EXHIBIT
10.26


 


COLLABORATION AGREEMENT


 


This
COLLABORATION AGREEMENT (the “Agreement”), effective as of December     ,
2002 (the “Effective Date”), is made by and between Sunesis
Pharmaceuticals, Inc., a Delaware corporation, having a principal place of
business at 341 Oyster Point Boulevard, South San Francisco, CA 94080 (“Sunesis”),
and Biogen, Inc., a Massachusetts corporation, having a principal place of
business at 14 Cambridge Center, MA 
02142 (“Biogen”).  Sunesis and
Biogen are sometimes referred to herein individually as a “Party” and
collectively as the “Parties”.


 


BACKGROUND


 


A.                                   Sunesis
has developed proprietary technology and know-how for the discovery and
optimization of small molecules that bind to enzyme targets and protein-protein
interfaces;


 


B.                                     Biogen
is a leader in the research and development of pharmaceutical compounds;


 


C.                                     Sunesis
and Biogen wish to collaborate to discover and develop small molecules that
modulate certain Targets, with the goal of delivering compounds with desired
activity and selectivity; and


 


D.                                    Biogen
wishes to acquire an exclusive license under the Collaboration Technology to
develop and commercialize Collaboration Compounds in the Field resulting from
the collaboration, as well as certain other rights to the results of the
collaboration, and Sunesis wishes to grant to Biogen such license, all on the
terms and conditions herein.


 


NOW,
THEREFORE, for and in consideration of the covenants, conditions and
undertakings hereinafter set forth, it is agreed by and between the Parties as
follows:


 


ARTICLE
1

DEFINITIONS


 


As used herein, the following terms will have the
meanings set forth below:


 


1.1                                 “Active
Compound” shall mean any Compound that (a) meets the Active Compound
Criteria or (b) is approved by the JRC as an Active Compound, in each case
during the Research Term.


 


1.2                                 “Active
Program” shall mean a program for the ongoing discovery, and/or the
preclinical, clinical and commercial development, of a Product directed to a
Target using Commercially Reasonable and Diligent Efforts.


 


1.3                                 “Affiliate”
shall mean any corporation or other business entity which during the term of
this Agreement controls, is controlled by or is under common control with
Sunesis or Biogen but only for so long as such entity controls, is controlled by,
or is under common control 


 










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


 


1





















 


with Sunesis or
Biogen.  For this purpose, “control”
means the ownership directly or indirectly of fifty percent (50%) or more of
the stock entitled to vote for the election of directors, and for nonstock
organizations, of the equity interests entitled to control the management of
such entity.


 


1.4                                 “Collaboration
Technology” shall mean all Collaboration Patents and Collaboration Know-How,
but shall not include any Sunesis Core Technology, Mutated Targets or Excluded
Compounds.


 


1.4.1                        “Collaboration
Patents” shall mean all Biogen Collaboration Patents, Sunesis Collaboration
Patents and Joint Collaboration Patents.


 


(a)                                  “Biogen
Collaboration Patents” shall mean all patents, patent applications and
invention disclosures the subject of which is an invention: (i) conceived or
reduced to practice solely by Biogen in the course of performing the Research
Program; (ii) conceived or reduced to practice to practice solely by Biogen
during the Exclusivity Period in the course of activities directed to the
discovery, research or development of Compounds for use in the Field; or (iii)
that is a Compound described in Section 1.6(ii) below; as well as any
divisions, continuations, continuations-in-part, reissues, reexaminations,
extensions or other governmental actions which extend any of the patent
applications or patents in (i), (ii) or (iii) above, and any substitutions,
confirmations, registrations, revalidations or foreign counterparts of any of
the foregoing.


 


(b)                                 “Sunesis
Collaboration Patents” shall mean all patents, patent applications and
invention disclosures the subject of which is an invention: (i) conceived or
reduced to practice solely by personnel of Sunesis in the course of performing
the Research Program; or (ii) conceived or reduced to practice solely by
Sunesis during the Exclusivity Period in the course of activities directed to
the discovery, research or development of Compounds for use in the Field; as
well as any divisions, continuations, continuations-in-part, reissues,
reexaminations, extensions or other governmental actions which extend any of
the patent applications or patents in (i) or (ii) above, and any substitutions,
confirmations, registrations, revalidations or foreign counterparts of any of
the foregoing.


 


(c)                                  “Joint
Collaboration Patents” shall mean all patents, patent applications and
invention disclosures the subject of which is an invention: (i) conceived
or reduced to practice jointly by personnel of Biogen and Sunesis in the course
of performing the Research Program; or (ii) conceived or reduced to practice
jointly by Biogen and Sunesis in the course of activities directed to the
discovery, research or development of Compounds for use in the Field; as well
as any divisions, continuations, continuations-in-part, reissues,
reexaminations, extensions or other governmental actions which extend any of
the patent applications or patents in (i) or (ii) above, and any substitutions,
confirmations, registrations, revalidations or foreign counterparts of any of
the foregoing.


 


1.4.2                        “Collaboration
Know-How” shall mean all Biogen Collaboration Know-How, Sunesis
Collaboration Know-How and Joint Collaboration Know-How.  Collaboration Know-How shall not include
Collaboration Patents.


 


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(a)                                  “Biogen
Collaboration Know-How” shall mean any data, inventions, methods,
proprietary information, processes, techniques, technology or material: (i)
made or developed solely by personnel of Biogen in the course of performing the
Research Program; (ii) made or developed solely by Biogen during the
Exclusivity Period in the course of activities directed to the discovery,
research or development of Compounds for use in the Field; or (iii) that is a
Compound described in Section 1.6(ii) below.


 


(b)                                 “Sunesis
Collaboration Know-How” shall mean any data, inventions, methods,
proprietary information, processes, techniques, technology or material: (i) made
or developed solely by personnel of Sunesis in the course of performing the
Research Program; or (ii) made or developed solely by Sunesis during the
Exclusivity Period in the course of activities directed to the discovery,
research or development of Compounds for use in the Field.


 


(c)                                  “Joint
Collaboration Know-How” shall mean any data, inventions, methods,
proprietary information, processes, techniques, technology or material: (i)
made or developed jointly by personnel of Biogen and Sunesis in the course of
performing the Research Program; or (ii) made or developed jointly by personnel
of Biogen and Sunesis in the course of activities directed to the discovery,
research or development of Compounds
for use in the Field.


 


1.5                                 “Commercially
Reasonable and Diligent Efforts” shall mean the level of effort and
resources normally used by a Party for a product or compound owned or
controlled by it, which is of similar market potential and at a similar stage
in its development or product life, taking into account, without limitation,
with respect to a Product issues of safety and efficacy, product profile, the
proprietary position of the Product, the then current competitive environment
for the Product and the likely timing of the Product’s entry into the market,
the regulatory environment of the Product, and other relevant scientific,
technical and commercial factors. 
Without limiting the foregoing, Commercially Reasonable and Diligent
Efforts as it applies to the development of Products hereunder shall mean
adherence to the activities and time lines (to the extent adherence to such
activities and time lines is controllable by the Party responsible for performing
such activities)set forth in the then most current version of the Research Plan
(or as applicable the development plan for a Target), subject to reasonable
delays caused by issues of safety or efficacy or other technical and scientific
issues that may arise or by any other factor outside the reasonable control of
the responsible Party. Notwithstanding the foregoing, to the extent that the
performance of a Party’s responsibilities hereunder is adversely affected by
the other Party’s failure to perform its responsibilities hereunder, such Party
shall not be deemed to have failed to use its Commercially Reasonable and
Diligent Efforts in performing such responsibilities.


 


1.6                                 “Compound”
shall mean any compound first discovered or actually synthesized (i) by
either Party during the Research Term in the course of performing the Research
Program; or (ii) by Biogen, prior to the second year anniversary of the
Exclusivity Period, as a result of a chemical synthesis program which is based
on or utilizes the structure or structure activity data of one or more Active
Compounds, or (iii) any compound covered by a patent or patent application
within the Collaboration Patents that claims a compound described in (i) or
(ii) above.  For purposes of this Section
1.6, “Exclusivity Period” shall be deemed to be not less than forty-two (42)
months, regardless of any early termination under this Agreement.


 


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1.7                                 “Collaboration
Compound” shall mean each (i) Active Compound, (ii) Lead Compound and
(iii) Development Candidate.


 


1.8                                 “Confidential
Information” shall mean, with respect to a Party, all information (and all
tangible and intangible embodiments thereof), which is owned or controlled by
such Party, is disclosed by such Party to the other Party pursuant to this
Agreement.  Notwithstanding the
foregoing, Confidential Information of a Party shall not include information
which, and only to the extent, the receiving Party can establish by written
documentation (a) has been generally known prior to disclosure of such
information by the disclosing Party to the receiving Party; (b) has become
generally known, without the fault of the receiving Party, subsequent to
disclosure of such information by the disclosing Party to the receiving Party;
(c) has been received by the receiving Party at any time from a source,
other than the disclosing Party, rightfully having possession of and the right
to disclose such information free of confidentiality obligations; or
(d) has been otherwise known by the receiving Party free of
confidentiality obligations prior to disclosure of such information by the disclosing
Party to the receiving Party; (each of the foregoing under clauses (a)
through (d) above, a “Confidentiality Exception”).  Except as otherwise expressly provided in
this Agreement, Collaboration Technology shall be deemed Confidential
Information of both Biogen and Sunesis.


 


1.9                                 “Criteria”
shall mean the Active Compound Criteria, Lead Compound Criteria and Development
Candidate Criteria.


 


1.9.1                        “Active
Compound Criteria” shall mean (i) those criteria set forth in
Exhibit 1.9.1 hereto, and (ii) such other criteria that are approved
by the JRC and agreed in writing by the Parties in order for such compound to
be deemed an Active Compound.


 


1.9.2                        “Lead
Compound Criteria” shall mean (i) those criteria set forth in
Exhibit 1.9.2 hereto, and (ii) such other criteria that are approved
by the JRC and agreed in writing by the Parties in order for such compound to
be deemed a Lead Compound.


 


1.9.3                        “Development
Candidate Criteria” shall mean (i) those criteria set forth in
Exhibit 1.9.3 hereto, and (ii) such other criteria that are approved
by the JRC and agreed in writing by the Parties in order for a Lead Compound
and/or other compound to be deemed a Development Candidate.


 


1.10                           “Development
Candidate” shall mean any Compound that is approved by Biogen in its
sole discretion as a Development Candidate in accordance with Section2.5.


 


1.11                           “Excluded
Compounds” shall mean any compound, to the extent the same is:
(i) disclosed in a Party’s patents or patent applications as of the
Effective Date; (ii) in the possession of a Party as of the Effective Date;
(iii) acquired by a Party after the Effective Date by way of a merger or
acquisition (and in addition, with respect to First Tier Targets, by way of a
license); or (iv) independently developed by a Party without use of or access
to any Collaboration Technology, or any Confidential Information of the other
Party; in each case, as evidenced by such Party’s contemporaneous written
records.


 


1.12                           “Exclusivity
Period” shall mean the period from the Effective Date until the first
anniversary of the end of the Research Term.


 


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1.13                           “Field”
shall mean the treatment, prevention and/or diagnosis of disease in humans
through modulation of the Targets.  For
the avoidance of doubt, the scope of the Field shall not extend to activities
of the Parties with protein or peptide therapeutics directed to biological
targets.  The term peptide therapeutics
in the preceding sentence shall mean peptides having a molecular weight greater
than 1,000 daltons.


 


1.14                           “FTE”
shall mean, with respect to a Party, the equivalent of a full-time scientist’s
work time over a twelve-month period (including normal vacations, sick days and
holidays).  In the case of less than a
full-time scientist, the portion of an FTE year devoted by a Party’s scientist
to the Research Program shall be determined by dividing the number of days
during any twelve-month period devoted by such scientist to the Research
Program by the total number of working days of such Party’s full-time scientist
during such twelve-month period.


 


1.15                           “Lead
Compound” shall mean any Compound that (i) meets the Lead Compound
Criteria, or (ii) is approved by the JRC as a Lead Compound, in each case
during the Research Term.


 


1.16                           “Mutated
Target” shall mean any mutation of a Target, which mutation was discovered
or first actually synthesized by either Party during the Research Term in the
course of performing the Research Program. 
It is understood that the term Mutated Target shall not include any
mutation of a Second Tier Target unless and until the Parties mutually agree in
writing in accordance with Section 2.6.2 to include such mutations within the
scope of this term.


 


1.17                           “NDA”
shall mean a New Drug Application (or its equivalent), as defined in the U.S.
Food, Drug and Cosmetic Act and the regulations promulgated thereunder, or any
corresponding or similar application, registration or certification in any
jurisdiction for marketing authorization of a Product.


 


1.18                           “Net Sales”
shall mean aggregate amounts invoiced for sales or transfers for value of
Products (including Abandoned Compounds under Section 7.3.2) by Biogen, its
Affiliates or any of its Sublicensees (or in the case of Abandoned Compounds
under Section 7.3.3 or Sunesis Compounds, Sunesis) to an independent Third
Party distributor, agent or end user in the Territory less deductions
selected as appropriate from: 
(i) credits, refunds, allowances and price adjustments separately
and actually credited to customers for defective, spoiled, damaged, outdated,
and returned Products, (ii) offered and taken trade and cash discounts,
rebates, chargebacks and allowances in amounts customary to the trade,
(iii) sales, excise, value added, turnover, use, and other like taxes, and
customs duties, paid, absorbed or allowed excluding net income tax, (iv)
allowances for bad debt in accordance with U.S. Generally Accepted Accounting
Principles (GAAP) consistently applied to
all products of Biogen, provided however, that if collected at a later date
such amounts will be added to Net Sales in the quarter in which it is received,
and (v) special outbound packing, transportation, insurance and handling
charges separately billed to the customer or prepaid.  Net Sales shall not
include amounts received by Biogen (or any of its
Affiliates) from transactions with an Affiliate or Sublicensee, where the
Product in question will be resold by such Affiliate or Sublicensee to an
independent Third Party distributor, agent or end user and such amounts received by the Affiliate or Sublicensee from such resale
is included in Net Sales.


 


5





















 


If a
sale, transfer or other disposition with respect to a Product is made for
consideration other than cash or is not at arm’s length, then the Net Sales
from such sale, transfer or other disposition shall be the arm’s length fair
market value thereof.  For purposes of this Agreement, “sale” means
any transfer or other distribution or disposition, but shall not include
transfers or other distributions or dispositions of Product, at no charge, for
pre-clinical, clinical or regulatory purposes or in connection with patient
assistance programs or other charitable purposes or to physicians or hospitals
for promotional purposes.  Product shall
be considered “sold” when billed or invoiced.


