EXHIBIT 10.7


 


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE
SECURITIES ACT OF 1933, AS AMENDED.


 


 


OMEGA INTERFERON


 


LICENSE AGREEMENT


 


EXECUTED


 


 


 





















 


TABLE OF CONTENTS


 


	
  1.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Affiliate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Effective Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  Field

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.4

  	
  Non-Manufacturing Know-How

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.5

  	
  Manufacturing Know-How

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.6

  	
  Licensed Product(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.7

  	
  Manufacturing Process

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.8

  	
  Net Sales

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.9

  	
  Patent Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.10

  	
  Phase II

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.11

  	
  Phase III

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.12

  	
  R&D Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.13

  	
  Settlement Agreement between BII and
  Genentech

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.14

  	
  Sublicensee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.15

  	
  Territory

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  GRANT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Grant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Sublicense

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  BII Obligations
  for the United States

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  DUE DILIGENCE BY BMI

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Development Planning

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Exercise of Diligence

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Commercialisation
  Plans in Certain Countries

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4

  	
  Potential
  Abandonment of Rights by BMI

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.5

  	
  Periodic Reporting

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.6

  	
  Need for
  Approval of Regulatory Authorities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  SUBLICENSING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Characteristics
  of Potential Sublicensees

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  BMI Duty to Inform

  	
   

  



 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


i





















 


	
  5.

  	
  BII
  REVIEW RIGHTS AND TERRITORIAL REVERSION RIGHTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  BII Clinical Data
  Review Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  BII Reversion Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  One-Time Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  DATA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Preclinical
  and Clinical Data, Non-Manufacturing Know-How

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Additional Reports

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  MANUFACTURING: PHASE II

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Responsibility
  for Phase II Manufacturing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Manufacturing
  Standards for Phase II Manufacturing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  Supplies
  for Phase II Clinical Trial described in Appendix D

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.4

  	
  Additional Phase
  II Clinical Supplies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.5

  	
  Cooperation During
  Manufacturing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  MANUFACTURING:
  PHASE III AND COMMERCIAL SUPPLY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Responsibility
  for Phase Ill Manufacturing and for Commercial Supply

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Price for
  Commercial Supplies/Minimum Order

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Floor Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  Payment Schedule
  and Cost Verification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5

  	
  Supply Agreement and
  Duration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.6

  	
  Payments for
  Supply in Deutsche Mark.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  PAYMENTS/ROYALTIES
  AND RELATED MATTERS.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  All Payments.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Initial Fee.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3

  	
  Milestones.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.4

  	
  Royalty Payments.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5

  	
  When Royalty Payments
  Are Not Due and Limitations Thereon.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.6

  	
  Not Due Royalty Payments
  on Supplies for Clinical Trials.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.7

  	
  Other Payments for Sales
  Within the United States.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.8

  	
  Sales Reporting.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.9

  	
  Timelines of Payments.

  	
   

  



 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


ii





















 


	
   

  	
  9.10

  	
  Financial Records
  and Verification.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.11

  	
  Taxes.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  INTELLECTUAL PROPERTY
  MATTERS.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Maintenance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2

  	
  Patent Term
  Extension or Equivalent.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.3

  	
  Notification
  Regarding Infringement.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.4

  	
  Litigation.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.5

  	
  Payments and Patent
  Litigation.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.6

  	
  Other Intellectual
  Property.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.7

  	
  Improvements to the
  Manufacturing Process.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  REPRESENTATIONS AND
  WARRANTIES.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Freedom to Execute
  Agreement.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.2

  	
  Patent Rights.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.3

  	
  Genentech, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.4

  	
  BII Affiliate(s).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.5

  	
  BMI Sublicensee(s).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  ASSIGNMENT, CHANGE IN
  CONTROL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Ability of BMI to
  Assign Agreement.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.2

  	
  Waiver of Consent.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.3

  	
  Change in Control.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  TERM AND TERMINATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Duration of Agreement.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.2

  	
  Paid-Up License.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.3

  	
  Termination Because
  of Unremedied Breach.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.4

  	
  Termination Because of Insolvency.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.5

  	
  Court-Awarded Damages.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.6

  	
  Continuation of Obligations.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.7

  	
  Duties of BMI After Breach.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.8

  	
  Duties of BMI After Bankruptcy.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  CONFIDENTIALITY

  	
   

  



 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


iii





















 


	
   

  	
  14.1

  	
  Transmittal of Information.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.2

  	
  Approval of Public Disclosure.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.3

  	
  Acknowledgment of Private
  Disclosure.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  COMMUNICATIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Instructions for Communications.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  MISCELLANEOUS
  PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.1

  	
  Governance of Agreement.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.2

  	
  Entire Agreement.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.3

  	
  Severability.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.4

  	
  Original Agreement and Counterparts.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.5

  	
  No Waiver of Rights.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.6

  	
  Section Titles.

  	
   

  



 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


iv





















 


LICENSE AGREEMENT


 


This agreement
(“Agreement”) is made and entered into this July 17, 1998 by and
between BOEHRINGER INGELHEIM INTERNATIONAL GMBH, a
corporation with offices at D 55216 Ingelheim/Rhein, Germany (“BII”), and BIOMEDICINES, INC., a Delaware corporation, with an address
for purposes of the Agreement at 909 Marina Village Parkway #583 Alameda,
California, United States of America (U.S.A.) 94501 (“BMI”).


