NON-INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS OF THIRD PARTIES, OR ANY
OTHER EXPRESS OR IMPLIED WARRANTIES.





 




			
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Securities and Exchange Commission. Confidential treatment has been requested with respect to the
omitted portions.




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ARTICLE XIV




INDEMNIFICATION AND INSURANCE



     14.1 Indemnification by Covella. Covella shall defend, indemnify, and hold harmless
Biogen Idec, its Affiliates and their respective directors, officers, shareholders, employees and
agents, and their respective heirs, successors and assigns (“Biogen Idec Indemnitees”),
from and against any and all liabilities, claims, damages, losses, costs and expenses (including
reasonable attorney’s fees) owing to Third Parties (collectively, “Liabilities”)
suffered or sustained by a Biogen Idec Indemnitee, or to which a Biogen Idec Indemnitee
becomes subject, arising out of or attributable to: (a) any breach of a representation, warranty,
covenant or agreement made or undertaken by Covella under this Agreement; (b) the development,
testing, manufacture, use, offer for sale, sale, distribution, promotion, importation, exportation
or marketing by Covella, its Affiliates or Sublicensees of a Product or Service or any materials
supplied by Biogen Idec hereunder, including any claim that the manufacture, use, offer for sale,
sale, or importation of a Product or Service infringes any Third Party intellectual property right,
and any claim of personal injury or death arising from the use of a Product or Service, (c) the
gross negligence or willful misconduct on the part of Covella or its Affiliate or Sublicensee, or
(d) any liability under the Boys Town Agreement arising on or after the Effective Date. However,
Covella shall not indemnify or hold harmless any Biogen Idec Indemnitee from any Liabilities to the
extent that such Liabilities resulted from the acts or omissions of a Biogen Idec Indemnitee, or
any breach of any representation, warranty, covenant or agreement made or undertaken by Biogen Idec
under this Agreement.



     14.2 Indemnification by Biogen Idec. Biogen Idec shall defend, indemnify, and hold
harmless Covella, its Affiliates and their respective directors, officers, shareholders, employees
and agents, and their respective heirs, successors and assigns (“Covella Indemnitees”),
from and against any and all Liabilities suffered or sustained by a Covella Indemnitee, or to which
a Covella Indemnitee becomes subject, arising out of or attributable to: (a) any breach of a
representation, warranty, covenant or agreement made or undertaken by Biogen Idec under this
Agreement; or (b) any breach by Biogen Idec of any of its obligations under the Boys Town Agreement
on or prior to the Effective Date; (c) the gross negligence or willful misconduct on the part of a
Biogen Idec Indemnitee; (d) any liability under the Boys Town Agreement arising prior to the
Effective Date; or (e) any activities of Biogen Idec or any Biogen Idec Indemnitee pursuant to the
rights retained by Biogen Idec under Section 2.3. However, Biogen Idec shall not indemnify or hold
harmless any Covella Indemnitee from any Liabilities to the extent that such Liabilities resulted
from the acts or omissions of a Covella Indemnitee or any breach of any representation, warranty,
covenant or agreement made or undertaken by Covella under this Agreement.



     14.3 Indemnification Procedures. In the event that any Indemnitee (either a Covella
Indemnitee or a Biogen Idec Indemnitee) intends to claim indemnification under this Article XIV,
such Indemnitee shall promptly notify the other Party in writing of the alleged Liability. The
indemnifying



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Party (“Indemnifying Party”) shall have the right to control the defense thereof, provided
that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnitee (which approval shall not be
unreasonably withheld), and the Indemnitee may participate in such defense at such Indemnitee’s
expense (unless the Indemnitee shall have reasonably concluded, based upon a written opinion from
outside legal counsel, that there may be a conflict of interest between the Indemnifying Party and
the Indemnitee in the defense of such action, in each of which cases the Indemnifying Party shall
pay the fees and expenses of one law firm serving as counsel for the Indemnitee). The failure of
any Indemnitee to give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement to the extent that such failure to give notice did not result in
prejudice to the Indemnifying Party or the Indemnifying Party’s insurer. The Indemnifying Party, in
the defense of any such claim or litigation, shall not, except with the approval of the Indemnitee
(which approval shall not be unreasonably withheld), consent to entry of any judgment or enter into
any settlement which (i) would result in injunctive or other relief being imposed against the
Indemnitee; or (ii) does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnitee of a release from all liability in respect to such claim or
litigation. The Indemnitee shall furnish such information regarding itself or the claim in
question as the Indemnifying Party may reasonably request in writing, and shall be reasonably
required in connection with the defense of such claim or litigation resulting therefrom.