 


In the event that Product is sold in the form of a
Combination Product, Net Sales for the Combination Product shall be determined
by multiplying actual Net Sales of the Combination Product (determined by
reference to the definition of Net Sales set forth above) during the royalty
payment period by the fraction A/A+B where A is the average sale price of
Product when sold separately in finished
form and B is the average sales price of the other active ingredients and
components when sold separately in finished form, in each case during the
applicable royalty payment period in the country in which the sale of the
Combination Product was made, or if sales of both the Product and the other
active ingredients and components did not occur in such period, then in the
most recent royalty payment period in which sales of both occurred.  Where the Product is sold separately in
finished form but the other ingredients and components are not, Net Sales for
the Combination Product shall be determined by multiplying actual Net Sales of
the Combination Product (determined by reference to the definition of Net Sales
set forth above) during the royalty payment period by the ratio of the average
per-unit sale price of Product when sold separately in
finished form to the average per-unit Net Sales of the Combination Product, in
each case during the applicable royalty payment period in the country in which
the sale of the Combination Product was made. 
Where the other active ingredients and components are sold separately in
finished form but the Product is not, Net Sales for the Combination Product
shall be determined by multiplying actual Net Sales of the Combination Product
(determined by reference to the definition of Net Sales set forth above) during
the royalty payment period by the difference obtained by subtracting from 1 the
ratio of the average per-unit sale price of the other active ingredients and components when sold separated in finished
form to the average per-unit Net Sales of the Combination Product, in each case
during the applicable royalty reporting period in the country in which the sale
of the Combination Product was made.  In
the event that such average sales price cannot be determined for either of the
Product or for all other active ingredients and components included in the
Combination Product, Net Sales for purposes of determining payments under this
Agreement shall be calculated by multiplying the Net Sales of the Combination
Product by the fraction C/C+D where C is the standard fully-absorbed cost of
the Product portion of the Combination Product and D is the sum of the standard
fully-absorbed costs of all other active ingredients and components included in
the Product, in each case as determined in accordance with GAAP
consistently applied; provided, however
that the Parties mutually agree that such approach is valid in light of the
particular circumstances, which agreement shall not be unreasonably withheld or
delayed.


 


1.19                           “Phase I”
shall mean human clinical trials, the principal purpose of which is preliminary
determination of safety in healthy individuals or patients as required in 21
C.F.R. §312.21(a) or similar clinical study in a country other than the United
States, and for which there are no endpoints related to efficacy.


 


6





















 


1.20                           “Phase
II” shall mean human clinical trials conducted on a limited number of
patients for the purpose of preliminary evaluation of clinical efficacy and
safety, and/or to obtain an indication of the dosage regimen required as more
fully defined in 21 C.F.R. §312.21(b).


 


1.21                           “Phase III”
shall mean human clinical trials, the principal purpose of which is to
establish safety and efficacy in patients with the disease being studied as
required in 21 C.F.R. §312.21(c) or similar clinical study in a country other
than the United States.  Phase III
shall also include any other human clinical trial intended as a pivotal trial
for regulatory approval purposes whether or not such trial is a traditional
Phase III trial.


 


1.22                           “Primary
Target” shall mean TNF[*].  For
such purposes, “TNF[*]” shall have the meaning defined in Exhibit 1.22.


 


1.23                           “Product”
shall mean a pharmaceutical preparation for sale by prescription,
over-the-counter or any other method for all uses in humans and/or animals,
which incorporates a Collaboration Compound. 
It is understood that all formulations and dosage forms of the same
active ingredient(s) shall be deemed the same “Product,” but Products with
different active ingredients shall be deemed different Products.


 


1.24                           “Regulatory
Approval” shall mean approval of the health regulatory agency in a country
(comparable to the U.S. FDA) necessary for the marketing and sale of a Product
in the applicable country.  As used
herein, “Regulatory Approval” shall not include pricing or reimbursement
approval.


 


1.25                           “Research
Program” shall mean the activities undertaken by the Parties pursuant to
the Research Plan, during the Research Term.


 


1.26                           “Research
Term” shall mean the period commencing on the Effective Date and ending on
the later of (i) the thirty (30) month anniversary of the Effective Date,
or (ii) if extended in accordance with Section 2.3 below, the end of
such extension period; provided that, the Research Term shall in all events
terminate upon an earlier termination of the Agreement in accordance with
Article 12 below.


 


1.27                           “Sublicensee”
shall mean a Third Party expressly licensed by such Party to make, use, import,
offer for sale or sell Product.  The term
“Sublicensee” shall not include distributors.


 


1.28                           “Sunesis
Core Technology” shall mean all patents, patent applications, and invention
disclosures (all as listed on Exhibit 1.28) and all information, materials and
other subject matter made or controlled by Sunesis, and improvements thereof,
relating to (i) utilization of mutated
Primary Targets and/or Secondary Targets in screening, (ii) the use of novel protein engineering techniques and
their application in drug discovery, (iii) target-directed fragment discovery
and maturation to produce drug leads, including monophore libraries for such
purposes, (iv) covalent tethering and techniques related thereto (e.g. NMR,
X-ray, mass 


 










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


 


7





















 


spec. AUC,
Biacore) and its use to discover fragments and test binding hypotheses of
fragments and leads, or (v) dynamic and other combinatorial chemistries related
to proteins, the subject of which is an invention made: (a) by Sunesis prior to
the Effective Date or in the course of performing the Research Program; or (b)
by employees of Biogen or its Affiliates during the Exclusivity Period in the
course of activities directed to the discovery, research or development of
compounds for use in the Field; provided, in the case of (b) that such item was
made using or derived from Sunesis Core Technology.  Sunesis Core Technology shall also include
any divisions, continuations, continuations-in-part, reissues, reexaminations,
extensions or other governmental actions which extend any of the patent
applications or patents in (a) or (b) above, and any substitutions,
confirmations, registrations, revalidations or foreign counterparts of any of
the foregoing.


 


1.29                           “Target”
shall originally mean the Primary Target. 
If a Secondary Target is established in accordance with Section 2.6
below, then Target shall also include such Secondary Target.


 


1.30                           “Third
Party” shall mean any person or entity other than Sunesis and Biogen, and
their respective Affiliates.


 


1.31                           “TNF
Family Members” shall mean the following: [*], and any other [*] or [*],
transmembrane or soluble, protein of at least [*]% sequence identity with TNF[*].


 


1.32                           “Valid
Claim” shall mean (i) a claim of an issued and unexpired patent (or the
equivalent in a supplementary protection certificate) included within the
Sunesis Core Technology or the Collaboration Patents, which has not lapsed or
become abandoned or been declared invalid or unenforceable by a court of
competent jurisdiction or an administrative agency from which no appeal can be
or is taken or (ii) a claim of a pending patent application included
within the Sunesis Core Technology or the Collaboration Patents, filed in good
faith, which claim shall not have been canceled, withdrawn, abandoned or
rejected by an administrative agency from which no appeal can be taken;
provided that no more than seven (7) years has passed since the filing
date for such patent application.


 


1.33                           Additional
Terms.  In addition to the foregoing,
the following terms shall have the meaning defined in the corresponding Section
below:


 


	
  Term

  	
   

  	
  Section Defined

  	
   

  
	
  “Abandoned Compound”

  	
   

  	
   

  	
  7.3.1

  	
   

  
	
  “Abandoned Target”

  	
   

  	
   

  	
  7.3.1

  	
   

  
	
  “Excluded Compound Program”

  	
   

  	
   

  	
  2.8

  	
   

  
	
  “Joint Steering Committee”

  	
   

  	
   

  	
  3.2

  	
   

  
	
  “First Tier Target”

  	
   

  	
   

  	
  2.61

  	
   

  
	
  “Inflation Index”

  	
   

  	
   

  	
  5.1.3(c)

  	
   

  
	
  “Indication”

  	
   

  	
   

  	
  5.5.3(a)

  	
   

  



 










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


 


8





















 


	
  Term

  	
   

  	
  Section Defined

  	
   

  
	
  “Joint Patent Committee”

  	
   

  	
   

  	
  8.2.2

  	
   

  
	
  “Joint Patent Counsel”

  	
   

  	
   

  	
  8.2.2

  	
   

  
	
  “JRC” or “Joint Research Committee”

  	
   

  	
   

  	
  3.1

  	
   

  
	
  “Major Country in the E.U.”

  	
   

  	
   

  	
  5.5.1

  	
   

  
	
  “Phase II Drug Collaboration”

  	
   

  	
   

  	
  2.8

  	
   

  
	
  “Research Plan”

  	
   

  	
   

  	
  2.2

  	
   

  
	
  “Second Tier Un-named Target”

  	
   

  	
   

  	
  2.6.2

  	
   

  
	
  “Secondary Target”

  	
   

  	
   

  	
  2.6.2

  	
   

  
	
  “Sunesis Compounds”

  	
   

  	
   

  	
  12.5.4

  	
   

  
	
  “Viable Hit”

  	
   

  	
   

  	
  2.7

  	
   

  



 


ARTICLE
2

RESEARCH PROGRAM


 


2.1                                 General;
Conduct of Research.  Subject to the
terms and conditions set forth herein, the Parties agree to conduct research
under the Research Plan on a collaborative basis.  Sunesis and Biogen shall each conduct the
Research Program in a good and scientific manner, and in compliance in all
material respect with all requirements of applicable laws, rules and
regulations and all applicable standard laboratory practices to attempt to
achieve their objectives efficiently and expeditiously.  Sunesis and Biogen each shall proceed
diligently with the work set out in the Research Program by using their good
faith efforts.  Sunesis agrees to
dedicate to the Research Program the number of Sunesis FTE’s specified in the
Research Plan; provided however, Sunesis shall not be obligated to incur costs
in performing its activities under the Research Program in excess of the
amounts specified under Section 5.1 below.


 


2.2                                 Research
Plan.  The Parties will conduct the
Research Program in the Field in accordance with a written plan approved by the
JRC (the “Research Plan”).  The Research
Plan shall establish: (i) the scope of the research activities which will be
performed; (ii) the research objectives, work plan activities and schedules
with respect to the Research Program; and (iii) the respective obligations of
the Parties with respect to the Research Program.  The Research Plan shall be reviewed on an
ongoing basis and may be amended by approval of the Joint Research Committee
from time to time as it deems necessary or appropriate.  The initial Research Plan is attached hereto
as Exhibit 2.2


 


2.3                                 Term
of Research Program.  The Research
Program shall commence on the Effective Date and continue for an initial period
of thirty (30) months.  Biogen will have
the option to extend the Research Term for a period of one (1) additional year
at the level of research funding by Biogen and FTE support by Sunesis specified
in Section 5.1.3(b), by providing Sunesis written notice at least
three (3) months before the end of the initial thirty (30) month Research
Term.


 


2.4                                 Target
Exclusivity.  Subject to Section 2.8,
during the Exclusivity Period, Sunesis shall collaborate exclusively with
Biogen with respect to each Target. 
Subject to Section 2.8, during the Research Term, Biogen, and during the
Exclusivity Period, Sunesis, shall collaborate exclusively with respect to each
Collaboration Compound and Development Candidate.  In 


 


9





















 


addition, subject
to Section 2.8, during the Research Term, Biogen shall collaborate exclusively
with Sunesis with respect to the Primary Target.


 


2.5                                 Designation
of Development Candidates.


 


(a)                                  The
Parties have established Development Candidate Criteria, set forth in Exhibit
1.9.3 for the nomination of Development Candidates.  From time to time during the Research Term,
Biogen may approve the designation of any Compound within the Field as a
Development Candidate by written notice to Sunesis, provided such Compound
either (i) meets the Development Candidate Criteria, or (ii) was recommended by
the JRC.


 


(b)                                 Biogen’s
right to specify a Development Candidate shall survive the expiration of the
Research Term and shall continue for a period of three (3) years following the
expiration of the Research Term, provided, Sunesis has not already granted a
Third Party the right to exploit such designated Compound.


 


Subject to the foregoing, it is understood and agreed
that if Biogen undertakes GLP toxicity studies with respect to a particular
Compound, such Compound shall be deemed designated by Biogen as a Development
Candidate (and if such Compound has not already been designated as a Lead
Compound, it shall also be deemed designated by Biogen as a Lead Compound).


 


2.6                                 Addition
of Secondary Targets under the Research Program.


 


2.6.1                        Biogen
Election of First Tier Targets.  At
any time during the first eighteen (18) months of the Research Term, Biogen has
an exclusive option, in its sole discretion, to add [*] and two additional
targets from among the following group: [*] and [*] (such two additional
targets to be identified by Biogen to Sunesis within six (6) months of the
Effective Date) (each of [*] and the two identified targets, a “First Tier
Target”, as further defined in Exhibit 1.22 below) under the Research
Program by providing written notice to Sunesis. 
Promptly following Biogen’s notice to Sunesis of such election, the JRC
shall evaluate the potential target to be added under the Research Program, and
the outline of a research plan for such potential target.  Subject to Sections 2.6.3 and 5.2, upon
written agreement of the Parties, such target shall be deemed a “Secondary
Target” and shall be added under the Research Program on the same terms and
conditions of this Agreement as a Target.


 


2.6.2                        Biogen
Election of Second Tier Targets.  In
addition to the foregoing, at any time during the first eighteen (18) months of
the Research Term, Biogen may request to add two additional un-named targets
(such un-named targets being referred to herein as the “Second Tier Un-Named
Targets”), to be identified by Biogen and approved by Sunesis, under the
Research Program by providing written notice to Sunesis.  In the case of the un-named targets, the Parties
shall meet and agree upon which Party shall own, during the term of this
Agreement, the Collaboration Technology directed to such target.  Following such agreement in the case of the
un-named targets, the Parties shall evaluate such target and the outline of a
research plan for 


 










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


 


10





















 


such target. 
Subject to Sections 2.6.3 and 5.2, upon written agreement of the
Parties, such target shall be deemed a “Secondary Target” (with a
description of such target attached at Exhibit 1.22) and shall be added under the
Research Program on the same terms and conditions of this Agreement as a
Target.


 


2.6.3                        Establishment
of Criteria; Extension of Research Term; Staffing of Sunesis FTEs.  Promptly following such designation of a
Secondary Target, the JRC shall establish, and the Parties shall mutually agree
on: (i) the Criteria for a Compound to be deemed an Active Compound, Lead
Compound or Development Candidate for such Secondary Target, and (ii) whether
to extend the Research Program with respect to such Secondary Target beyond the
initial Research Term.  In addition to
the foregoing, the Joint Steering Committee shall establish, and the Parties
shall mutually agree on whether additional Sunesis FTE’s shall be funded to
conduct activities under the Research Program with respect to such Secondary
Target.  It is understood and agreed that
staffing of Sunesis FTE’s with respect to a Secondary Target shall be
incremental to the staffing of Sunesis FTE’s with respect to the Primary
Target, unless otherwise agreed by the Joint Steering Committee and approved by
the Parties.


 


2.7                                 Biogen
Counterscreening Reagents; Biogen Right of First Negotiation.


 


2.7.1                        Counterscreening
Reagents; Criteria; and Viable Hits. 
It is understood that, during the Research Term, the Parties may agree
that Biogen may provide specific proteins of related TNF Family Members (other
than TNF[*]) for use in counterscreening under the Research Program.  Promptly following Biogen’s supply of such
reagents for use under the Research Program, the JRC shall establish, and the
Parties shall mutually agree on, the criteria to be demonstrated from the
counterscreening of a compound in order for such compound to be deemed a viable
hit (each a “Viable Hit”) for a target within such TNF Family Members.  To the extent any Viable Hits are identified
under the Research Program, the Parties shall notify the JRC in writing.