 


WHEREAS, BII
is the owner of certain Patent Rights, Know-How, and the Manufacturing Process
(each as hereinafter defined) and has the right to grant the license
(“License”) set forth herein and, moreover, BII has developed certain
pharmaceutical formulations containing Omega Interferon (“Licensed Product” as
defined below) and has conducted Phase I clinical trials; and


 


WHEREAS, BMI
desires to establish whether the Licensed Product is useful in treating
patients with various diseases and, if so, to complete the development of
Licensed Product in order to commercialise Licensed Product; and


 


WHEREAS, BMI
desires to obtain an exclusive License in the Territory (as hereinafter
defined) under the Patent Rights and Know-How;


 


NOW,
THEREFORE, in consideration of the promises and mutual
covenants contained herein, and other good and valuable consideration, BII and
BMI agree as follows:


 


1.                                      DEFINITIONS


 


1.1                               Affiliate shall mean any corporation or business entity controlled by, controlling
or under common control with either BII or BMI, as the case may be. For this
purpose, control shall mean any of the following:


 


(a)                                  direct
or indirect beneficial ownership of more than fifty percent (50%) of the voting
stock of such entity;


 


(b)                                  fifty
percent (50%) or greater interest in the income of such entity;


 


(c)                                  a
fifty percent (50%) or greater management control over a joint venture; or


 


(d)                                  any
other relationship that, in fact, constitutes actual control.


 


1.2                               Effective Date shall mean the date of execution of the Agreement
as shown above.


 


1.3                               Field shall
mean the treatment of humans for diseases, disorders, conditions, and the like
by the administration of Licensed Product.


 


1.4                               Non-Manufacturing Know-How shall mean any and
all technical data or non-technical information, expertise, knowledge and the
like which relates to the Licensed Product or to the Patent Rights but
excluding Manufacturing Know-How. Such data or information shall


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


 


1





















 


include, without limitation, all pharmacological, toxicological,
clinical, and marketing or sales-related information as well as any other data,
information or designs used or specifically useful for the development or
commercialisation of the Licensed Product. Furthermore, Non-Manufacturing
Know-How includes similar data or information as described herein that may now
be known to, or is now in the possession of BII or its Affiliate(s) or which
may become known to or may come into the possession of BII or its Affiliate(s)
after the Effective Date provided that, in the event such data or information
is received from a third party, BII shall be entitled to pass on such data and
information to BMI.


 


1.5                               Manufacturing Know-How shall mean any and all
assay, chemical, control, and manufacturing information or data useful or
necessary for the successful development, registration, and commercialisation
of the Licensed Product.


 


1.6                               Licensed Product(s) shall mean one or more
pharmaceutical products initially developed by BII and containing Omega
Interferon (which is described more fully in Appendix A) and for use in the
Field including new formulations, if any, developed by BII or BMI after the
Effective Date.


 


1.7                               Manufacturing Process shall mean:


 


(a)                                  any
process for manufacturing Licensed Product which is covered in whole or in part
by any claim contained in the Patent Rights or by Manufacturing Know-How;


 


(b)                                  any
information or description of any process for manufacturing the Licensed
Product contained in a Drug Master File or similar document; or


 


(c)                                  any
modification or improvement thereto suggested, developed or introduced by BII,
BMI or Affiliates thereof during the course of either development or
commercialisation of the Licensed Product, provided, however, that any
modifications by BMI necessary to permit administration of Omega Interferon by
other than subcutaneous injection shall not necessarily become a part of the
Manufacturing Process as defined herein but shall be the subject of good faith
negotiations between BII and BMI.


 


1.8                               Net Sales
shall mean the actual gross amount invoiced by BMI, or by its Affiliates or
Sublicensees as the case may be, for sales of the Licensed Product in the
Territory to a third party during a calendar year after deduction of:


 


(a)                                  direct
transportation charges, including insurance therefor;


 


(b)                                  any
sales, use, value-added taxes, excise taxes and/or other similar duties or
allowances based on the selling price of the Licensed Product which become due
and are paid by BMI or paid by its Affiliates or Sublicensees as a consequence
of such sales;


 


(c)                                  trade,
quantity or cash discounts or rebates actually allowed or taken to the extent
customary in the trade, including (without limitation) governmental rebates;
and


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


2


















 


(d)           allowances
or credits, including but not limited to, allowances or credits to customers on
account of rejection or return of the Licensed Product.


 


The sale or
transfer by BMI to an Affiliate or Sublicensee for ultimate re-sale by such
Affiliate or Sublicensee shall not be considered a sale by BMI for the purpose
of this provision. (However, the actual resale by such Affiliate or Sublicensee
shall be a sale for purposes of calculating Net Sales.)


 


Any transfers or
dispositions of Licensed Product by BMI or its Affiliate(s) or its
Sublicensee(s) solely for pre-clinical, clinical, regulatory, or governmental
purposes, whether prior to or after a marketing approval may be granted in any
country, shall not be considered a sale by BMI for the purposes of this
provision.


 


1.9          Patent Rights
shall mean all of the following intellectual property of BII:


 


(a)           the
patents and patent applications listed in Appendix B;


 


(b)           the
patents issued from the applications listed in Appendix B and from divisionals
and continuations of these applications;


 


(c)           any
reissue or extension of patents in Appendix B; and


 


(d)           any
improvement patent dominated by the claims of the Patent Rights.