     14.4 Insurance. Covella shall, at its sole expense, obtain and maintain the following
insurance on its own behalf, with insurance companies having an A. M. Best Rating of “A-, VII” or
better:


          (a) From the initiation of the first clinical trial for a Product until the date
[***] ([***]) years after the last dosing of a human subject under the last clinical trial for a
Product, Covella shall maintain coverage for each such clinical trial in an amount not less than
(i) [***] Dollars ($[***]) per occurrence and [***] Dollars ($[***]) annual aggregate for any Phase
I clinical trial, and (ii) [***] Dollars ($[***]) per occurrence and [***] Dollars ($[***]) annual
aggregate for any Phase II or Phase III clinical trial;


          (b) During the Term, Covella shall maintain comprehensive or commercial general
liability insurance (contractual liability included) with limits of at least: (i) each occurrence,
[***] Dollars ($[***]); (ii) personal and advertising injury, [***] Dollars ($[***]); and (iii)
general aggregate (commercial form only), [***] Dollars ($[***]).


          (c) [***].



ARTICLE XV




MISCELLANEOUS



     15.1 Force Majeure. Neither Party shall be held liable or responsible to the other
Party, nor be





 




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




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deemed to have defaulted under or breached this Agreement, for failure or delay in
fulfilling or performing any term of this Agreement to the extent, and for so long as, such failure
or delay is caused by or results from causes beyond the reasonable control of the affected Party,
including fire, floods, embargoes, power shortage or failure, acts of war (whether war be declared
or not), insurrections, riots, terrorism, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or any acts, omissions or delays in acting by any governmental authority
or the other Party.




     15.2 Assignment. Either Party may assign or transfer this Agreement: (a) without the
consent of the other Party, to an Affiliate or in connection with the transfer or sale of all or
substantially all of its assets or business related to this Agreement, or in the event of its
merger or consolidation or change in control or similar transaction; and (b) in any other
circumstance, only with the prior written consent of the other Party, such consent not to be
unreasonably withheld, conditioned or delayed. Biogen Idec shall not assign or otherwise transfer
to any Affiliate or any Third Party ownership of any of the Biogen Idec Technology unless such
Affiliate or Third Party agrees to be bound by this Agreement. Any permitted assignee shall assume
all obligations of its assignor under this Agreement. Any purported assignment by a Party of this
Agreement in violation of this Section 15.2 shall be void.



     15.3 Severability. If one (1) or more provisions of this Agreement is held to be
invalid, illegal or unenforceable, the Parties shall substitute, by mutual consent, valid
provisions for such invalid, illegal or unenforceable provisions which valid provisions are, in
their economic effect, sufficiently similar to the invalid provisions that it can be reasonably
assumed that the Parties would have entered into this Agreement with such provisions. In the event
that such provisions cannot be agreed upon, the invalidity, illegality or unenforceability of one
(1) or more provisions of the Agreement shall not affect the validity of this Agreement as a whole.



     15.4 Notices. Any notice, consent or report required or permitted to be given or made
under this Agreement by one Party to the other Party shall be in English and in writing, delivered
personally or by facsimile (receipt verified and a copy promptly sent by personal delivery, U.S.
first class mail or express courier providing evidence of receipt, postage prepaid (where
applicable)), or by U.S. first class mail or express courier providing evidence of receipt, postage
prepaid (where applicable), at the following address for a Party (or such other address for a Party
as may be specified by like notice):



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	To Biogen Idec:	 	To Covella:
	Biogen Idec, Inc.

	 	Covella Pharmaceuticals, Inc.
	14 Cambridge Center

	 	P.O. Box 676150
	Cambridge MA 02142

	 	14530 Calle Carla
	Attention:

	 	Rancho Santa Fe, CA 92067
	Susan Alexander, Esq.

	 	Attention: Chief Executive Officer
	General Counsel

	 	Facsimile:
	Facsimile: (866) 546-2758

	 	Phone:
	Phone: (617) 679-2386
	 	 
	 

	 	With a copy to (which shall not constitute
	With a copy to (which shall not

	 	notice hereunder):
	constitute notice hereunder):
	 	 
	 

	 	Latham & Watkins LLP
	Biogen Idec, Inc.

	 	12636 High Bluff Drive, Suite 400
	14 Cambridge Center

	 	San Diego, CA 92130
	Cambridge MA 02142

	 	Attention: Faye H. Russell, Esq.
	Attn: Susan Green

	 	Facsimile: (858) 523-5450
	Associate Director, Program

	 	Phone: (858) 523-5400
	Management
	 	 
	Facsimile: (617) 914-4569
	 	 
	Phone: (617) 679-2218
	 	 






     All such notices, consents or reports shall be effective upon receipt.



     15.5 Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of California, without regard to the conflicts of law principles that would provide
for application of the law of a jurisdiction other than California and excluding the United Nations
Convention on Contracts for the International Sales of Goods.