 


2.7.2                        Biogen
Options.  With respect to Viable Hits
disclosed to the JRC during the Research Term, the following shall apply:


 


(a)                                  If
such Viable Hit is to a First Tier Target, and such Viable Hit is disclosed to
the JRC during the initial eighteen (18) months of the Research Term, Biogen
may elect to obtain rights to such Viable Hit by adding such First Tier Target
as a Secondary Target pursuant to Section 2.6.1;


 


(b)                                 If
such Viable Hit is to a First Tier Target, and such Viable Hit is disclosed to
the JRC after the initial eighteen (18) months of the Research Term, Biogen
will have a right of first negotiation under Section 2.7.3 below with respect
to such Viable Hit;


 










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


 


11





















 


(c)                                  If
such Viable Hit is to a target other than a First Tier Target, Biogen may
request to include such target pursuant to Section 2.6.2 above or elect to
exercise its right of first negotiation with respect to such Viable Hit
pursuant to Section 2.7.3 below; and


 


(d)                                 If
the target for which such Viable Hit relates is included as a Secondary Target
pursuant to either Section 2.6.1 or Section 2.6.2, then Biogen shall have no
further rights under Section 2.7.3 with respect to such target and any Viable
Hits relating thereto.


 


2.7.3                        Biogen
Right of First Negotiation – Viable Hits. 
Subject to Section 2.7.2, following receipt of initial written notice by
the JRC of a Viable Hit, Biogen shall have ninety (90) days in which to notify
Sunesis of its election to negotiate exclusive rights to such Viable Hit.  In the event that Biogen makes such election,
the Parties shall have ninety (90) days from the date of Biogen’s election to
negotiate the terms and conditions pursuant to which such rights and license
will be granted to Biogen.  If Biogen
does not make such election or if the Parties are unable to negotiate such
terms and conditions within the foregoing periods, Sunesis shall be free to
develop and commercialize such Viable Hit, the target which such Viable Hit
directly modulates, and other compounds that modulate the activity of such
target, either by itself or through a Third Party, without any further
obligation to Biogen under this Agreement, and on any terms that Sunesis
considers appropriate.


 


2.8                                 Phase II Drug
Collaborations and Excluded Compound Programs.  Notwithstanding Section 2.4, but subject to
the provisions of this Section 2.8, neither Party shall be prohibited from
collaborating with a Third Party on the development and commercialization of
compounds that directly modulate the activity of the Primary Target; provided,
such compounds are in Phase II clinical trials or later stage of development or
commercialization (each, a “Phase II Drug Collaboration”).  As of the Effective Date, except for those
compounds listed on Exhibit 2.8, neither Party is in a Phase II Drug
Collaboration.  In addition to the
foregoing, neither Party shall be prohibited from developing or commercializing
Excluded Compounds (an “Excluded Compound Program”).  Each Party shall notify the other Party in
writing upon entering into such a Phase II Drug Collaboration, or undertaking
activities within the Field with respect to an Excluded Compound.


 


(a)                                  If
Biogen enters into a Phase II Drug Collaboration or Excluded Compound Program
and subsequent thereto, Biogen fails to use Commercially Reasonable and
Diligent Efforts with respect to such Target, Sunesis shall have the right to
terminate this Agreement with respect to such Target and the Compounds that
modulate the activity of such Target, and such Target and Compounds shall be
deemed an Abandoned Target and Abandoned Compounds subject to the provisions of
Section 7.3.


 


(b)                                 If
Sunesis enters into a Phase II Drug Collaboration or Excluded Compound Program,
Biogen shall have the right to terminate the Research Program with respect to
such Target and the Compounds that modulate the activity of such Target, and
following such termination, with respect to the milestone and royalty amounts
first accrued and payable by Biogen to Sunesis after the effective date of
termination on Lead Compounds and Development Candidates that meet the Criteria
with respect to such Target, and royalties on Products that incorporate such
Development Candidates, such amounts shall be reduced by fifty percent (50%) 


 


12





















 


of the amounts that would
otherwise be due to Sunesis under Sections 5.4, 5.5 and 5.6 with respect to
such Collaboration Compounds.


 


2.9                                 Reports;
Records; Inspections.


 


2.9.1                        Reports.  Each Party shall keep the other Party
informed of its progress and results in performing the Research Program.  Sunesis and Biogen shall each provide the
other, at least once quarterly, a written summary of research activities and
results in connection with the Research Program.  In addition, each Party shall provide the JRC
as mutually agreed with data and information pertaining to all Compounds
identified by such Party, including the chemical structures of such Compounds
and structure-activity data with respect thereto, and such other information as
the Parties agree.


 


2.9.2                        Research
Records.  Sunesis and Biogen shall
maintain records of the Research Program (or cause such records to be
maintained) in sufficient detail and in good scientific manner as will properly
reflect all work done and results achieved in the performance of the Research
Program.


 


2.9.3                        Inspections.  During the Research Term, and for three (3)
years thereafter, the Parties shall provide each other access to such records,
upon request, during ordinary business hours.


 


ARTICLE
3

MANAGEMENT


 


3.1                                 Joint
Research Committee.  Biogen and
Sunesis will establish a committee (the “Joint Research Committee” or “JRC”) to
oversee, review and recommend direction of the Research Program.  The responsibilities of the Joint Research
Committee shall consist of: (i) monitoring and reporting research progress
and ensuring open and frequent exchange between the Parties regarding Research
Program activities; (ii) establishing or modifying Criteria for the selection
of Active Compounds, Lead Compounds and Development Candidates; (iii)
designating Compounds as Active Compounds and Lead Compounds, (iv) nominating
Compounds as Development Candidates; (iv) modifying the Research Plan; and (v)
taking such other actions as may be specifically allocated to the JRC by the
Parties (such as making decisions regarding research activities or allocation
of FTE’s under the Research Plan).


 


3.2                                 Joint
Steering Committee.  Biogen and
Sunesis will also establish a committee (the “Joint Steering Committee”) to
oversee the JRC and to provide overall strategic and business guidance for the
Research Program.  The responsibilities
of the Joint Steering Committee shall consist of:  (i) monitoring the progress of the Research
Program; (ii) resolving disputes as to matters allocated to the JRC; and (iii)
taking such other actions as are specifically allocated to the Joint Steering
Committee under this Agreement.


 


3.3                                 Membership.  The Joint Steering Committee shall include
two (2) representatives, and the JRC shall include three (3) representatives,
of each of Biogen and Sunesis, with each Party’s members selected by that
Party.  Sunesis and Biogen may each
replace its Joint Steering Committee and/or JRC representatives at any time,
upon written notice to the other Party.  


 


13





















 


Unless otherwise
agreed by the Parties, at least one (1) representative of each Party to the JRC
and the Joint Steering Committee must be at least a director or higher level
employee of such Party.


 


3.4                                 Meetings.  During the Research Term, the Joint Steering
Committee and the JRC shall meet at least quarterly, or at a frequency as
agreed by the respective committee members, at such locations as the Parties
agree, and will otherwise communicate regularly by telephone, electronic mail,
facsimile and/or video conference.  With
the consent of the Parties, other representatives of Sunesis or Biogen may
attend the Joint Steering Committee and/or the JRC meetings as nonvoting observers.  Each Party shall be responsible for all of
its own expenses associated with attendance of such meetings.


 


3.5                                 Decision
Making.  Decisions of the JRC shall
be made by unanimous approval of the members present in person or by other
means (e.g., teleconference) at any meeting; provided that at least one member
from each Party must be so present and voting. 
In the event that unanimity is not achieved within the JRC on a decision
required to be made by the JRC, the matter will be referred to the Joint Steering
Committee, which shall promptly meet and endeavor in good faith to resolve such
matter in a timely manner.  In the event
the Joint Steering Committee is unable to reach consensus on a particular
matter, such matter shall be referred to the CEO of Sunesis and the Executive
Vice President of Research and Development of Biogen or their representatives
for resolution, who shall meet in person or by telephone within thirty (30)
days after such referral to attempt in good faith to resolve such matter; and in
the event the Parties are unable to resolve such matter within thirty (30) days
thereafter, such matter shall be resolved as provided in Article 13.


 


ARTICLE
4

LICENSES


 


4.1                                 Research
Licenses under Collaboration Technology and Sunesis Core Technology.


 


4.1.1                        Research
License under Collaboration Technology. 
Subject to the terms and conditions of this Agreement, each Party shall
have a worldwide, co-exclusive right under the Collaboration Technology, and
each Party hereby grants to the other Party a worldwide, co-exclusive license
under its interest in the Collaboration Technology, to make, have made and use
Compounds and Mutated Targets to conduct research in the Field using such
Compounds and Mutated Targets solely in order to discover, research and/or develop
Active Compounds, Lead Compounds and Development Candidates pursuant to the
Research Program.  Unless terminated
earlier herein, such right and license shall expire at the end of the
Exclusivity Period.


 


4.1.2                        Research
License under Sunesis Core Technology. 
Subject to the terms and conditions of this Agreement, Sunesis hereby
grants to Biogen a worldwide, co-exclusive license under the Sunesis Core
Technology to make, have made and use Compounds and Mutated Targets under the
Research Program to conduct research in the Field using such Compounds and
Mutated Targets solely in order to discover, research and/or develop Active
Compounds, Lead Compounds and Development Candidates pursuant to the Research
Program.  It is understood that the
foregoing license to Biogen under the Sunesis Core Technology shall not 


 


14





















 


include the right to sublicense the Sunesis Core
Technology, or practice Sunesis Core Technology to discover novel compositions,
and shall only include the right to exploit Compounds provided by Sunesis to
Biogen under the Research Program or that are Compounds generated by Biogen
without the use of Sunesis Core Technology in accordance with this
Agreement.  It is further understood and
agreed that Sunesis may practice and exploit the Sunesis Core Technology for
any purpose, including without limitation the granting of licenses thereunder,
subject to the prohibitions on Sunesis under Section 2.4 above with respect to
activities in the Field during the Exclusivity Period.  Unless terminated earlier herein, such
license shall expire at the end of the Exclusivity Period.  As used solely in this Section 4.1.2, “Mutated
Target” shall include any mutation of the Primary Target or a First Tier Target
which mutation was discovered or first actually synthesized by Sunesis prior to
the Effective Date.


 


4.2                                 License
to Collaboration Compounds and Corresponding Products and Mutated Targets.


 


4.2.1                        License
under the Collaboration Technology to Collaboration Compounds and Corresponding
Products.  Subject to the terms and
conditions of this Agreement, Biogen shall have a worldwide, exclusive right
under the Collaboration Technology, and Sunesis hereby grants to Biogen a
worldwide, exclusive license, with the right to grant and authorize sublicenses
as provided in Section 4.3, under Sunesis’ interest in the applicable
Collaboration Technology, to make, have made, use, import, offer for sale, sell
and otherwise exploit Collaboration Compounds for any purpose, alone or as incorporated
into a Product.


 


4.2.2                        License
under Sunesis Core Technology. 
Subject to the terms and conditions of this Agreement, Sunesis hereby
grants to Biogen a worldwide, non-exclusive license under the Sunesis Core
Technology to make, have made, use, import, offer for sale and sell
Collaboration Compounds for any purpose, alone or as incorporated into a
Product.  It is understood that the
foregoing license to Sunesis Core Technology shall not include the right to
practice Sunesis Core Technology to discover novel compositions, and shall only
include the right to exploit Collaboration Compounds provided by Sunesis to
Biogen under the Research Program or that are Compounds generated by Biogen
without the use of Sunesis Core Technology in accordance with this Agreement.


 


4.2.3                        License
under the Collaboration Technology and Sunesis Core Technology to Mutated
Targets.  Subject to the terms and
conditions of this Agreement, Biogen shall have a worldwide, exclusive right
under the Collaboration Technology, and Sunesis hereby grants to Biogen a
worldwide, exclusive license under Sunesis’ interest in the applicable
Collaboration Technology, and a worldwide, non-exclusive license under the
Sunesis Core Technology, in each case, to make, have made, use, import, offer
for sale and sell Mutated Targets, alone or as incorporated into a product, for
the therapeutic treatment of a disease. 
It is understood that the foregoing licenses to Sunesis Core Technology
shall not include the right to practice Sunesis Core Technology to discover
novel compositions, and shall only include the right to exploit Mutated Targets
provided by Sunesis to Biogen under the Research Program or that are Mutated
Targets generated by Biogen without the use of Sunesis Core Technology in
accordance with this Agreement.


 


15





















 


4.3                                 Sublicenses.  Subject to the terms and conditions of this
Agreement, Biogen shall have the right to sublicense the rights granted in
Section 4.2 above.  Within a
reasonable period of time following Biogen’s grant of any such sublicense,
Biogen shall provide Sunesis with a summary of such sublicense, including the
identity of the Sublicensee (including any Affiliate) and the rights granted
with respect thereto for each Product and territory, sufficient to allow
Sunesis to verify the amounts due under Articles 5 and 6 below.  Each sublicense granted by Biogen shall be
consistent with all the terms and conditions of this Agreement, and subordinate
thereto, and Biogen shall remain responsible to Sunesis for the compliance of
each such Sublicensee with the financial and other obligations due under this
Agreement.


 


4.4                                 Reserved
Rights of Sunesis.  Subject to the
rights and licenses expressly granted to Biogen under this Agreement, Sunesis
shall have the worldwide, exclusive right and license, and Biogen hereby grants
to Sunesis the worldwide, exclusive right and license under the Collaboration
Technology, with the right to grant and authorize licenses, to practice and
exploit the Collaboration Technology for any and all purposes (including the
right to make, have made, use, import, offer for sale and sell products (i.e.,
other than for the manufacture, sale, use or import of Collaboration
Compounds)); provided, during the Exclusivity Period, such right and license in
the Field shall be limited solely for purposes of conducting the Research
Program.


 


4.5                                 No
Other Rights; No Implied Licenses. 
Only the licenses granted or retained pursuant to the express terms of
this Agreement shall be of any legal force or effect.  No other license rights shall be created by
implication, estoppel or otherwise.


 


ARTICLE
5

PAYMENTS


 


5.1                                 Research
Program Funding.


 


5.1.1                        Research
Program Payment Schedule.  Subject to
Section 5.2, Sunesis shall commit ten (10) Sunesis FTE’s, at it own expense, to
conduct the Research Program during the initial Research Term, unless otherwise
mutually agreed.  Biogen shall commit the
number of Biogen FTE’s called for in the Research Plan to conduct the Research
Program, at its own expense, during the Research Term.  With respect to any additional Sunesis FTE’s
called for in the Research Plan with respect to the Primary Target, Biogen
agrees to pay Sunesis research funding for Sunesis’ conduct of the Research
Program quarterly, in advance, prior to the first day of each calendar quarter,
in an amount equal to the number of such additional Sunesis FTEs called for in
the Research Plan for the applicable quarter (i.e., the number of Sunesis FTE’s
in excess of the ten (10) above) multiplied by the Sunesis FTE rate (as defined
in Section 5.1.3).


 


5.1.2                        Research
Program.


 


(a)                                  Primary
Target.  The Research Plan shall
provide for a total of ten (10) Sunesis FTEs during each year of the initial
Research Term to conduct activities under the Research Program with respect to
the Primary Target, such FTEs to be allocated as set forth in the Research
Plan.  If Biogen elects to extend the
Research Term pursuant to Section 2.3, the Parties shall mutually agree on the
number of Sunesis FTE’s to be allocated to the Primary Target.


 


16





















 


(b)                                 Secondary
Targets.  With respect to each
Secondary Target added to the Research Program, the Research Plan shall
provide, unless otherwise agreed upon by the Joint Steering Committee, for any
additional Sunesis FTEs during each year of the remainder of the initial
Research Term to conduct activities under the Research Program with respect to
such Secondary Target, such FTEs to be allocated as set forth in the Research
Plan.  One-half of such additional
Sunesis FTEs shall be funded by Biogen and one-half shall be funded by
Sunesis.  Notwithstanding the foregoing,
Sunesis shall have the right, at its discretion, at the time a particular
Secondary Target is added to the Research Program, to elect to have Biogen fund
One-Hundred Percent (100%) of such additional Sunesis FTEs for such Secondary
Target, and subject to Section 5.5.2, upon such election by Sunesis, Biogen
agrees to pay Sunesis research funding for one-hundred percent (100%) of such
additional Sunesis FTEs.