 


1.10        Phase II
shall mean


 


(a)           those
clinical studies performed in patients rather than normal volunteers; and


 


(b)           utilizing
drug supplies manufactured by the BII’s Affiliate Bender + Co., GmbH and/or
BII’s Affiliate Boehringer Ingelheim Pharma KG.


 


1.11        Phase III shall mean


 


(a)           those
clinical studies performed in patients rather than normal volunteers where the
purpose of said studies is specifically to obtain clinical data in support of
registration and subsequent commercialisation; and


 


(b)           utilizing
drug supplies manufactured by BII’s Affiliate Boehringer Ingelheim Pharma KG.


 


1.12        R&D Agreement shall mean an agreement between BMI
and Boehringer Ingelheim Pharma KG of even date with the Agreement for the
manufacture of Licensed Product.


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


3





















 


1.13        Settlement Agreement between BII and Genentech
shall mean the agreement between BII and the United States corporation
Genentech, Inc. dated [*] (the
Settlement Agreement).


 


1.14        Sublicensee shall mean a person or legal entity to
which BMI grants a sublicense of some or all of the rights granted to BMI under
Section 2.1.


 


1.15        Territory 
The territory (“Territory) shall be worldwide with the exception of the
United States of America. Asia (“Asia”) shall mean those countries of the
Territory shown in Appendix C. The European Union (“European Union”) shall be
those countries of the Territory officially recognised as members by the
European Parliament as of the Effective Date. In addition, BMI territorial
rights as described in the Agreement shall not be abridged because of a change
in the official country name or a change in geographic boundaries.


 


2.             GRANT


 


2.1          Grant.  Subject to the terms and conditions of the
Agreement, BII hereby grants to BMI, and BMI hereby accepts from BII, under the
Patent Rights and Non-Manufacturing Know-How an exclusive royalty-bearing right
and license (the “License”), even as to BII, to use, develop, market, and sell
Licensed Product in the Territory for uses within the Field and to use the
Manufacturing Know-How to the extent necessary to develop, register and
commercialise Licensed Product under the Agreement. BMI shall have no rights to
use the Manufacturing Know-How to manufacture Licensed Product or to have it
manufactured except by BII or by a BII Affiliate, as provided herein and in the
R&D Agreement, or unless otherwise approved by BII.


 


2.2          Sublicense.  BII also grants to BMI the right to
sublicense Licensed Product as provided for in this and in other Sections of
the Agreement.


 


2.3          BII Obligations for the United
States.  BII will utilise its best reasonable efforts
pursuant to Clause 11.3 to grant BMI a sublicense under the Settlement
Agreement.


 


3.             DUE DILIGENCE BY BMI


 


3.1          Development Planning.  Prior to initiating clinical testing with the
Licensed Product, BMI has provided BII a copy of the first clinical protocol
for a Phase II clinical trial for the indication of treating viral hepatitis.
Such protocol is attached to this Agreement as Appendix D. Both BII and BMI
acknowledge that such protocol is subject to regulatory approval and to
agreement with clinical investigators.


 


Prior to initiating
additional clinical trials for viral hepatitis or clinical testing for any
other indication, BMI will also provide to BII a suitably detailed protocol or
protocol outline for any other said clinical trial. BII will have the right but
not the obligation to provide comments on each protocol or protocol outline to
BMI. BMI may, at BMI’s discretion, modify any protocol in response to the
comments or suggestions made by BII.


 


3.2          Exercise of Diligence.  BMI agrees to exercise due diligence,
consistent with good business judgment, to develop Licensed Product in the
Territory, in particular in the


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


 


4





















 


European Union and in Japan. In this regard, BMI shall use its good
faith efforts to further develop, obtain regulatory approvals and commercialise
the Licensed Product in the Territory. It is understood, however, that not all
of the countries in the Territory outside the European Union and Japan will
necessarily be subject to initial development or commercialisation.


 


BMI shall bear the
responsibility for ensuring regulatory compliance, development, and
commercialisation when such activities are undertaken by BMI, BMI’s Affiliates
or Sublicensees.


 


3.3          Commercialisation Plans in
Certain Countries.  Within twelve (12) months after the first
filing for marketing approval of Licensed Product for the European Union or
Japan, whichever is earlier, BMI must disclose in writing to BII its plans to
develop, register and commercialise Licensed Product in countries outside the
European Union and Japan. Within sixty (60) days after receipt of said plans by
BII, BMI and BII agree to discuss said plans and to discuss in good faith any
reasonable modification thereof.


 


3.4          Potential Abandonment of Rights
by BMI.  In the event that registration and
commercialisation of Licensed Product under Section 3.2 is not consistent with
good business judgment in any country of the Territory, then such country shall
be deleted from the Territory and BII shall be entitled to make use in such
country of any data generated by BMI under such terms as are agreed by BII and
BMI taking into account the costs incurred by BMI generating such data and the
sales potential in such country.


 


3.5          Periodic Reporting.  BMI will provide periodic reports to BII
during the course of development in sufficient detail for BII to assess whether
BMI is in compliance with the diligence obligations in Section 3.2. BII may
make reasonable requests for additional information and BMI will make
reasonable efforts to comply with said requests for additional information
consistent with good business judgment.


 


3.6          Need for Approval of Regulatory
Authorities.  BII acknowledges that approval by regulatory
authorities may be necessary prior to the commencement of any clinical
development activities by BMI or BMI Sublicensees. No guarantee can be provided
that such regulatory approval will be obtained. Accordingly, while development
plans, protocols, protocol outlines, and the like will be provided in good
faith to BII by BMI, such plans or proposals must be viewed as tentative and
subject to regulatory approval.