     15.6 Arbitration.


          (a) Except as otherwise expressly provided in this Section 15.6, the Parties
agree that any dispute, claim or controversy arising under, out of, or in connection with this
Agreement (a “Dispute”) as to the breach, performance or interpretation of this Agreement, such
Dispute shall, upon written notice of either Party to the other, be referred for resolution by
final, binding arbitration in accordance with the provisions of this Section 15.6. The arbitration
shall be conducted by the Judicial Arbitration and Mediation Services, Inc. (or any successor
entity thereto) (“JAMS”) under its rules of arbitration then in effect, except as modified in this
Agreement. The arbitration shall be conducted in



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the English language, by a single arbitrator. The arbitrator shall engage an independent expert
with experience in the subject matter of the Dispute to advise the arbitrator.



          (b) With respect to any Dispute referred to arbitration pursuant to Section
15.6(a), the Parties and the arbitrator shall use all reasonable efforts to complete any such
arbitration within six (6) months from the issuance of notice of a referral of any such Dispute to
arbitration. The arbitrator shall determine what discovery will be permitted, consistent with the
goal of limiting the cost and time which the Parties must expend for discovery; provided that the
arbitrator shall permit such discovery as he or she deems necessary to permit an equitable
resolution of the Dispute.


          (c) The Parties agree that the decision of the arbitrator shall be the sole,
exclusive and binding remedy between them regarding the Dispute presented to the arbitrator. Any
decision of the arbitrator may be entered in a court of competent jurisdiction for judicial
recognition of the decision and an order of enforcement. The arbitration proceedings and the
decision of the arbitrator shall not be made public without the joint consent of the Parties and
each Party shall maintain the confidentiality of such proceedings and decision unless each Party
otherwise agrees in writing; provided that either Party may make such disclosures as are permitted
for Proprietary Information of the other Party under Article X above.


          (d) Unless otherwise mutually agreed upon by the Parties, the arbitration
proceedings shall be conducted in San Diego, California. The Parties agree that they shall share
equally the cost of the arbitration filing and hearing fees, the cost of the independent expert
retained by the arbitrator, and the cost of the arbitrator and administrative fees of JAMS. Each
Party shall bear its own costs and attorneys’ and witnesses’ fees and associated costs and
expenses.


          (e) Pending the selection of the arbitrator or pending the arbitrator’s
determination of the merits of any Dispute, either Party may seek appropriate interim or
provisional relief from any court of competent jurisdiction as necessary to protect the rights or
property of that Party.



     15.7 LIMITATION OF LIABILITY. EXCEPT FOR A BREACH OF ARTICLE X (CONFIDENTIALITY),
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY PUNITIVE, SPECIAL, CONSEQUENTIAL, INCIDENTAL OR
INDIRECT DAMAGES ARISING OUT OF THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY;
PROVIDED HOWEVER THAT NOTHING IN THIS SECTION 15.7 SHALL BE DEEMED TO LIMIT THE INDEMNIFICATION
OBLIGATIONS OF EITHER PARTY UNDER ARTICLE XIV TO THE EXTENT A THIRD PARTY RECOVERS ANY PUNITIVE,
SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES FROM AN INDEMNITEE.



     15.8 Entire Agreement. This Agreement (including the Exhibits attached hereto)
contains the entire agreement by the Parties with respect to the subject matter hereof and
supersedes any prior express or implied agreements, understandings and representations, either oral
or written, which may have related to the subject matter hereof in any way, including the Mutual
Confidentiality Agreement.



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     15.9 Interpretation. The captions to the several Articles and Sections of this
Agreement are not a part of this Agreement, but are included for convenience of reference and shall
not affect its meaning or interpretation. In this Agreement: (a) the word “including” shall be
deemed to be followed by the phrase “without limitation” or like expression; (b) the singular shall
include the plural and vice versa; and (c) masculine, feminine and neuter pronouns and expressions
shall be interchangeable.



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



     15.11 Waiver; Amendment. Except as otherwise expressly provided in this Agreement,
any term of this Agreement may be waived only by a written instrument executed by a duly authorized
representative of the Party waiving compliance. The delay or failure of any Party at any time to
require performance of any provision of this Agreement shall in no manner affect such Party’s
rights at a later time to enforce the same. This Agreement may be amended, and any term of this
Agreement may be modified, only by a written instrument executed by a duly authorized
representative of each Party.



     15.12 Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective legal representatives, successors and permitted assigns.



     15.13 Counterparts. This Agreement may be executed in two (2) or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument. Facsimile and other electronically scanned signatures shall have the same effect
as their originals.



[Remainder of page intentionally left blank; signature page follows.]




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Execution
Copy



     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth
above.



	 	 	 	 	 
	COVELLA PHARMACEUTICALS, INC.

 	 
	BY: /s/ Lawrence C. Fritz
 	 
	NAME: Lawrence C. Fritz 	 
	TITLE: President & CEO 	 
	 
	BIOGEN IDEC MA INC.

 	 
	BY: /s/ James C. Mullen
 	 
	NAME: James C. Mullen 	 
	TITLE: President & CEO