 


5.1.3                        Sunesis
FTE Rate.


 


(a)                                  Initial
Research Term.  The Sunesis FTE rate
shall be equal to [*] U.S. Dollars ($[*]) per FTE per year during the first two
(2) years of the initial Research Term. 
The Sunesis FTE rate during the last six (6) months of the initial
Research Term shall be equal to the Sunesis FTE rate for the previous year plus
a percentage increase equal to the Inflation Index.


 


(b)                                 Extended
Research Term.  During any extension
of the Research Term beyond the initial Research Term, unless otherwise agreed
by the Parties, the Research Plan shall provide for the greater of ten (10)
Sunesis FTEs per year or a number of Sunesis FTEs per year equal to at least
the number of Sunesis FTEs for the previous year.  The Sunesis FTE rate during any such extended
Research Term shall be equal to Sunesis FTE rate for the previous year plus a
percentage increase equal to the Inflation Index.  It is understood and agreed, that in no event
is Biogen obligated to extend the Research Term.


 


(c)                                  Inflation
Index.  As used herein, “Inflation
Index” shall mean the percentage increase in the Consumer Price Index for all
Urban Consumers, as published by the U.S. Department of Labor, Bureau of
Statistics, since the Effective Date, or if later, since the date of the last
adjustment of the Sunesis FTE rate under this Section 5.1.


 


5.1.4                        Outsourced
Activities.  In the event the
Research Plan provides, or the JRC agrees, that work under the Research Program
is to be conducted by a Third Party, unless otherwise agreed by the Parties,
Biogen shall bear the out-of-pocket costs incurred with respect to such work.


 










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


 


17





















 


5.2                                 Secondary
Targets.  On a Secondary
Target-by-Secondary Target basis, upon designation of each Secondary Target
pursuant to Section 2.6, Biogen shall pay to Sunesis a research initiation fee
of [*]
($[*]).  Such fee shall be non-refundable
and non-creditable against other amounts due Sunesis hereunder.


 


5.3                                 Upfront
Payments; Equity Investment; and Facility Credit.


 


5.3.1                        Upfront
Payment.  Upon signing of this
Agreement, an upfront technology access fee of Three Million U.S. Dollars
($3,000,000) shall be due to Sunesis, payable by Biogen within ten (10) days
after the Effective Date.  Such fee shall
be non-refundable and non-creditable against other amounts due Sunesis
hereunder.


 


5.3.2                        Maintenance
Fee.  Commencing on April 1, 2004,
and continuing until July 1, 2005 (unless the Research Term is extended
pursuant to Section 2.3, then July 1, 2006), a quarterly maintenance fee payment
of Three Hundred and Fifty-Seven Thousand – Five Hundred U.S. Dollars
($357,500) shall be due to Sunesis, payable in advance by Biogen on first day
of each calendar quarter.


 


5.3.3                        Equity
Investment in Sunesis.  Biogen agrees
to make an equity investment in Sunesis in the amount of Six Million U.S.
Dollars ($6,000,000) pursuant to a Stock Purchase Agreement on the Effective
Date herewith.


 


5.3.4                        Facility
Credit.  Biogen agrees to enter into
a loan agreement with Sunesis on the Effective Date, pursuant to which
agreement Biogen shall loan Sunesis Four Million U.S. Dollars ($4,000,000), all
as provided in the Credit Facility Agreement, attached hereto as Exhibit5.3.4.


 


5.4                                 Research
Milestones.


 


5.4.1                        Research
Milestones Payments.  On a
Target-by-Target basis, Biogen shall pay to Sunesis the following amounts
within thirty (30) days following the first achievement of the following
research milestones with respect to the Target:


 


	
  Research Milestones

  	
   

  	
  Payment Amount

  	
   

  
	
  1.

  	
   

  	
  The
  earlier of (i) designation of the first [*] Compound for such Target by the
  JRC, or (ii) identification of the first [*] Compound to meet [*] Compound
  Criteria for such Target:

  	
   

  	
  $

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Approval
  by Biogen, in accordance with Section 2.5, of the first [*] for such Target:

  	
   

  	
  $

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  On
  approval by Biogen, in accordance with Section 2.5, of the [*] for such
  Target:

  	
   

  	
  $

  	
  [*]

  	
   

  



 










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


 


18





















 


5.4.2                        Secondary
Targets for which Sunesis Elects Not to Fund.  Notwithstanding Section 5.4.1 above, with
respect to any Secondary Target for which Sunesis elects pursuant to Section
5.1.2(b) to have Biogen fund One Hundred Percent (100%) of the additional
Sunesis FTE’s allocated to such Secondary Target, commencing upon such election
and continuing thereafter, the amounts due under Section 5.4.1 with respect to
the achievement of milestones by Lead Compounds and Development Candidates that
meet the Criteria with respect to such Secondary Target shall be reduced by [*]
percent ([*]%).


 


5.5                                 Development
Milestones.


 


5.5.1                        Development
Milestone Payments.  On a
Collaboration Compound-by-Collaboration Compound basis, subject to Section
5.5.2 below, Biogen shall pay to Sunesis the following amounts within
thirty (30) days following the first achievement by Biogen, its Affiliates
or Sublicensees, as the case may be, of each of the following milestones with
respect to a Collaboration Compound (or corresponding Product incorporating
such Collaboration Compound):


 


	
  Development Milestones

  	
   

  	
  Payment Amount

  	
   

  
	
   

  	
  1st Indication

  	
   

  	
  2nd Indication

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.               Initiation
  of Phase I for such Collaboration Compound in any country:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.               Initiation
  of the first Phase III trial for such Collaboration Compound in any country:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.               Filing
  of a NDA in the U.S. for such Collaboration Compound:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.               Filing
  of an NDA in a *Major Country in the E.U. for such Collaboration Compound:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.               Filing
  of a NDA in Japan for such Collaboration Compound:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.               Regulatory
  Approval in the U.S. of such Collaboration Compound:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.               Regulatory
  Approval in a *Major Country in the E.U. for such Collaboration Compound:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.               Regulatory
  Approval in Japan of such Collaboration Compound:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  	
   

  



 


Such milestone payments shall be non-refundable and non-creditable
against other amounts due Sunesis hereunder.


 










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


 


19





















 


* “Major Country in the E.U” shall mean any of France, Germany, Italy,
or the United Kingdom.


 


5.5.2                        Secondary
Targets for which Sunesis Elects Not to Fund.  Notwithstanding Section 5.5.1 above, with
respect to any Secondary Target for which Sunesis elects pursuant to Section
5.1.2(b) to have Biogen fund One Hundred Percent (100%) of the additional
Sunesis FTE’s allocated to such Secondary Target, commencing upon such election
and continuing thereafter, the amounts due under Section 5.5.1 with respect to
achievement of milestones by Collaboration Compounds that modulate the activity
of such Secondary Target shall be reduced by [*] percent ([*]%).


 


5.5.3                        Certain
Additional Terms.


 


(a)                                  Multiple
Collaboration Compounds; Multiple Indications.  It is understood that the payments under this
Section 5.5 shall be due separately for each Collaboration Compound to meet
such milestones; accordingly, if a second or subsequent Collaboration Compound
is developed, a further full set of milestone payments will become due and
payable at the time(s) set forth in Section 5.5 for such second or
subsequent Collaboration Compound.  In
addition, if the same Collaboration Compound is developed for a second
Indication, it is understood that the payments for milestones 1 through 8 will
become due and payable at the time such Collaboration Compound achieves such
milestone for such second Indication; provided, that the amounts due above for
such second Indication will be the lower amounts reflected for such Indications
in the right most column of the table under Section 5.5.1 above.  As used herein “Indication” shall mean a
disease or condition for which approval for use of a Collaboration Compound can
be sought from the FDA or a regulatory authority or agency of a country other
than the United States with responsibilities comparable to those of the FDA.
 For purposes hereof, varying forms or degrees of severity of the same disease
shall be considered the same Indication, even if they require separate
approvals from the FDA or other regulatory authority or agency.


 


(b)                                 Credit
for Discontinued Compounds.  If
Biogen ceases all clinical development of a particular Collaboration Compound
with respect to a particular Target (the “Discontinued Compound”) after having
made the payments due under Section 5.5 above on the achievement of a
particular milestone by such Collaboration Compound, there shall be no payment
due upon the accomplishment of that same milestone with respect to the next
Collaboration Compound directed to the same Target to achieve such milestone.


 


(c)                                  Accrued
Milestones.  If a research milestone
for a Target under Section 5.4.1 above, or a development milestone for a
Collaboration Compound under Section 5.5.1 above, is achieved with respect
to such Target or Collaboration Compound (respectively) in a territory before a
prior research milestone under Section 5.4.1 or a prior development
milestone under Section 5.5.1 for such Target or Collaboration Compound in
such territory, then the earlier milestone payments in such territory shall
then be due with respect to such Target or Collaboration Compound, as the case
may be.


 










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


 


20





















 


5.5.4                        Reports;
Payments.  Within ten (10) business
days of the occurrence of any event which would trigger a milestone payment
according to Section 5.4 or 5.5, Biogen shall inform Sunesis of such
occurrence.  The corresponding payment
shall be due thirty (30) days after the occurrence of such event.


 


5.6                                 Royalties
on annual Net Sales of Products by Biogen, its Affiliates and Sublicensees.


 


5.6.1                        Products.  Biogen shall pay to Sunesis a royalty on
annual Net Sales by Biogen, its Affiliates and their Sublicensees of Products,
on a Product-by-Product basis, equal to the percentage of such Net Sales set
forth below:


 


	
  Annual Net Sales

  	
   

  	
  Royalty on Net Sales

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Portion
  of Annual Net Sales of such Product up to $[*]:

  	
   

  	
  [*]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Portion
  of Annual Net Sales of such Product between $[*] and $[*]:

  	
   

  	
  [*]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Portion
  of Annual Net Sales of such Product between $[*] and $[*]:

  	
   

  	
  [*]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Portion
  of Annual Net Sales of such Product over $[*]:

  	
   

  	
  [*]

  	
  %

  



 


For
purposes of the foregoing, “annual Net Sales” shall mean, for a particular
Product, the worldwide net sales of such Product for the particular calendar
year.


 


5.6.2                        Third
Party Patents.  If: (i) an issued
patent of a Third Party should be in force in any country during the term of
this Agreement covering the practice of the Sunesis Core Technology as licensed
under Section 4.2.2 with respect to the manufacture, use or sale of any
Development Candidate, and (ii) it should prove in Biogen’s reasonable
judgment, after consultation with Sunesis, impractical or impossible for Biogen
to commercialize such Development Candidate without obtaining a royalty bearing
license from such Third Party under such patent in said country, and (iii) the
royalty paid to such Third Party is directed to the practice of rights granted
to Biogen under the Sunesis Core Technology pursuant to Section 4.2.2 with
respect to such Development Candidate, and (iv) the practice of such Sunesis
Core Technology as practiced alone would require such license (i.e.,
independently of any particular Compound) (whether or not Biogen is practicing
such Sunesis Core Technology with any other technology owned or controlled by
Biogen), then Biogen shall be entitled to a credit against the royalty payments
due under Section 5.6 with respect to the same Development Candidate in such
country of an amount equal to [*] percent ([*]%) of the royalty paid to such
Third Party for such Development Candidate in such country, such credit not to
exceed [*] percent ([*]%) of the royalty otherwise due under this Agreement for
such Development Candidate in such country, arising from the practice of such
Sunesis Core Technology with respect to the manufacture, use or sale of the
Development Candidate in said country.


 










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


 


21





















 


5.7                                 Royalty
Term.  The royalties due pursuant to
Section 5.6 above, and Section 7.3.4 below, shall be payable on a
country-by-country and Product-by-Product basis commencing on the first
commercial sale in a country and continuing until the later of: (i) the
expiration of the last Valid Claim covering the manufacture, sale or use of
such Product, in such country, or (ii)  ten (10) years following the first
commercial sale of such Product in such country.


 


ARTICLE
6

PAYMENTS, BOOKS AND RECORDS


 


6.1                                 Royalty
Reports and Payments.  After the
first sale of a product on which royalties are payable by a Party hereunder, such
Party shall make quarterly written reports to the other Party within sixty (60)
days after the end of each calendar quarter, stating in each such report,
separately the number, description, and aggregate Net Sales, by country, of
each such Product sold during the calendar quarter upon which a royalty is
payable under Section 5.5 above or Section 7.3.4 below, as
applicable.  Concurrently with the making
of such reports, such Party shall pay to the other Party royalties due at the
rates specified in Section 5.5 or7.3.4, as applicable.


 


6.2                                 Payment
Method.  All payments due under this
Agreement shall be made by bank wire transfer in immediately available funds to
a bank account designated by the Party owed such payment.  All payments hereunder shall be made in U.S.
dollars.  Any payments that are not paid
on the date such payments are due under this Agreement shall bear interest to
the extent permitted by applicable law at the prime rate as reported by the
Chase Manhattan Bank, New York, New York, on the date such payment is due, plus
an additional two percent (2%), calculated on the number of days such payment
is delinquent.


 


6.3                                 Place
of Royalty Payment; Currency Conversion. 
If any currency conversion shall be required in connection with the
calculation of royalties hereunder, such conversion shall be made using the
average of the buying and selling exchange rate for conversion of the foreign
currency with U.S. Dollars, quoted for current transactions reported in The
Wall Street Journal for the last business day of each calendar month during the
calendar quarter to which such payment pertains.


 


6.4                                 Records;
Inspection.  Each Party shall keep,
and shall ensure that its Affiliates keep, complete, true and accurate books of
account and records for the purpose of determining the amounts payable under
this Agreement.  Such books and records
shall be kept at the principal place of business of such Party, for at least
three (3) years following the end of the calendar quarter to which they
pertain.  Such records will be open for
inspection by a public accounting firm to whom the audited Party has no
reasonable objection and subject to such accounting firm entering into a
satisfactory confidentiality agreement, solely for the purpose of determining
the payments to the other Party hereunder. 
Such inspections may be made no more than once each calendar year, at
reasonable times and on reasonable notice. 
Inspections conducted under this Section 6.4 shall be at the
expense of the auditing Party, unless a variation or error producing an


 


22





















 


increase exceeding
[*] percent ([*]%) of the amount stated for the period covered by the
inspection is established in the course of any such inspection, whereupon all
reasonable costs relating to the inspection for such period and any unpaid
amounts that are discovered will be paid promptly by the audited Party together
with interest thereon from the date such payments were due.


 


6.5                                 Withholding
Taxes.  Each Party shall pay any and
all taxes levied on account of amounts payable to it under this Agreement.  If laws or regulations require that taxes be
withheld, the paying Party will (i) deduct those taxes from the remittable
payment, (ii) timely pay the taxes to the proper authority, and (iii) send
proof of payment to the other Party within sixty (60) days following that
payment.  Notwithstanding the foregoing,
it is understood and agreed that the amounts payable under Sections 5.1, 5.2,
5.3, 5.4, and 5.5 shall be paid in full without reduction for withholding
taxes.