 


4.             SUBLICENSING


 


4.1          Characteristics of Potential
Sublicensees.  In granting a sublicense, BMI agrees to
consider whether past or present activities by the potential Sublicensee would
substantially prejudice the relationship of either BMI or BII with recognised
health authorities in the United States, Europe, or Japan and to determine
whether the potential Sublicensee is engaged in substantive litigation
involving BII.


 


4.2          BMI Duty to Inform.  If BMI
intends to grant a sublicense, BMI must inform BII in writing as soon as
commercial terms have been substantively agreed but in any event at least
thirty (30) days in advance of the granting of each sublicense in order that
BMI can consider possible objections by BII under Section 4.1.


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


5





















 


5.             BII REVIEW RIGHTS AND
TERRITORIAL REVERSION RIGHTS


 


5.1          BII Clinical Data Review Rights.  Within thirty (30) days of the availability
within or to BMI of a clinical trial report for any completed trial, BMI shall
provide a copy of the report to BII.


 


5.2          BII Reversion Rights


 


5.2.1       Interests
of the parties.  BII has a possible
interest in the reversion of some or all of the rights granted under this
Agreement in the event BMI can demonstrate to BII’s satisfaction clinical
benefits of Licensed Product. BMI has a possible interest in granting a
sublicense in Asia before such clinical benefits have been demonstrated.


 


5.2.2       For
[*].  Notwithstanding Section 5.2.3,
BII agrees that BMI shall be free to conclude a sublicensing agreement with a
third party for [*] and/or other countries [*] at any time after the Effective Date and on any terms
acceptable to BMI provided, however, that such terms must also be in compliance
with the terms of the Agreement.


 


In the event, BMI
sends to a prospective [*] Sublicensee
any preclinical or clinical data concerning Licensed Product that did not
originate from or within BII or a BII Affiliate (“New Data”), then BMI will
send such New Data to BII on or before the date such New Data is sent to such
prospective Sublicensee and BII shall have the opportunity to negotiate for the
reversion of the rights granted under this Agreement.


 


5.2.3       Rights
of First Refusal.  Within thirty (30)
days after receiving from BMI the final clinical trial report for the clinical
study described in Appendix D, BII shall inform BMI in writing whether it
wishes to negotiate the reversion of some or all of the rights granted to BMI
under this Agreement in the countries of the Territory except for countries
where BMI has granted a Sublicense under Clause 5.2.2. If BII does so wish,
then both BMI and BII agree to negotiate in good faith for no more than an
additional sixty (60) days the potential terms of such reversion (“Reversion
Terms”). Until the expiration of this sixty (60) day period, BMI may not
conclude a Sublicense agreement with any third party except for countries in
Asia pursuant to Section 3.2.


 


In the event that
BMI rejects said Reversion Terms, then BMI shall be free thereafter to conclude
one or more new sublicensing agreements with a third party for any country
provided that the sublicense terms agreed with the third party for any such
country must be on terms no more favorable to the third party than were the Reversion
Terms previously offered by BII to BMI.


 


If both BII and
BMI agree to Reversion Terms, however, then BII and BMI shall conclude a new
agreement embodying said Reversion Terms as soon as practicable. Due diligence
by BII will be determined by the terms of the new agreement embodying said
Reversion Terms.


 


BII may decline,
however, to review such clinical trial report. If BII declines, then BII waives
its rights under this Section 5.2.3.


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


6





















 


5.3          One-Time Rights.  Both BII
and BMI agree that the reversion rights described in this Section 5 shall be
“one-time” rights only and shall expire following the earliest of the following
independent and mutually exclusive events:


 


(a)           the
decision by BII to decline to review the report regarding the clinical study of
Appendix D; or


 


(b)           the
end of the thirty(30)-day review period referred to in Section 5.2.3 but then
if, and only if, BII has not yet informed BMI in writing of BII’s wish to
negotiate Reversion Terms; or


 


(c)           the
end of sixty-day negotiation period referred to in Section 5.2.3 but then if,
and only if, BII and BMI have not yet agreed on said Reversion Terms.


 


6.             DATA


 


6.1          Preclinical and Clinical Data,
Non-Manufacturing Know-How.  BII shall make available to BMI, in English
where available in English, and in German where unavailable in English,
Non-Manufacturing Know-How, any and all preclinical and clinical data, or other
data or information generated by BII or its Affiliate(s) from preclinical or
clinical research with regard to the development of the Licensed Product.


 


BII shall deliver
to BMI such Non-Manufacturing Know-How, data, information or documents
reasonably requested by BMI from time to time during the term of the Agreement.
Such delivery will occur within sixty (60) days of such request by BMI.


 


BMI acknowledges,
however, that BII shall be obliged to make available only those data or
documents already in the possession of BII or an Affiliate as of the Effective
Date or which come into the possession of BII or an Affiliate as a result of
BII’s own development activities or those of said BII Affiliate.


 


6.2          Additional Reports


 


In addition to
reports provided by BMI pursuant to Section 3.5, BMI shall during the term of
the Agreement provide BII with such written reports and analyses as BII shall
reasonably request regarding the development, regulatory approval and/or
commercialisation of Licensed Product. BI acknowledges, however, that BMI shall
be obliged to make available only those data or documents already in the
possession of BMI or a BMI Affiliate or Sublicensee.