 


ARTICLE
7

DILIGENCE


 


7.1                                 Diligence.  Biogen shall use Commercially Reasonable and
Diligent Efforts to develop and commercialize Products within the Field.


 


7.2                                 Reports.  Biogen agrees to keep Sunesis informed with
respect to the pre-clinical and clinical development of all Products,
including, upon initiation of clinical development, a development plan for each
Product.  Without limiting the foregoing,
Biogen shall provide Sunesis, at least every six (6) months, a written summary
of the pre-clinical and clinical development activities and results with
respect to each Product and other information reasonably requested by Sunesis.


 


7.3                                 Abandoned
Compounds.


 


7.3.1                        Abandonment
of a Target.  Without limiting
Section 7.1 above, if Biogen fails to maintain an Active Program with respect
to a Target (an “Abandoned Target”), all
Collaboration Compounds that modulate the activity of such Abandoned Target
shall be deemed to be “Abandoned Compounds”. 
Following any such abandonment, the co-exclusive licenses granted under
Section 4.1, and exclusive licenses granted under Sections 4.2.1 and 4.2.2 (but
excluding Section 4.2.3) with respect to such Abandoned Target shall terminate.


 


7.3.2                        Sunesis
hereby grants to Biogen a worldwide, exclusive license under the Biogen
Collaboration Patents and Biogen Collaboration Know-How, and a worldwide,
non-exclusive license under the Joint Collaboration Patents and Joint
Collaboration Know-How, in each case, with the right to grant and authorize
sublicenses, to make, have made, use, import, offer for sale and sell Abandoned
Compounds for any purpose, alone or as incorporated into a Product, subject to
the milestone payment and royalty obligations under Article 5.


 










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


 


23





















 


7.3.3                        Subject
to Section 4.2.3, Biogen hereby grants to Sunesis a worldwide, exclusive
license under the Sunesis Collaboration Patents and Sunesis Collaboration
Know-How and a worldwide, non-exclusive license under the Joint Collaboration
Patents and Joint Collaboration Know-How, in each case, with the right to grant
and authorize sublicenses, to make, have made, use, import, offer for sale and
sell Abandoned Compounds for any purpose, alone or as incorporated into a
Product, subject to the royalty obligations under Section 7.3.4 below.


 


7.3.4                        Reverse
Royalty.  Sunesis agrees to pay to
Biogen a reverse royalty equal to [*] percent ([*]%) on aggregate Net Sales by Sunesis, its Affiliates or its Sublicensees of Abandoned
Compounds, where the manufacture, sale or use of such Abandoned Compound is
covered by a Valid Claim. For purposes of determining the term of Sunesis’
royalty obligations, the Valid Claim referred to above shall be limited to
Valid Claims of the Sunesis Collaboration Patents and the Joint Collaboration
Patents.


 


7.3.5                        Abandonment
of Program.  If at the time a Target
becomes an Abandoned Target under Section 2.8 or 7.3.1 above, or beginning
twelve (12) months after the end of the Research Term, there is not a remaining
Target or Development Candidates under this Agreement for a period of six (6)
months, then upon notice by Sunesis to Biogen, such occurrence shall be deemed
a termination of this Agreement by Biogen under Section 12.4 below.


 


ARTICLE
8

INTELLECTUAL PROPERTY


 


8.1                                 Ownership;
Disclosure.


 


8.1.1                        Collaboration
Technology.


 


(a)                                  Primary
Targets and First Tier Targets. 
Subject to Section 8.1.2, during the term of the Agreement, all right,
title and interest in and to the Collaboration Technology consisting of, or
directed to the Primary Target and First Tier Targets shall, as between the Parties,
be solely owned by Biogen.  Sunesis
hereby assigns to Biogen its interest in and to such Collaboration Technology
during the term of the Agreement.


 


(b)                                 Second
Tier Targets.  Subject to Section
8.1.2, with respect to Second Tier Un-Named Targets that the Parties agree
pursuant to Section 2.6.2 are solely owned by Biogen, all right, title and
interest in and to such Collaboration Technology shall, as between the Parties,
be solely owned by Biogen.  Sunesis hereby
assigns to Biogen its interest in and to such Collaboration Technology during
the term of the Agreement.  Subject to
Section 8.1.2, with respect to Collaboration Technology consisting of, or
directed to Second Tier Un-Named Targets that the Parties agree pursuant to
Section 2.6.2 are solely owned by Sunesis, all right, title and interest in and
to such Collaboration Technology shall, as between the Parties, be solely owned


 










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


 


24





















 


by Sunesis.  Biogen hereby assigns to Sunesis its interest
in and to such Collaboration Technology during the term of the Agreement.


 


(c)                                  Restriction
on Rights.  Notwithstanding the
foregoing, it is understood that, except as expressly set forth in this
Agreement, neither Party shall have any right, and each Party agrees not, to
research, develop, commercialize and/or otherwise exploit Collaboration
Technology without the express written consent of, and accounting to, the other
Party.


 


8.1.2                        Sunesis
Core Technology.  All right, title
and interest in and to the Sunesis Core Technology, and in any inventions or
improvements made by or under authority of either Party or its Affiliates
during the term of this Agreement relating to Sunesis Core Technology, shall,
as between the Parties, be owned solely by Sunesis.  Biogen hereby assigns to Sunesis all of its
and its Affiliates rights in and to such inventions and improvements relating
to Sunesis Core Technology (including all patent and other intellectual
property rights therein).


 


8.1.3                        Disclosure.  Each Party shall promptly disclose to the
other, all inventions relating to Collaboration Technology and Sunesis Core
Technology (reasonably necessary to perform the Research Program) conceived
and/or reduced to practice in connection with this Agreement.


 


8.2                                 Patent
Prosecution.


 


8.2.1                        Sunesis
Core Technology.  Sunesis shall have
the right to control the preparation, filing, prosecution and maintenance of
patent applications and patents directed to Sunesis Core Technology using
patent counsel of Sunesis’ choice.


 


8.2.2                        Collaboration
Technology.  All preparation, filing,
prosecution and maintenance of patent applications and patents directed to
Collaboration Technology shall be governed by this Section 8.2.2.


 


(a)                                  Joint
Patent Committee.  Biogen and Sunesis
will establish a joint patent committee (the “Joint Patent Committee”) to (i)
select patent counsel mutually agreeable to both Parties (the “Joint Patent
Counsel”) to prepare, file, prosecute and maintain the patent applications and
patents directed to Collaboration Technology, and (ii) to control the filing,
prosecution, and maintenance of the patent applications and patents directed to
Collaboration Technology.  The Joint
Patent Committee shall include one (1) representative from each of Biogen and
Sunesis.  Sunesis and Biogen may each
replace its Joint Patent Committee representative at any time, upon written
notice to the other Party.  During the
term of this Agreement, the Joint Patent Committee shall meet at least
quarterly, or more frequently as agreed by the Parties, at such locations as
the Parties agree, and will otherwise communicate regularly by telephone,
electronic mail, facsimile and/or video conference.  With the consent of the Parties, other
representatives of Sunesis or Biogen may attend the Joint Patent Committee
meetings as nonvoting observers.  Each
Party shall be responsible for all of its own expenses associated with
attendance of such meetings.  Decisions
of the Joint Patent Committee shall be made by unanimous approval of the
members present in person or by other means (e.g., teleconference) at any
meeting; provided that at least one member from each Party must be so


 


25


















present and voting.  In the event the Parties cannot reach
unanimous agreement on a matter relating to prosecution under this Section
8.2.2, Biogen shall have the final decision; provided, such decision is
reasonable and does not substantially negatively impact Sunesis’ rights
hereunder.  As used herein, “prosecution”
shall include interferences, re-examinations, reissues, oppositions and the
like.


 


(b)                                 Joint
Patent Counsel.  In addition to
preparing, filing, prosecuting and maintaining the patent applications and
patents directed to Collaboration Technology, Joint Patent Counsel shall have
sole responsibility for determining: (i) whether, consistent with laws
regarding inventorship, to correct or supplement the inventors listed on the
invention disclosure form in view of the activities conducted under the
Research Program, and (ii) whether, consistent with applicable law regarding
inventorship, the respective invention was made solely or jointly by Biogen
and/or Sunesis.


 


8.2.3                        Patent
Fees.  During the term of the
Agreement, and following any termination by Biogen under Section 12.5.3, all
costs associated with filing, prosecuting, issuing and maintaining patent
applications and patents (i) within the Sunesis Core Technology shall be borne
by Sunesis; (ii) within the Collaboration Technology shall be borne by Biogen.


 


8.2.4                        Cooperation.  Each Party will cooperate fully with the
other Party and provide all information and data, and sign any documents,
reasonably necessary and requested by the other Party for the purpose of
preparing, filing and prosecuting patent applications pursuant to this Section
8.2.


 


8.3                                 Enforcement.


 


8.3.1                        Notice.  In the event a Party becomes aware of any
potential infringement or misappropriation of the Collaboration Technology (a “Subject
Infringement”), such Party shall notify the other Party.


 


8.3.2                        Biogen.  Biogen shall have the initial right, but not
the obligation, to take reasonable legal action to enforce and defend the
Collaboration Technology against Subject Infringements by Third Parties at its
sole cost and expense.  If, within six
(6) months following a request by Sunesis to do so, Biogen fails to take such
action to enforce the Collaboration Patents with respect to a Subject
Infringement, Sunesis or its designee shall, in its sole discretion, have the
right, at its sole expense, to take such action.


 


8.3.3                        Sunesis.  Notwithstanding Section 8.3.2, with respect
to any Subject Infringement that involves a compound substantially the same in
structure as a compound that is exclusively licensed to Sunesis hereunder,
Sunesis (or its designee) shall have the initial right, but not the obligation,
to take reasonable legal action to enforce and defend the Collaboration
Technology against such Subject Infringements by Third Parties at its sole cost
and expense.  If, within six (6) months
following a request by Biogen to do so, Sunesis fails to take such action to
enforce the Collaboration Patents with respect to such Subject Infringement,
and the Subject Infringement is within the subject matter of the Collaboration
Technology that Biogen is authorized to practice hereunder, Biogen or its
designee shall, in its sole discretion, have the right, at its sole expense, to
take such action.


 


26





















 


8.3.4                        Cooperation;
Costs and Recoveries.  If a Party
(the “Controlling Party”) brings an action with respect to a Subject
Infringement in accordance with this Section 8.3 (an “Infringement Action”),
then the other Party (the “Cooperating Party”) shall cooperate as reasonably
requested, at such Controlling Party’s expense, in the pursuit of such
Infringement Action, including if necessary by joining as a nominal Party to
the Infringement Action.  In any case,
the Cooperating Party shall have the right, even if not required to be joined,
to participate in such Infringement Action with its own counsel at its own
expense.  The costs and expenses of the
Infringement Action shall be the responsibility of the Controlling Party, and
any damages or other monetary rewards or settlement payments actually received
and retained by the Controlling Party shall first be applied to reimburse the
Controlling Party’s out-of-pocket expenses directly attributed to the
Infringement Action, then the other Party’s out-of-pocket expenses directly
attributed to the Infringement Action and the remainder shall be shared as
follows: [*]
percent ([*]%) to the Controlling Party and [*] percent ([*]%) to the other
Party.


 


ARTICLE
9

CONFIDENTIALITY


 


9.1                                 Confidentiality.
During the term of this Agreement and for a period of five (5) years following
the expiration or earlier termination hereof, each Party shall maintain in
confidence the Confidential Information of the other Party, shall not use or
grant the use of the Confidential Information of the other Party except as
expressly permitted hereby, and shall not disclose the Confidential Information
of the other Party except (i) on a need-to-know basis to such Party’s
directors, officers and employees, to such Party’s consultants working on such
Party’s premises, and to any bona fide subcontractor performing work for Biogen
hereunder, or (ii) to the extent such disclosure is reasonably necessary in
connection with such Party’s activities as expressly authorized by this
Agreement (including permitted sublicensees). 
To the extent that disclosure to any person is authorized by this
Agreement, prior to disclosure, a Party shall obtain written agreement of such
person to hold in confidence and not disclose, use or grant the use of the
Confidential Information of the other Party except as expressly permitted under
this Agreement.  Each Party shall notify
the other Party promptly upon discovery of any unauthorized use or disclosure
of the other Party’s Confidential Information.


 


9.2                                 Permitted
Use and Disclosures.  The
confidentiality obligations under this Article 9 shall not apply to the
extent that a Party is required to disclose information by applicable law,
regulation or order of a governmental agency or a court of competent
jurisdiction; provided, however, that such Party shall provide
written notice thereof to the other Party (to the extent not prohibited by law
or court order), and consult with the other Party with respect to such
disclosure to the extent reasonably protectable and provide the other party
reasonable opportunity to object to any such disclosure or to request
confidential treatment thereof. 
Notwithstanding the provisions of this Section, either Party may, to the
extent necessary, disclose Confidential Information of the other Party, to any
governmental or regulatory authority in connection with the development of a
Product.


 










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


 


27





















 


9.3                                 Nondisclosure
of Terms.  Each of the Parties hereto
agrees not to disclose the financial terms of this Agreement to any Third Party
without the prior written consent of the other Party hereto, which consent
shall not be unreasonably withheld, except to such Party’s attorneys, advisors,
investors and others on a need to know basis under circumstances that
reasonably ensure the confidentiality thereof, or to the extent required by
law.  Notwithstanding the foregoing,
immediately after the execution of this Agreement, the Parties will agree upon
a joint press release and the substance of information that can be used to describe
the terms and conditions of this transaction, and each Party may then disclose
such information without the consent of the other Party.


 


9.4                                 Publication.  Any manuscript by Sunesis or Biogen
describing scientific results pertaining to any Development Candidate to be
published or publicly disclosed, shall be subject to the prior review of the
other Party at least thirty (30) days prior to submission.  Further, to avoid loss of patent rights as a
result of premature public disclosure of patentable information, the receiving
Party shall notify the disclosing Party in writing within thirty (30) days
after receipt of any disclosure whether the receiving Party desires to file a
patent application on any invention disclosed in such scientific results.  In the event that the receiving Party desires
to file such a patent application, the disclosing Party shall withhold
publication or disclosure of such scientific results until the earlier of
(i) a patent application is filed thereon, (ii) the Parties determine
after consultation that no patentable invention exists, or (iii) sixty
(60) days after receipt by the disclosing Party of the receiving Party’s
written notice of the receiving Party’s desire to file such patent application,
or such other period as is reasonable for seeking patent protection.  Further, if such scientific results contain
the information of the other Party that is subject to use and nondisclosure
restrictions under this Article 9, the publishing Party agrees to remove
such information from the proposed publication or disclosure.  Following the filing of any patent
application within the Collaboration Technology, in the eighteen (18) month
period prior to the publication of such a patent application, neither Party
shall make any written public disclosure regarding any invention claimed in
such patent application without the prior consent of the other Party.


 


ARTICLE
10

REPRESENTATIONS AND WARRANTIES


 


10.1                           Warranty.  Each Party represents and warrants on its own
behalf and on behalf of its Affiliates that:


 


(i)                                     Such
Party is duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized.


 


(ii)                                  It
has the legal power and authority to enter into this Agreement and to perform
all of its obligations hereunder.


 


(iii)                               This
Agreement is a legal and valid obligation binding upon it and enforceable in
accordance with its terms.


 


28





















 


(iv)                              All
necessary consents, approvals and authorizations of all governmental
authorities and other persons or entities required to be obtained by such Party
in connection with this Agreement have been obtained.


 


(v)                                 The
execution and delivery of this Agreement and the performance of such Party’s
obligations hereunder (a) do not conflict with or violate any requirement
of applicable laws, regulations or orders of governmental bodies; and
(b) do not conflict with, or constitute a default under, any contractual
obligation of such Party.  Neither Party
will enter into any agreement with any Third Party that conflicts with the terms
of this Agreement.


 


(vi)                              Each Party also represents and warrants that,
to the best of its knowledge as of the Effective Date, except with respect to
its Excluded Compounds and the Sunesis Core Technology, it does not own or
control any patents and/or patent applications directed to small molecule
inhibitors of TNF[*].


 


10.2                           Additional
Warranty of Sunesis.  In addition,
Sunesis represents and warrants that, to the best of its knowledge as of the
Effective Date, the practice of the Sunesis Core Technology is not generally
dominated by patent rights of a Third Party. 
It is understood that Sunesis makes no representation or warranty with
respect to any patent rights of Third Parties relating to the Target.


 


10.3                           Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN
THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY
KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE COLLABORATION TECHNOLOGY,
SUNESIS CORE TECHNOLOGY OR COLLABORATION COMPOUNDS OR CONFIDENTIAL INFORMATION,
INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, VALIDITY OF ANY COLLABORATION TECHNOLOGY, PATENTED OR
UNPATENTED, OR NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES.


 


ARTICLE
11

INDEMNIFICATION


 


11.1                           Biogen.  Biogen shall indemnify, defend and hold
harmless Sunesis and its Affiliates and their respective directors, officers,
employees, agents and their respective successors, heirs and assigns from and
against any losses, costs, claims, damages, liabilities or expense (including
reasonable attorneys’ and professional fees and other expenses of litigation)
(collectively, “Liabilities”) resulting from any claims, demands, actions or
other proceedings by any Third Party to the extent resulting from: (i) the
manufacture, use, sale, handling or storage of Products, Abandoned Compounds or
Mutated Targets by Biogen or its Affiliates or Sublicensees or other
designees; or (ii)  the material breach by Biogen of the
representations and warranties


 










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


 


29





















 


made
in this Agreement; except, in each case, to the extent such Liabilities result
from a material breach of this Agreement by Sunesis, negligence or intentional
misconduct of Sunesis.


 


11.2                           Sunesis.  Sunesis agrees to indemnify, defend and hold
harmless Biogen and its Affiliates and their respective directors, officers,
employees, agents and their respective heirs and assigns from and against any
Liabilities resulting from any claims, demands, actions or other proceedings by
any Third Party to the extent resulting from: (i) any Abandoned Compounds
manufactured, sold or otherwise distributed by Sunesis or its Affiliates or
Sublicensees or other designees, or (ii) the material breach by Sunesis of
its representations and warranties made in this Agreement; except, in each
case, to the extent such Liabilities result from a material breach of this
Agreement by Biogen, negligence or intentional misconduct of Biogen.


 


11.3                           Procedure.  If a Party (the “Indemnitee”) intends to
claim indemnification under this Section 11, it shall promptly notify the
other Party (the “Indemnitor”) in writing of any claim, demand, action or other
proceeding for which the Indemnitee intends to claim such indemnification, and
the Indemnitor shall have the right to participate in, and, to the extent the
Indemnitor so desires, to assume the defense thereof with counsel mutually
satisfactory to the Parties; provided, however, that an Indemnitee shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the Indemnitor, if representation of such Indemnitee by the counsel retained by
the Indemnitor would be inappropriate due to actual or potential differing
interests between the Indemnitee and any other Party represented by such
counsel in such proceeding.  The
obligations of this Section 11 shall not apply to amounts paid in
settlement of any claim, demand, action or other proceeding if such settlement
is effected without the consent of the Indemnitor, which consent shall not be
withheld or delayed unreasonably.  The
failure to deliver written notice to the Indemnitor within a reasonable time
after the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve the Indemnitor of any obligation to the
Indemnitee under this Section 11. 
The Indemnitee, its employees and agents, shall reasonably cooperate
with the Indemnitor and its legal representatives in the investigation of any
claim, demand, action or other proceeding covered by this Section 11.


 


ARTICLE
12

TERM AND TERMINATION


 


12.1                           Term.  The term of this Agreement shall commence on
the Effective Date, and shall continue in full force and effect on a
country-by-country, Product-by-Product and Abandoned Compound-by-Abandoned
Compound basis until the later of (i) completion of the Research Program,
including any extensions thereof, or (ii) until expiration of both Parties’
royalty payment obligations in such country with respect to such Products, in
each case unless earlier terminated as provided in this Article 12.


 


12.2                           Termination
for Breach.  Either Party to this
Agreement may terminate this Agreement in the event the other Party hereto
shall have materially breached or defaulted in the performance of any of its
material obligations hereunder, and such default shall have continued for sixty (60)
days after written notice thereof was provided to the breaching Party by the
non-breaching Party.  Any termination
shall become effective at the end of such sixty (60) day period unless the
breaching Party has cured any such breach or default prior to the expiration of
the sixty (60) day period.


 


30





















 


12.3                           Termination
For Bankruptcy.  Either Party hereto
shall have the right to terminate this Agreement forthwith by written notice to
the other Party (i) if the other Party is declared insolvent or bankrupt by a
court of competent jurisdiction, (ii) if a voluntary or involuntary petition in
bankruptcy is filed in any court of competent jurisdiction against the other
Party and such petition is not dismissed within ninety (90) days after filing,
(iii) if the other Party shall make or execute an assignment of substantially
all of its assets for the benefit of creditors, or (iv) substantially all of
the assets of such other Party are seized or attached and not released within
ninety (90) days thereafter.


 


12.4                           Termination
for Convenience by Biogen.  Provided
that Biogen is not in breach of this Agreement, Biogen will have the right to
terminate this Agreement at any time, by providing Sunesis written notice at
least thirty (30) days in advance.


 


12.5                           Effect
of Breach or Termination.


 


12.5.1                  Accrued
Rights and Obligations.  Termination
of this Agreement for any reason shall not release either Party hereto from any
liability which, at the time of such termination, has already accrued to the
other Party or which is attributable to a period prior to such termination nor
preclude either Party from pursuing any rights and remedies it may have
hereunder or at law or in equity with respect to any breach of this Agreement.


 


12.5.2                  Collaboration
Technology.  In the event of
termination of this Agreement for any reason or in the event of expiration of
this Agreement, upon such termination or expiration:


 


(a)                                  Biogen
Collaboration Patents and Biogen Collaboration Know-How.  Sunesis shall assign and hereby assigns to
Biogen all right, title and interest in and to its interest in the Biogen
Collaboration Patents and Biogen Collaboration Know-How;


 


(b)                                 Sunesis
Collaboration Patents and Sunesis Collaboration Know-How.  Biogen shall assign and hereby assigns to
Sunesis all right, title and interest in and to its interest in the Sunesis
Collaboration Patents and Sunesis Collaboration Know-How; and


 


(c)                                  Joint
Collaboration Patents and Joint Collaboration Know-How.  Biogen shall assign and hereby assigns to
Sunesis a joint ownership interest in and to the Joint Collaboration Patents
and Joint Collaboration Know-How. 
Sunesis shall assign and hereby assigns to Biogen a joint ownership
interest in and to the Joint Collaboration Patents and Joint Collaboration
Know-How.  The laws of the United States
with respect to joint ownership of inventions shall apply in all jurisdictions;
accordingly, except as expressly provided in this Agreement, neither Party
shall have any obligation to account to the other for profits, or to obtain any
approval of the other Party to license or exploit Collaboration Technology, by
reason of joint ownership thereof.


 


12.5.3                  Termination
by Biogen for Breach by Sunesis.  In
the event of termination of this Agreement by Biogen pursuant to Section 12.2
due to Sunesis’ material breach, or Section 12.3 for Sunesis’ bankruptcy, in
addition to those provisions surviving under Section 12.6, the obligation of
Sunesis under Section 2.7 and 2.8 shall survive for one year after the
effective date of termination, and the rights and obligations of the Party’s
under Sections 4.1, 4.2, 4.3, 4.4, 5.4,


 


31





















 


5.5, 5.6, 5.7, 8.2 and 8.3 shall survive, except that
(i) with respect to the milestone and royalty amounts specified in Sections
5.4, 5.5, 5.6, commencing upon such termination and continuing thereafter,
shall be reduced by fifty percent (50%). 
In addition to the foregoing, Biogen’s obligation to extend and Sunesis’
right to receive additional funds under the Credit Facility Agreement shall
terminate.  In addition, upon such
termination, Sunesis’ obligations, but not Biogen’s obligations, under Section
2.4 shall continue for the remaining period that the Exclusivity Period would
have been had no termination occurred.


 


12.5.4                  Termination
by Sunesis for Breach by Biogen.  In
the event of termination of this Agreement by Sunesis pursuant to Section 12.2
due to Biogen’s breach, or Section 12.3 for Biogen’s bankruptcy, in addition to
those provisions surviving under Section 12.6, Section 5.7 shall survive with
respect to the license and rights granted to Sunesis under this Section
12.5.4.  In addition to the foregoing,
upon such termination the following shall apply:


 


(a)                                  Sunesis
Collaboration Patents and Sunesis Collaboration Know-How shall cease to be
within the Collaboration Technology (including for the purposes of this Section
12.5.4); and such Sunesis Collaboration Patents and Sunesis Collaboration
Know-How shall be deemed Confidential Information of Sunesis (i.e., to the same
extent as if such information has been first disclosed to Biogen by Sunesis
under this Agreement, subject to the Confidentiality Exceptions);


 


(b)                                 Subject
to Section 4.2.3 above, Biogen shall grant and hereby grants to Sunesis a
worldwide, irrevocable, exclusive license, with the right to grant and
authorize sublicenses, under the Biogen Collaboration Patents and Biogen
Collaboration Know-How, under Biogen’s interest in the Joint Collaboration
Patents and Joint Collaboration Know-How, and a non-exclusive right under other
intellectual property rights owned or controlled by Biogen to practice and
otherwise exploit the Collaboration Technology and to make, have made, import,
use, sell, offer to sell and otherwise exploit any and all Compounds and
Abandoned Compounds that modulate the activity of a Target (hereinafter, such
compounds shall be deemed “Sunesis Compounds”;


 


(c)                                  Sunesis
agrees to pay to Biogen a reverse royalty equal to [*] percent ([*]%) on
aggregate Net Sales by Sunesis,
its Affiliates or its Sublicensees of Sunesis Compounds, where the manufacture,
sale or use of such Sunesis Compound is covered by a Valid Claim for the period
specified in Section 5.7 above.  For
purposes of determining the term of Sunesis’ royalty obligations, the Valid
Claim referred to above shall be limited to Valid Claims of the Collaboration
Patents;


 


(d)                                 Biogen’s
obligations, but not Sunesis’ obligations, under Section 2.4 shall continue for
the remaining time period that the Research Term would have been had no
termination occurred (subject to Biogen’s rights under Section 2.8 above);


 










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


 


32





















 


(e)                                  The
Parties’ rights and obligations, under Sections 2.9 and 8.1.3 shall survive;


 


(f)                                    Sunesis
shall have final authority with respect to decisions made by the Joint Patent
Committee under Section 8.2.2; and


 


(g)                                 Sunesis
shall have the right, at its discretion, to take any legal action to enforce
and defend the Collaboration Technology against any Subject Infringement,
including entering into settlement thereof, and to retain all monetary rewards
and settlement payments received therefrom.


 


12.5.5                  Termination
by Biogen for Convenience.  In the
event of termination of this Agreement by Biogen pursuant to Section 12.4, in
addition to those provisions surviving under Section 12.6, Section 5.7 shall
survive with respect to the license and rights granted to Sunesis and Biogen
under this Section 12.5.5.  In addition
to the foregoing, upon such termination the following shall apply:


 


(a)                                  Biogen
shall have a worldwide, exclusive license under the Biogen Collaboration
Patents and Biogen Collaboration Know-How, and Sunesis hereby grants to Biogen
a worldwide, non-exclusive license under the Joint Collaboration Patents and
Joint Collaboration Know-How, in each case, with the right to grant and
authorize sublicenses, to make, have made, use, import, offer for sale and sell
Compounds for any purpose, alone or as incorporated into a product, subject to
the milestone payment and royalty obligations under Article 5.


 


(b)                                 Subject
to Section 4.2.3, Sunesis shall have a worldwide, exclusive license under the
Sunesis Collaboration Patents and Sunesis Collaboration Know-How, and Biogen
hereby grants to Sunesis a worldwide, non-exclusive license under the Joint
Collaboration Patents and Joint Collaboration Know-How, in each case, with the
right to grant and authorize sublicenses, to make, have made, use, import,
offer for sale and sell Compounds for any purpose, alone or as incorporated
into a product, subject to the royalty obligations under Section 12.5.5(c)
below.


 


(c)                                  Sunesis
agrees to pay to Biogen a royalty equal to [*] percent ([*]%) on aggregate Net
Sales by Sunesis, its Affiliates or its
Sublicensees of Compounds, where the manufacture, sale or use of such Compound
is covered by a Valid Claim for the period specified in Section 5.7 above.  For purposes of determining the term of
Sunesis’ royalty obligations, the Valid Claim referred to above shall be
limited to Valid Claims of the Joint Collaboration Patents and Sunesis Collaboration
Patents; and


 


(d)                                 The
Parties’ rights and obligations, under Sections 2.9 and 8.1.3 shall survive;


 










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


 


33





















 


(e)                                  Preparation,
filing, prosecution and maintenance of patents and patent applications within:


 


(i)                                     The
Biogen Collaboration Patents shall be controlled by Biogen’s at its sole
discretion and expense;


 


(ii)                                  The
Sunesis Collaboration Patents shall be controlled by Sunesis’ at its sole
discretion and expense; and


 


(iii)                               The
Joint Collaboration Patents shall be controlled as follows:  Biogen shall have the first right to control
the preparation, filing, prosecution and maintenance of the patents and patent
applications within the Joint Collaboration Patents, at its expense, using
patent counsel mutually agreeable to Sunesis. 
Sunesis shall be given the opportunity to review Biogen’s activities and
provide input thereto.  Biogen shall in
good faith consider including in such patent applications such claims as
Sunesis reasonably requests.  Biogen
shall keep Sunesis reasonably informed as to the status of such patent matters
, including without limitation, by promptly providing Sunesis the opportunity
to review and comment on any documents relating to Joint Collaboration Patents
which will be filed in any patent office as soon possible but in all cases at
least five (5) business days before such filing, and promptly providing Sunesis
copies of any documents relating to Joint Collaboration Patents which Biogen
receives from such patent offices, including notice of all interferences,
reissues, reexaminations, oppositions or requests for patent term
extensions.  In the event that Biogen
declines to file or, having filed, declines to further prosecute and maintain
any claims within any patent applications or patents subject to this Section
12.5.5(e)(iii), Biogen shall provide Sunesis notice thereof prior to the
expiration of any deadline relating to such activities, but in any event at
least thirty (30) days prior notice, and Sunesis shall have the right to file,
prosecute and maintain such patent applications or patents in the name of
Sunesis, at Sunesis’ expense, using counsel of its choice.