 


7.             MANUFACTURING: PHASE II


 


7.1          Responsibility for Phase II
Manufacturing.  Bender + Co. GmbH (an Affiliate of BII
located in Vienna, Austria) will be responsible for manufacturing Licensed
Product for the Phase II clinical trial described in Appendix D and possibly
for additional Phase II clinical trials. Such manufacturing will be performed
according to the currently established Manufacturing Process. Bender + Co. will
manufacture Licensed Product exclusively for BMI in the Territory.


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


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7.2          Manufacturing Standards for
Phase II Manufacturing.  Manufacturing of Licensed Product for the
Phase II clinical trial described in Appendix D will be performed according to
manufacturing standards set by the currently applicable regulations,
directives, or decisions of the European Union (as now published in the
Official Journal of the European Community or its successor publication).


 


7.3          Supplies for Phase II Clinical
Trial described in Appendix D.  Utilising the services of BII’s Affiliate
Bender + Co. GmbH, BII shall, upon BMI’s reasonable request, deliver to BMI
(and otherwise free of charge to BMI) [*] of Licensed
Product and [*] of placebo. The Licensed
Product shall be [*] in bulk unlabelled [*], without final packaging, having undergone successful
release testing, ex works.  Each [*] shall contain a withdrawable amount of [*] of Omega Interferon in addition to the standard
excipients. The placebo [*] will be
identical except that there shall be no Omega Interferon contained therein.


 


Temporary storage
of undelivered [*] for up to [*]
months will be provided for BMI as reasonably required by BMI, also without
additional charge. Costs for labeling, final packaging, insurance, and
shipping, however, will be the responsibility of BMI. The shelf life, or time
until expiry, of such [*] will be
sufficient to permit reasonable completion of the clinical trial described in
Appendix D.


 


These supplies
will be available for delivery at a time reasonably agreed by both BII (or its
Affiliate, as appropriate) and BMI.


 


7.4          Additional Phase II Clinical
Supplies.  While it is understood that BMI intends to
perform the study described in Appendix D, additional studies may be required
in one or more indications before Phase III studies can commence. BII, again
through its Affiliate Bender + Co. GmbH, agrees to supply to BMI at mutually
agreed intervals additional [*] of Licensed
Product or matching placebo. The actual supply price for up to [*] manufactured by Bender and Co. will be:


 


	
  Quantity* (μg/[*])

  	
   

  	
  0 (Placebo)

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  Price**

  DM/[*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  



 










* The Quantity (mg/[*]) will be such that the withdrawable quantity of drug per
[*] will be at least [*] μg.


 


** The price shown
in DM will be converted to Euro at such time as the Euro replaces the DM.


 


7.5          Cooperation During Manufacturing.  It is understood by both BII and BMI that
manufacturing activities require time and appropriate planning and that,
therefore, reasonable requests with regard to timing, the number of [*], and the quantity per [*]
will be essential. BMI specifically acknowledges this need for reasonableness.
Similarly, BII acknowledges that good faith efforts are essential in promoting
efficient development and commercialisation. BII agrees to obligate its
Affiliate to cooperate with BMI in managing all aspects of the Manufacturing
Process.  Such cooperation will be based
on the principles of good faith negotiations and reasonableness in all matters.


 










[  * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


 


8





















 


8.             MANUFACTURING: PHASE III AND
COMMERCIAL SUPPLY


 


8.1          Responsibility for Phase Ill
Manufacturing and for Commercial Supply.  BMI shall be responsible for supply of
Licensed Product in support of Phase III clinical testing and subsequent
commercialisation. For this purpose, BMI has concluded the R & D Agreement
with BI Pharma KG, which addresses the basic issues of an intended supply
agreement.


 


8.2          Price for Commercial
Supplies/Minimum Order.  BMI shall purchase its requirements of Licensed
Product at a price which will be the higher of


 


(i)            a
percentage of the [*] by BMI,
BMI’s Affiliate or Sublicensee in the Territory as laid down in Art. 9 below;
or


 


(ii)           the
floor price per [*] according to Section 8.3
below.  The minimum quantity per order
will be [*].


 


8.3          Floor Price.  Notwithstanding the above Section 8.2, under
no circumstances will BII be obliged to sell commercial quantities of Licensed
Product at a price below the following prices in Deutsche Mark per [*] dependent on the number of [*]
ordered and bought and the withdrawable quantity of drug per [*]:


 


	
   

  	
   

  	
  Quantity (μg/[*])

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*] ordered

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  



 


The above floor
prices per [*] shall remain valid for a
period up until [*] years after first introduction
of Licensed Product in the Territory. BII will be entitled to increase the
floor prices to apply after such period in the event BII’s manufacturing costs
specific to Licensed Product increase by more than [*]
between the date of first supply under this Section 8 and the end of such
period. Such increase in floor price will be equal to the [*]
in BII’s manufacturing costs specific to Licensed Product from the date of
first supply to the end of such period. BMI shall be entitled to have such
increase verified by an independent accountant according to international
generally accepted accounting principles.


 


8.4          Payment Schedule and Cost
Verification.  BMI will pay to BII within 30 days of
delivery of each batch of Licensed Product the floor price as defined in
Section 8.3 above. In the event such price is calculated according to Section 8.3 i) above (based on BII’s manufacturing cost), BII will
at the request of BMI permit an independent accountant to verify such
manufacturing costs according to generally accepted good accounting practices.