 


(f)                                    Enforcement
of the patents and patent applications


 


(i)                                     within
the Biogen Collaboration Patents shall be controlled by Biogen’s at its sole
discretion and expense.  Biogen shall
have the right, at its discretion, to take any legal action to enforce and
defend the Biogen Collaboration Patents against any infringement, including
entering into settlement thereof, and to retain all monetary rewards and
settlement payments received therefrom.


 


(ii)                                  within
the Sunesis Collaboration Patents shall be controlled by Sunesis’ at its sole
discretion and expense.  Sunesis shall
have the right, at its discretion, to take any legal action to enforce and
defend the Sunesis Collaboration Patents against any infringement, including
entering into settlement thereof, and to retain all monetary rewards and
settlement payments received therefrom.; and


 


(iii)                               within
the Joint Collaboration Patents shall be governed by the terms of Section 8.3;
provided it is understood and agreed that the terms of Section 8.3 shall only
apply with respect to patents and patent applications within the Joint
Collaboration Patents.


 


(g)                                 To
the extent the Agreement is terminated by Biogen, such that the effective date
of termination occurs at any time after the April 1, 2004 but prior to July 1,
2005


 


34





















 


(unless the Research Term
is extended pursuant to Section 2.3, then July 1, 2006), then Biogen shall be
obligated to pay Sunesis a termination fee equal to the next quarters
maintenance fee that would have otherwise been due under Section 5.3.2 but for
such termination less a prorata amount of the maintenance fee already received
by Sunesis in the calendar quarter in which the date of notice of such
termination occurred.  By way of example,
if the date of notice of termination occurred on May 1, 2004, Biogen shall pay
to Sunesis $357,500 less $238,333 (i.e., as the date of notice of termination
occurred at the end of the first month of the calendar quarter, Sunesis shall
have been deemed to have already received two months worth of the maintenance
fee).


 


12.5.6                  Transition of Information and
Materials.  With respect to a Party’s
obligation to transition Collaboration Technology, information and material
with respect to a particular compound, each Party shall cooperate fully (and
cause its Affiliates to cooperate fully) with the other Party to facilitate a
smooth and prompt transition of Collaboration Technology, information and
materials that are necessary or useful for the receiving Party to further
research, develop, or otherwise exploit such target and compounds in the Field.


 


12.6                           Survival
Sections.  Sections 4.2.3, 4.4,
5.3.1, 5.3.2, 5.3.3, 5.7, 8.1.2, 12.5 and 12.6, and Articles 1, 6, 9, 10,
11, 13 and 14 of this Agreement shall survive the expiration or termination of
this Agreement for any reason.


 


ARTICLE
13


DISPUTE RESOLUTION


 


13.1                           Arbitration.  If the Parties are unable to reach agreement
pursuant to Sections 2.8, 3.5 or 7.3, upon written request by either Party such
dispute will be conducted by binding arbitration in English pursuant to the
International Commercial Arbitration Rules of the American Arbitration
Association for Large, Complex Cases then in effect in accordance with this
Section 13.1.  Notwithstanding those
rules, the following provisions shall apply. 
The arbitration shall be conducted by one (1) arbitrator.  In such arbitration, the arbitrator shall be
an independent expert in worldwide pharmaceutical and biotechnology product
development (including clinical development and regulatory affairs) mutually
acceptable to the Parties.  If the
Parties are unable to agree on an arbitrator, the arbitrator shall be an independent
expert as described in the preceding sentence selected by the chief executive
of the San Francisco office of the American Arbitration Association.  Each Party to the arbitration shall prepare a
written report setting forth it position or proposal with respect to the
dispute, and shall submit such report to the arbitrator within the later of (i)
three months following a request by any Party for such arbitration, or (ii) ten
days after selection of such arbitrator. 
The costs of such arbitration, and the direct expenses of both Parties in
connection with such arbitration, shall be borne by the losing Party.  Any such arbitration shall be completed
within six (6) months following a request by any Party for such arbitration.


 


13.2                           Injunctive
Relief.  This Article  13 shall
not be construed to prohibit either Party from seeking preliminary or permanent
injunctive relief, restraining order or degree of specific performance in any
court of competent jurisdiction to the extent not prohibited by this
Agreement.  For avoidance of doubt, any
such equitable remedies provided under this Article 13


 


35





















 


shall be
cumulative and not exclusive and are in addition to any other remedies, which
either Party may have under this Agreement or applicable law.


 


13.3                           Matters
to Proceed to Court.  Notwithstanding
the foregoing, any dispute relating to the determination of validity of a Party’s
patents or other issues relating solely to a Party’s intellectual property and
any dispute asserting breach of this Agreement or of the representations and
warranties made hereunder shall be submitted exclusively to the federal court
in Delaware, and the Parties hereby consent to the jurisdiction and venue of
such court.


 


ARTICLE
14 

MISCELLANEOUS


 


14.1                           Governing
Laws.  This Agreement and any dispute
arising from the construction, performance or breach hereof shall be governed
by and construed, and enforced in accordance with, the laws of the state of
Delaware, without reference to conflicts of laws principles.


 


14.2                           Waiver.  It is agreed that no waiver by either Party
hereto of any breach or default of any of the covenants or agreements herein
set forth shall be deemed a waiver as to any subsequent and/or similar breach
or default.


 


14.3                           Assignment.  This Agreement shall not be assignable by
either Party without the written consent of the other Party hereto, except
either Party may assign this Agreement, without such consent, to an entity that
acquires all or substantially all of the business or assets of such Party
whether by merger, reorganization, acquisition, sale, or otherwise; provided,
however, that the assignee shall agree in writing to be bound by the terms and
conditions of this Agreement.


 


14.4                           Independent
Contractors.  The relationship of the
Parties hereto is that of independent contractors.  The Parties hereto are not deemed to be
agents, partners or joint venturers of the others for any purpose as a result
of this Agreement or the transactions contemplated thereby.


 


14.5                           Compliance
with Laws.  In exercising their rights
under this license, the Parties shall fully comply in all material respects
with the requirements of any and all applicable laws, regulations, rules and
orders of any governmental body having jurisdiction over the exercise of rights
under this license including, without limitation, those applicable to the
discovery, development, manufacture, distribution, import and export and sale
of Products pursuant to this Agreement.


 


14.6                           Patent
Marking.  Biogen agrees to mark
Sublicensees mark all Products sold pursuant to this Agreement in accordance
with the applicable statute or regulations relating to patent marking in the
country or countries of manufacture and sale thereof.


 


14.7                           Notices.  All notices, requests and other
communications hereunder shall be in writing and shall be personally delivered
or by registered or certified mail, return receipt requested, postage prepaid,
in each case to the respective address specified below, or such other address
as may be specified in writing to the other Parties hereto and shall be deemed
to have been given upon receipt:


 


36





















 


	
  Sunesis:

  	
   

  	
  Sunesis
  Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  341
  Oyster Point Boulevard

  
	
   

  	
   

  	
  South
  San Francisco, California 94080

  
	
   

  	
   

  	
  Attn:
  Chief Executive Officer

  
	
   

  	
   

  	
  Fax:
  (650) 266-3505

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
   

  	
  Wilson
  Sonsini Goodrich & Rosati

  
	
   

  	
   

  	
  Professional
  Corporation

  
	
   

  	
   

  	
  650
  Page Mill Road

  
	
   

  	
   

  	
  Palo
  Alto, California 94304-1050

  
	
   

  	
   

  	
  Attn:
  Kenneth A. Clark, Esq.

  
	
   

  	
   

  	
  Fax:
  (650) 493-6811

  
	
   

  	
   

  	
   

  
	
  Biogen

  	
   

  	
  Biogen,
  Inc.

  
	
   

  	
   

  	
  14
  Cambridge Center

  
	
   

  	
   

  	
  Cambridge,
  MA 02141

  
	
   

  	
   

  	
  Attn:
  Associate Director, Research Operations

  
	
   

  	
   

  	
  Fax:
  (617)-679-

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
   

  	
  Biogen,
  Inc.

  
	
   

  	
   

  	
  14
  Cambridge Center

  
	
   

  	
   

  	
  Cambridge,
  MA 02141

  
	
   

  	
   

  	
  Attn:
  General Counsel

  
	
   

  	
   

  	
  Fax:
  (617)-679-2838

  



 


14.8                           Severability.  In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect to the fullest extent permitted by law without said provision, and the
Parties shall amend the Agreement to the extent feasible to lawfully include
the substance of the excluded term to as fully as possible realize the intent
of the Parties and their commercial bargain. 
If a Party seeks to avoid a provision of this Agreement by asserting
that such provision is invalid, illegal or otherwise unenforceable, the other
Party shall have the right to terminate this Agreement upon sixty (60) days’
prior written notice to the asserting Party, unless such assertion is eliminated
and cured within such sixty (60) day period. 
If Biogen has sought to so avoid a provision of this Agreement, such
termination shall be deemed a termination by Biogen under Section 12.4
above, and if Sunesis has sought such an avoidance, such termination shall be
deemed a termination for breach by Sunesis under Section 12.2 above.


 


14.9                           Advice
of Counsel.  Sunesis and Biogen have
each consulted counsel of their choice regarding this Agreement, and each
acknowledges and agrees that this Agreement shall not be deemed to have been
drafted by one Party or another and will be construed accordingly.


 


14.10                     Performance
Warranty.  Each Party hereby warrants
and guarantees the performance of any and all rights and obligations of this
Agreement by its Affiliates and Sublicensees.


 


37





















 


14.11                     Complete
Agreement.  This Agreement with its
Exhibits, constitutes the entire agreement, both written and oral, between the
Parties with respect to the subject matter hereof, and all prior agreements
respecting the subject matter hereof, either written or oral, express or
implied, shall be abrogated, canceled, and are null and void and of no
effect.  No amendment or change hereof or
addition hereto shall be effective or binding on either of the Parties hereto
unless reduced to writing and executed by the respective duly authorized
representatives of Sunesis and Biogen.


 


14.12                     Consultation.  If an unresolved dispute arises out of or
relates to this Agreement, or the breach thereof, either Party may refer such
dispute to the Chief Executive Officer of Biogen and the Chief Executive
Officer of Sunesis, who shall meet in person or by telephone within thirty (30)
days after such referral to attempt in good faith to resolve such dispute.  If such matter cannot be resolved by
discussion of the Chief Executive Officer of Biogen and the Chief Executive
Officer of Sunesis within such thirty (30) days period (as may be extended by
mutual agreement), either Party shall be entitled to seek relief in any court
of competent jurisdiction.


 


14.13                     Headings.  The captions to the several Sections and
Articles hereof are not a part of this Agreement, but are included merely for
convenience of reference and shall not affect its meaning or interpretation.


 


14.14                     Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same agreement.


 


38





















 


IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed by their authorized representatives and delivered in duplicate
originals as of the Effective Date.


 


	
  BIOGEN,
  INC.

  	
   

  	
  SUNESIS
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
									



 


39





















 


EXHIBIT 1.9.1


 


Active Compound Criteria


 


A.                                    TNF[*]


 


Either


 


1.               In vitro receptor binding affinity: Ki[*],
and


 


2.               Selectivity
profiling: [*]fold selectivity over relevant [*] and [*].


 


Or


 


3.               In vitro receptor
binding affinity: [*]


 










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


 


40





















 


EXHIBIT 1.9.2


 


[*]Compound Criteria


 


A.                                    TNF[*]


 


1.                                       In vitro receptor binding affinity: Ki[*]


 


2.                                       Aqueous
solubility [*]


 


3.                                       Stability
in human plasma, liver microsomes [*]% after 1 hour


 


4.                                       Molecular
weight [*] Daltons


 


5.                                       Selectivity
profiling: [*]fold selectivity over relevant [*] and [*]


 


6.                                       Activity
in cell-based functional assay likely due to desired MOA: IC50 cytotoxicity /
IC50 functional assay [*]


 


7.                                       SAR
based on [*] comparable compounds in a series


 


8.                                       Optimization
potential based on (i) [*] and (ii) [*]


 


9.                                       Oral
bioavailability in [*]%


 


10.                                 Acceptable
outcome in a screen of a panel of [*] receptors and/or enzymes.


 










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


 


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EXHIBIT 1.9.3


 


[*] Candidate Criteria


 


A.                                    TNF[*]


 


1.                                       In vitro receptor binding affinity: Ki[*]


 


2.                                       Activity
in a functional assay using human primary cells: IC50 [*]


 


3.                                       In vivo activity in a relevant animal
model: ED50 [*]


 


4.                                       Absolute
oral bioavailability [*]% in rats


 


5.                                       No
significant interaction with cytochrome P450 at [*]


 


6.                                       At
least 1000-fold selective over relevant [*] and [*]


 


7.                                       Ames
test, gene profiling negative


 


8.                                       Acute
toxicology acceptable


 


9.                                       In vitro metabolism verified and
acceptable


 


10.                                 Patentability
assessed and viable


 


11.                                 Purity
[*]%


 


12.                                 Acceptable
outcome in screen of [*] or more enzymes and/or receptors


 


13.                                 Pharmacokinetic
properties of the compounds in rat and other relevant species predict
sufficient exposure for efficacy in humans in clinically relevant doses and
schedules


 


14.                                 [*]
criteria:


 


a.               Physical-chemical
properties: aqueous solubility [*], pH stability, salt potential, lack of
hygroscopicity


 


b.              [*]


 


c.               Synthetic
complexity evaluation (liquid-phase synthesis, gram or multigram scale, step
number and yield; non-chromatographic purification; bulk availability and cost
of commercial raw materials; preliminary evaluation of chemical hazardness and
environmental toxicity of reactants/reagents)


 










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


 


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EXHIBIT 1.22


 


TARGETS


 


A.                                    Primary Target


 


(i)                                     “TNF[*]
TNF” shall mean the protein encoded by the gene specified by GenBank accession
number [*]


 


B.                                    Secondary Targets


 


1.                                      First Tier Targets


 


(i)                                     “[*]”
shall mean the protein encoded by the gene specified by GenBank accession
number [*]


 


(ii)                                  “[*]”
shall mean the protein encoded by the gene specified by GenBank accession
number [*]


 


(iii)                               “[*]”
shall mean the protein encoded by the gene specified by GenBank accession
number [*]


 


(iv)                              “[*]”
shall mean the protein encoded by the gene specified by GenBank accession
number [*]


 


(v)                                 “[*]”
shall mean the protein encoded by the gene specified by GenBank accession
number [*]


 


(vi)                              “[*]”
shall mean the protein encoded by the gene specified by GenBank accession
number [*]


 


2.                                      Second Tier Un-named Targets


 


(i)                                     “              ”
shall mean
                                                             


 


(ii)                                  “              ”
shall mean
                                                             


 










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


 


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EXHIBIT 1.28


 


Sunesis Core Technology


 


	
  Sunesis No.

  	
   

  	
  Serial No.