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


9





















 


8.5          Supply Agreement and Duration.  Approximately one (1) year prior to
launch of Licensed Product BMI and BII or a BII Affiliate will conclude a
detailed supply agreement based on the terms of the above Sections 8.1 to 8.4.


 


8.6          Payments for Supply in Deutsche
Mark.  Payment for supplies of Licensed Product will
be in Deutsche Mark or Euro at such time as the Euro replaces the Deutsche
Mark. Any currency conversions shall be made using the average quarterly
exchange rates published regularly by Citibank, New York, or its successor. The
average will be calculated by summing the exchange rates for the final business
day of each of the three (3) months in the applicable calendar quarter and
dividing by three (3). All currency conversions will be calculated to an
accuracy of three (3) digits after the decimal point.


 


9.             PAYMENTS/ROYALTIES AND RELATED
MATTERS.


 


9.1          All Payments. 
All payments under the following Sections 9.2 and 9.3 shall be made in
United States (U.S.) dollars ($.)


 


9.2          Initial Fee. 
Within thirty (30) days of signing the Agreement, BMI shall pay to BII
the sum of [*]. This sum shall include payment
to BII for the drug supplies for the first Phase II clinical trial as described
in Section 7.3.


 


9.3          Milestones.  BMI shall pay to BII each of the following
sums within forty-five (45) days of:


 


(a)           filing
an application to the health authorities for marketing approval:


 


	
  Location

  	
   

  	
  Amount ($ U.S.)

  
	
  European Union*

  	
   

  	
  [*]

  
	
  Japan

  	
   

  	
  [*]

  



 










* to be adjusted
pro rata on the basis of population in the event of national filing(s)


 


(b)           receiving
the first approval for marketing from the health authorities in:


 


	
  Location

  	
   

  	
  Amount ($ U.S.)

  
	
  European Union*

  	
   

  	
  [*]

  
	
  Japan

  	
   

  	
  [*]

  



 










* to be adjusted
pro rata on the basis of population in the event of national approval(s)


 


No
milestone payments will be due in the event of filing a marketing application
or for the receipt of a regulatory approval elsewhere in the Territory. The
milestone amounts identified in a) and b) above shall be payable to BII after
the occurrence of the stated event(s) regardless of whether BMI has signed a
sublicensing agreement for the country in question.


 


9.4          Royalty Payments.  BMI
shall pay to BII royalties on aggregate Net Sales by BMI, BMI’s Affiliate or
Sublicensee in the Territory as follows:


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


10





















 


	
  Net Sales

  ($ millions U.S.)

  	
   

  	
  Royalty Rate

  (%)

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  



 


Such
royalty shall be payable until the last to expire of the Patent Rights in each
country or for a period of [*] years from
the date of market introduction of Licensed Product in such country, whichever
period is longer.


 


9.5          When Royalty Payments Are Not Due
and Limitations Thereon.  Notwithstanding
the foregoing provisions of Section 9.4, royalty payments shall not be due to
BII for the sale of any [*] of Licensed
Product purchased and paid for by BMI under the R & D Agreement:


 


(a)           manufactured,
of necessity, as a condition of obtaining regulatory approval to market
Licensed Product (so-called “Qualifying Batches”); and


 


(b)           not
used in clinical testing.


 


In no
event, however, will the total number of royalty-free [*]
exceed one and one-half (1.5) times the number of [*]
in any one standard, commercial-sized batch manufactured at any time after the
manufacture of the Qualifying Batches.


 


It is currently
anticipated that the standard commercial-sized batch will be [*]. Therefore, it is anticipated that the maximal number of
royalty-free [*] may not exceed [*] in number.


 


9.6          Not Due Royalty Payments on Supplies
for Clinical Trials.  In addition,
royalty payments shall not be due on supplies manufactured to support clinical
trials by BMI or by BMI Affiliates or Sublicensees including Phase IV clinical
trials carried out after market introduction. The Floor Price per [*] will be due to BII in lieu of the payments described in
Section 9.5 for all of Licensed Product used in clinical trials.


 


9.7          Other Payments for Sales Within the
United States.  In the event, BII
grants BMI a sublicense in the United States, BMI will pay BII the following:


 


(a)           any
royalty or other payment due according to the terms of Sections 8.2, 8.3, 9.4,
9.5, and 9.6 of the Agreement; and


 


(b)           plus
[*] of any similarly calculated
compensation, royalty or other similar payment due from BII to Genentech, Inc.,
if any, and according to the terms of the Bll-Genentech Settlement Agreement
(“Supplemental U.S. Royalty”). Because the current royalty rate due to
Genentech, Inc. from BII is now [*] of Net
Sales, the Supplemental U.S. Royalty would be [*]
of Net Sales, provided, however, that the payment by BMI to BII in any calendar
year shall be no less than the compensation due from BII to Genentech.


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


11





















 


9.8          Sales Reporting.  BMI will
oblige any party marketing Licensed Product in the Territory to deliver to BII
periodic financial reports. These reports will be consistent with generally
accepted accounting principles and in a format consistent with BII’s internal
accounting policies. The reports will be delivered to BII within sixty (60)
days after the close of each calendar quarter and will show separately for each
Licensed Product:


 


(a)           gross
sales, categorised by units sold and by total revenue;


 


(b)           Net
Sales, detailing the deductions allowed under Section 1.8;


 


(c)           details
of the quantities sold in each country;


 


(d)           royalties
or other like compensation due pursuant to the Agreement; and


 


(e)           the
respective Floor Price already paid for the [*]
bought from BII or its Affiliates.


 


BII
agrees to make available sufficient information regarding its internal
accounting policies to facilitate preparation of the required reports.


 


9.9          Timelines of Payments.  Concurrently with the making of any such
financial reports as described above (i. e. within sixty (60) days of the end
of such calendar quarter), BMI shall pay the amount of royalties due on Net
Sales during the preceding calendar quarter. BMI shall be allowed to deduct all
payments already made in the respective quarter for the supply of Licensed
Product according to Section 8.3 above.


 


If BMI shall fail
to make said payment when due, such party shall have an additional five (5)
business days from the date such payment was due to cure such non-payment.


 


9.10        Financial Records and
Verification.  BMI, or its Affiliates or Sublicensees as
appropriate (each a “Selling Party” for purposes of this Section), shall keep
sufficiently complete and accurate records


 


a)             to
properly reflect all gross sales and deductions from Net Sales; and


 


b)             to
enable the amounts payable hereunder to be determined.


 


Upon the written
request of BII, the Selling Party shall permit an independent certified public
accounting firm to verify the accuracy of reports and amounts paid to BII. This
process of verification may apply to either or both of the two most recent
fiscal years of the Selling Party. The accounting firm will be selected by BII,
will be of international standing, and will be otherwise reasonably acceptable
to the Selling Party. The activities of the accounting firm will be paid for
solely by BII except as provided below.


 


Representatives of
the accounting firm will be permitted to have reasonable access, for reasonable
periods of time, to certain financial records of the Selling Party. Such access
will be limited to that reasonably necessary for the accounting firm to verify
the appropriateness of the payments made previously to BII. The accounting firm
shall disclose in writing all information


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


12


















 


gathered
to the Selling Party. In the form of a written report, the accounting firm
shall disclose to BII only whether or not payments made to BII were reasonably
correct and the specific details concerning any purported discrepancies. No
other information shall be shared with BII. The accounting firm will provide
its report simultaneously to BII and to BMI and to the BMI Affiliate or
Sublicensee as appropriate.


 


If, and only if,
the accounting firm concludes that additional royalties or other compensation
are definitely owed for the audited period, and the additional amount owed
exceeds, in aggregate, five percent (5%) of amount actually paid, then the
Selling Party shall take additional actions to remedy this underpayment. BMI
will then:


 


(a)                                  pay
all reasonable costs associated with the audit that demonstrated the
underpayment (or repay BII for said audit costs, as appropriate);


 


(b)                                  pay
the underpaid amount within thirty (30) days of the date the accounting firm
delivered the report to BII and BMI; and


 


(c)                                  pay
interest on the underpaid amount only 
(The interest rate will be the average prime rate of interest calculated
from end-of-quarter data reported by the Deutsche Bank, Frankfurt am Main,
utilising data from all quarters since the end of the audited period.)


 


Should,
however, the accounting firm conclude that the Selling Party has overpaid
royalties or other compensation to BII, then BII shall credit any such
overpayment to BMI (or otherwise to a Selling Party as appropriate). This
credit will be applied during the next complete calendar quarter for which
payments are due to BII.


 


9.11                        Taxes.  BMI shall be entitled to deduct any
withholding taxes from the payments due under this Agreement. BMI will then pay
the withheld amount to the proper tax authorities as required by the laws of
the country in the Territory applicable at the date of payment. BMI shall use
reasonable best efforts to ensure that any withholding taxes imposed and paid
are reduced or eliminated as far as possible under the terms of the current or
any future “double-taxation” agreement between the United States of America and
Germany.


 


10.                               INTELLECTUAL PROPERTY MATTERS.


 


10.1                        Maintenance


 


(a)                                  BII
shall, subject to good business judgment, at its sole cost and expense maintain
the Patent Rights in Appendix A.


 


(b)                                  If
BII shall elect not to maintain Patent Rights in any country within the
Territory, BMI shall have the right to assume, at BMI’s sole cost and expense,
the maintenance of any such Patent Rights and BMI shall be entitled to deduct
its expenses in maintaining such Patent Rights from any milestone or other
payments to BII for sales of Licensed Product in said country.


 


(c)                                  Maintenance
shall include the continuing effort, on the basis of good business judgment, to
obtain issued patents where patent applications are now pending.


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


13





















 


(d)                                  BI
will provide BMI with annual reports regarding the status and maintenance of
Patent Rights and probable or actual changes thereto.


 


10.2                        Patent Term Extension or Equivalent.


 


(a)                                  In
the event an extension of a patent is available, BII shall have the right to
designate the patent or patents for which such extension will be applied.


 


(b)                                  If
BII shall elect not to extend Patent Rights in any country within the Territory,
BMI shall have the right to extend, at BMI’s sole cost and expense, any Patent
Rights not otherwise extended by BII and BMI shall be entitled to deduct such
costs and expenses from any milestone or royalty payments due to BII by BMI,
its Affiliates or Sublicensees for sales of Licensed Product in said country.


 


10.3                        Notification Regarding
Infringement.  Each of the
Parties shall notify the other promptly in the event that it becomes aware of
any alleged infringement of the Patent Rights by a third party and of any
available evidence thereof.


 


10.4                        Litigation.


 


(a)                                  BII
agrees, subject to good business judgment, to prosecute and/or defend Patent
Rights against challenge or infringement by any third party or parties.


 


(b)                                  In
the event that BII shall elect not to defend Patent Rights against challenge or
infringement, BMI, its Affiliates or Sublicensees, may prosecute and/or defend
any infringement and/or challenge to the Patent Rights.