  	
   

  	
  Title

  	
   

  	
  Inventors

  
	
  UC-100

  	
   

  	
  US
  09/049,754

  	
   

  	
  Pharmacophore
  Recombination For the Identification of Small Molecule Drug Lead Compounds

  	
   

  	
  John
  Ellman

  Ingrid Choong

  
	
  UC-100
  AU

  	
   

  	
  32113/99

  	
   

  	
  Pharmacophore
  Recombination For the Identification of Small Molecule Drug Lead Compounds

  	
   

  	
  John
  Ellman

  Ingrid Choong

  
	
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  US
  09/105,372

  	
   

  	
  Methods
  for Rapidly Identifying Small Organic Molecule Ligands for Binding to
  Biological Target Molecules

  	
   

  	
  Jim
  Wells

  Dan Erlanson

  Andrew C. Braisted

  
	
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  SU-100
  D1C1

  	
   

  	
  US
  10/043,833

  	
   

  	
  Methods
  for Rapidly Identifying Small Organic Molecule Ligands for Binding to
  Biological Target Molecules

  	
   

  	
  Jim
  Wells

  Dan Erlanson

  Andrew C. Braisted

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


 


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EXHIBIT 2.2


 


RESEARCH PLAN


 


Overview of Research Plan


 


During
approximately the first [*] of the collaboration the Research Plan has two
elements: (a) An aggressive [*] effort on TNF[*] (the “Primary Target”) that
continues and expands upon the work that Sunesis has [*] on this target.  (b) Initiation of new [*] efforts on three “[*]
Tier Targets”, comprising [*] and [*] additional targets to be chosen from
among the following: [*] and [*].  It is
expected that work on TNF[*] and on [*] will start immediately after initiation
of the collaboration.  Work on the
remaining [*] targets will start following their [*] from the [*] given above,
this [*] to take place within approximately [*] after the start of the
collaboration.


 


After
approximately [*], it is expected that the [*] effort for the Primary Target,
TNF[*], will have progressed to the point where bona fide
[*] will have been developed.  At the
point this goal is met, a full [*] effort on TNF[*] will be launched that will
continue to [*] of the agreement and beyond. 
If no [*] for TNF[*] have been identified after approximately [*], or if
the JRC shall decide at some other point that success against this target is
not sufficiently likely to warrant continued work on it, [*] efforts on this
target will be discontinued.


 


After
approximately [*], it is also expected that initial [*] will have been
completed for the [*] Tier Targets.  At
this point, progress on the [*] Tier Targets will be assessed to evaluate which
of them are sufficiently promising to warrant continued [*] efforts.  [*] efforts will then continue on the [*]
Tier Target(s) judged by the JRC to be most promising (which will at that point
be added to the Field as a [*]), with the stipulation that the overall
work-plan across all [*] Targets will be commensurate with the
contractually-designated level of resources assigned to the collaboration at
each site, or such additional resources as the JRC shall choose to fund.


 


Research Plan for [*]


 


(a)                                  [*] for TNF[*]


 


A full analysis of
the results of the [*] already done by Sunesis will allow several activities to
begin immediately after the collaboration is initiated.  These are: (i) [*] and [*] for any promising
hits generated by the initial [*].  (ii) [*]
of hits from the initial [*] (i.e. [*] of [*] into [*] using approaches such as
[*] or [*] of the [*] and [*]).  (iii)
The [*], [*] and [*] of new collections of [*] that explore areas of [*] space
suggested by the initial [*] results or that attempt to optimize [*]and [*] to
achieve better quality [*].  (iv) The [*]
and [*] of additional [*] of TNF[*] to explore regions of the [*] that the
initial [*] suggests are of particular interest.


 










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


 


45





















 


As iterative
cycles of [*] and [*] advancement progress, [*] work and other [*] or [*]
approaches will be employed to obtain [*] information on TNF[*] of
interest.  [*] and [*] approaches will be
used to guide a [*] effort to embellish the [*] of [*] and to [*] together.  The goal will be to develop preliminary [*] compounds
that are sufficiently potent to be detected by conventional TNF[*] and TNF[*],
which are to be developed on a timeframe dictated by the progress of the [*] and
[*] efforts.  The activity of these
preliminary [*] compounds will be optimized by [*] guided by [*] generated
using these [*] and [*] assays.  Some in vitro biochemical work will also be done at both sites to
develop methods to establish the [*] (binding [*], [*], [*], etc.) for the [*]
being developed.


 


Major milestones
for this part of the collaboration will be (i) identification of the first [*] that
meet predefined quality criteria, (ii) generation of the first [*] of a [*] to
a potentially important [*] on TNF[*], (iii) generation of the first compound
that is active in the TNF[*], and (iv) generation of bona fide
lead compounds that meet the criteria defined in the contract.  The expectations for this part of the project
are to meet goals (i) and (ii) after approximately [*], goal (iii) by approximately
[*], and goal (iv) by approximately [*] into the collaboration.


 


Work on these
activities will be distributed between Biogen and Sunesis as follows: [*] and [*]
of TNF[*], and also [*] and [*] measurements using the Sunesis [*], will take
place exclusively at Sunesis.  [*] of new
[*] and of new [*] will be shared between the two sites.  [*] of new monophores will also take place at
both sites, but with the bulk of the chemistry effort taking place at
Biogen.  [*] of TNF[*] will take place at
Sunesis.  Development of protein-based
TNF[*] binding and TNF[*] will be shared between the two sites.


 


A GANTT chart
illustrating timelines for the key activities for this part of the
collaboration is shown in Figure 1. Consistent with the Research Plan, after [*]
is performed and substantial [*] has occurred, a key [*] will be reached. If
the JRC determines that the [*] are of [*], then efforts will proceed to
develop them into TNF [*] and then further into [*] (by month [*]). If the JRC
determines that the [*] are of insufficient quality to warrant further efforts,
all TNF [*] will be [*] to the [*] Tier Targets effort at that time.


 


(b)                                  [*]
for [*] “[*]
Tier Target [*]”, and for [*]
Tier Targets [*] and [*].


 


Work on [*] (“[*] Tier
Target [*]”) will start upon initiation of the collaboration.  Production of the [*] required for both the [*]
and [*] work will be done at Biogen.  The
preparation of the [*] and the [*] will be done at Sunesis. The plan calls for
an [*] (ca. [*]) of [*]work on [*], to determine the best [*] and [*] ([*] or [*])
for producing the [*].  At the same time,
an [*] of [*] for [*] will be designed through collaboration of scientists


 










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


 


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at both
sites.  Once a suitable approach has been
chosen, an [*] of [*] will be made, [*] and [*] at Biogen.  These [*] will be sent to Sunesis for [*] against
the Sunesis [*] plus additional [*] of [*] to these targets that may be [*] and
[*] at either site. Sunesis will purchase and install a [*] within the first [*]
months of the Research Term for [*] of targets in the Research Plan.


 


Production of the [*]
required for both the [*] and [*] work of [*] Tier Targets [*] and [*] will
also be done at Biogen.  The preparation
of the [*] and the actual [*] will be done at Sunesis. Work at Biogen on [*]
for the preparation of [*] Tier Target [*] and 1st Tier Target [*] will be
started immediately upon final selection of these two targets from among the
molecules [*] and [*].  The initial panel
of mutants of [*] Tier Targets [*] and [*] will be [*] and sent to Sunesis as
they become available, on a schedule designed to maintain Sunesis’ [*] across
all targets at a [*] that is manageable within the [*] of [*] in the
contract.  Initial [*] results on each
target will lead to the [*] and [*] of additional rounds of [*], and of [*] to
be [*].  If [*] Tier Target [*] and/or [*]
include one or both of [*] and [*], the [*] of these proteins may be produced
at Biogen by [*] or by [*] rather than by [*], to allow for [*] of [*] through [*]
of [*] to ensure [*].  As with [*], an
initial period of proof-of-concept work will be required to establish [*] for
the [*] and [*] of [*] of [*] Tier Targets [*] and [*].  The design of the initial panels of [*] or [*]
will take place concurrently with this proof-of-concept work, by collaboration
between scientists at the two sites. 
Subsequent rounds of [*] will be [*] and made in the same fashion.


 


[*] of [*] tier
targets will follow the bulk of the TNF [*] effort. This effort will occur
sequentially to the extent that is practical, with [*] being [*] first, [*] tier
target [*] 2nd, and [*] tier target [*] 3rd.  However, the [*] effort will adapt to
accommodate the availability of the different [*] of [*] as resources
permit.  With these targets too, as
iterative [*] of [*] and [*] advancement progress, [*] work and other [*] or [*]
approaches will be employed to obtain [*] on [*] of interest.  For any of these targets [*] determinations
and [*] of [*] may play an important role. 
This [*] work will be done at Biogen. 
[*] and [*] approaches will be used to guide a chemistry effort to
advance the [*] to [*] by [*] and [*]. 
As with TNF[*], the ultimate goal if any [*] Tier Target(s) are added to
the Field as [*] Targets will be to develop preliminary [*] compounds that are
sufficiently [*] to be [*] by [*] and [*], to be developed on a timeframe
dictated by the progress of the [*] and [*] efforts.  The activity of these preliminary [*] compounds
will be [*] by [*] guided by [*] data generated using these [*] and [*].  Some [*] work will also be done at both sites
to develop methods to establish the [*] of [*] ([*], etc.) for the [*] being
developed.


 


A major milestone
for this part of the collaboration will be (i) [*] of [*] and establishment of [*]
leading to the [*] of the [*] of [*] of [*] and of [*] Tier targets [*] and [*],
leading to the key milestone of [*] of [*] against each of these targets.  For each of the [*] Tier Targets, additional
milestones during the initial [*] months of the Research Term will be


 










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


 


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(ii) [*] of the
first [*] hits that meet [*], and (iii) generation of the first [*] of a [*] hit
[*] to a potentially important [*].  The
expectations for this part of the project are, for [*] Tier Target [*], to meet
goal (i) by approximately [*] months, and goal (ii) by approximately [*] months
and for [*] Tier Targets [*], and [*] to achieve Goal (i) by approximately [*] months
and Goal (ii) by approximately [*] months


 


A GANTT chart
illustrating timelines for the key activities for the work on [*]Tier Targets [*],
during months [*] is shown in Figure 1.


 


The approximate
total resources required for months [*], including all the work on TNF[*], [*],
and [*] Tier Targets [*] and [*] described above, is shown in table I (below).


 


Research Plan for months [*]


 


At the point at
which a bona fide [*] compound [*] has been [*] for
at [*] of the [*] targets, a [*] effort will be initiated on that target.  It is expected that this [*] will proceed up
to and beyond the [*] months that are the [*] term of the collaboration.  While [*] on TNF[*] or another [*] target is
in progress, it is envisioned that earlier-stage [*] activities on one or
several of the other collaboration targets may continue in [*] subject to the
available resources, if in the judgment of the JSC such activities are warranted
and if Biogen elects to include such target as a [*] Target.  The major activities for months [*] will
therefore be as follows:


 


A [*] effort
comprising ca. [*] individuals will work to develop [*] for the [*] series and
to optimize the [*] and [*] and other key properties of the molecule to the
point at which a [*] has been developed. 
This [*] will be supported by (i) [*] and [*], to generate the panel of [*]
and [*] required to [*] the compounds, and to perform these [*] on the
compounds that are generated by the [*] effort; (ii) [*] and [*] and [*], to
provide [*] approaches to [*]; (iii) [*], to establish [*] and [*] for key
compounds; and (iv) [*], to perform [*] to test for activity against the target
[*].  Some biological work to establish [*]
and other [*] for the compounds will be required as the project evolves.  [*] work will also continue, to establish the
[*] of [*] ([*], etc.) for the [*] being developed.  Continued [*] activities on [*] of the [*] collaboration
targets will likely proceed [*] with the above, with the [*] (though not the [*])
of [*] being as shown in the Research Plan for months [*] (above).


 


Most of the [*] work
will be done at Biogen.  This will
include (i) the [*], (ii) [*], (iii) [*] of [*] of different [*] with the
target protein for [*], (iv) [*] models, and (v) [*] using [*] assays.  Efforts at Sunesis will focus on [*] Target(s),
and on utilizing Sunesis’ [*] to support [*] efforts on the [*] target.


 


The major
milestones for this phase of the project are (i) achievement of compounds with [*]
and [*] in [*] assays that [*], (ii) achievement of compounds with [*] the
target [*], 


 










[*]         Certain information on
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has been requested with respect to the omitted portions.


 


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(iii) achievement
of compounds with [*] in [*] of disease. 
It is not expected that the milestone of achieving a [*] will occur [*]
the first [*] months of the collaboration.


 


The approximate
resources required for the stage of the project from months [*] are shown in
Table [*].  It should be noted that these
resource estimates are for [*] for a [*] target protein.  If [*] are found for [*] targets, resources
to [*] these [*] into [*] would be [*] to those shown in Table [*].


 










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


 


49





















 


Figure 1


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Qtr 1, 2003

  	
   

  	
  Qtr 2, 2003

  	
   

  	
  Qtr 3, 2003

  	
   

  	
  Qtr 4, 2003

  	
   

  	
  Qtr 1, 2004

  	
   

  	
  Qtr 2, 2004

  	
   

  	
  Qtr 3, 2004

  	
   

  
	
  ID

  	
   

  	
  Task
  Name

  	
   

  	
  Dec

  	
   

  	
  Jan

  	
   

  	
  Feb

  	
   

  	
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  1

  	
   

  	
  TNF
  Project (Month [*])

  	
   

  	
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  2

  	
   

  	
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  3

  	
   

  	
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  4

  	
   

  	
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  5

  	
   

  	
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  6

  	
   

  	
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  7

  	
   

  	
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  8

  	
   

  	
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  9

  	
   

  	
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  10

  	
   

  	
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  11

  	
   

  	
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  12

  	
   

  	
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  22

  	
   

  	
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  23

  	
   

  	
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  25

  	
   

  	
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  26

  	
   

  	
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  27

  	
   

  	
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  28

  	
   

  	
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  29

  	
   

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


 


50





















 


Part A:  [*]
for TNF:


 


	
   

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
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  Q4

  	
   

  	
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  Q6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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


 


51





















 


Part B:  [*] for [*]:


 


	
   

  	
   

  	
   

  	
   

  	
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  Q6

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
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  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  	
   

  
	
   

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [*]

  



 










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


 


52





















 


Table I:  [*]
for Months [*] (by activity)


 


	
  Activities (Months [*])

  	
   

  	
  [*]

  (BIOGEN)

  	
   

  	
  [*]

  (SUNESIS)

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  0.25
  APC

  	
   

  	
   

  	
   

  
	
  [*]

  [*]

  	
   

  	
  [*]

  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  [*]

  	
   

  	
  [*]

  	
   

  	
  -

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  [*]

  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  -

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  [*]

  	
   

  	
  -

  	
   

  	
  2.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  - [*]

  [*]

  - [*]

  	
   

  	
  [*]

  [*]



  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  [*]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  -

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  -

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  -

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL (Months [*])

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  



 










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


 


53





















 


Table II:  [*] for Months [*]


 


	
  Activities (Months [*])

  	
   

  	
  [*] (BIOGEN)

  	
   

  	
  [*]

  (SUNESIS)

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  -[*]

  -[*]

  	
   

  	
  [*]

  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  -

  	
   

  
	
  [*]

  	
   

  	
  [*]

  [*]

  	
   

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  [*]

  [*]

  	
   

  	
  -

  	
   

  	
  [*]

  	
   

  
	
  [*]

  [*]

  	
   

  	
  -

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  -

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  -

  	
   

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL (Months [*])

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  



 










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


 


54





















 


EXHIBIT 2.9


 


PHASE II DRUG COMPOUNDS


 


[no exceptions to date]


 


 


55





















 


EXHIBIT 5.3.4


 


FACILITY LOAN AGREEMENT


 


[previously filed as Exhibit 10.16 to Sunesis
Pharmaceuticals, Inc.'s Registration Statement on Form S-1 filed on
December 23, 2004]


 


 


56