 


(c)                                  In
any infringement suit BMI, its Affiliates or Sublicensees may institute to
enforce the Patent Rights pursuant to the Agreement, or in any suit brought by
a third party in which BMI, its Affiliates or Sublicensees is defending the
Patent Rights, BII shall cooperate in all reasonable respects and, to the
extent practicable, have its employees and, if practicable, former employees,
testify when requested. BII will also make available relevant records, papers,
information, samples, specimens and the like. BII will obligate its own
Affiliates to cooperate in a similar manner.


 


(d)                                  If,
as a result of any such suit, the Patent Rights are held in any country to be
not enforceable or invalid pursuant to a judgment rendered by a court of final
determination and not subject to appeal, then, from and after the date of the
filing of the action which resulted in such judgment, the royalties or other
payments computed on the basis of Net Sales in that country, and payable
pursuant to the Agreement hereunder, shall be reduced by fifty percent (50%).
Notwithstanding the possible reduction of fifty percent, however, the royalties
or ether payments are still subject to the Floor Price of Section 8.3.


 


10.5                        Payments and Patent Litigation.  If BMI, its Affiliates or Sublicensees, shall
undertake the enforcement or defense by litigation of the Patent Rights in any
country in the Territory, any royalties or other payments due to BII on Net
Sales in such country may be withheld. Such withholding may be applied only
toward the reimbursement of expenses, including attorney’s fees, related to
said litigation. Such withholding shall not, however, exceed


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


14





















 


fifty percent (50%) of the amount that would otherwise have been due to
BII. If such withheld sums are specifically recovered, however, from an
offending third party, then the recovered sum will be remitted to BII. The
remission will occur within sixty days of the recovery. No interest shall be
paid on the sums withheld. Notwithstanding the foregoing in this Section 10.5,
however, the royalties or other payments are still subject to the Floor Price
of Section 8.3.


 


10.6                        Other Intellectual Property.  Trademarks, service marks, and tradenames, or
any applications pertaining thereto, as shall be selected, chosen, created or
developed by BMI, its Affiliates or Sublicensees, pursuant to any effort to
develop and commercialise the Licensed Product shall be the exclusive property
of BMI, its Affiliates or Sublicensees, as appropriate.


 


10.7                        Improvements to the Manufacturing
Process.  Any improvements to the
Manufacturing Process proposed by BMI, paid for by BMI, whether in whole or in
part, and implemented by BII or a BII Affiliate to manufacture Licensed Product
shall be licensed exclusively but for BII or its Affiliates or Licensees to BMI
for the duration of this Agreement. However, such improvements may not be
utilised to manufacture any other product containing Omega Interferon without
the written consent of BMI.


 


11.                               REPRESENTATIONS AND WARRANTIES.


 


11.1                        Freedom to Execute Agreement.
Each of BII and BMI represent and warrant to the other party that:


 


(a)                                  it
is free to enter into the Agreement and has the full right and authority to do
so;


 


(b)                                  it
has taken all corporate action necessary to authorise the execution and
delivery of the Agreement and the performance of its obligations under the
Agreement;


 


(c)                                  it
is not aware of any impediment that would inhibit its ability to perform in all
material respects its obligations under the Agreement; and


 


(d)                                  the
execution, delivery and performance of the Agreement will not violate any provision
of, conflict with or result in any breach of any of the terms of, or constitute
a default under either party’s respective certificate of incorporation,
by-laws, or any material indenture, lease, any other agreement (including
specifically the Settlement Agreement) or other material instrument to which it
is a party, or any decree, judgment or order applicable to such party or any
law, statute, rule or regulation applicable to such party.


 


11.2                        Patent Rights.  BII hereby represents and warrants to BMI
that:


 


(a)                                  it
is the legal assignee of the Patent Rights covered by the Agreement;


 


(b)                                  it
has the full legal power to convey the rights granted to BMI in the Agreement;


 


(c)                                  it
has no knowledge of any facts which would rebut the presumption of validity
accorded any issued patents within the Patent Rights;


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


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(d)                                  it
has disclosed to the United States Patent and Trademark Office, or to other
similar offices in other countries, all information “material to
patentability,” as such is defined in 37 C.F.R. §1.56;


 


(e)                                  it
has no knowledge of any adverse claims to the Patent Rights;


 


(f)                                    all
patent applications included in the Patent Rights are pending and have not been
abandoned and are enforceable as of the Effective Date pursuant to a valid
assignment;


 


(g)                                 to
its best knowledge and belief, as of the Effective Date, there is no asserted
or unasserted claim or demand which may be enforced against any of the Patent
Rights;


 


(h)                                 to
its best knowledge and belief, on the Effective Date the practice of any
processes and/or products disclosed in the Patent Rights do not infringe upon
any third party patents; and, in addition, that


 


(i)                                    BII
has not entered into any agreement with any other party which is in conflict
with the rights granted to BMI pursuant to the Agreement.


 


11.3                        Genentech, Inc.  BII
further hereby represents that it will work diligently and in good faith with
BMI in a continuing effort to reduce, relieve, or (if possible) eliminate the [*] regarding [*] of Licensed
Product in the United States as set by the Settlement Agreement. If BII
concludes that such good faith efforts have failed or are not likely to
succeed, BII and BMI agree to discuss possible alternatives, and to implement
at the sole risk of BMI any mutually agreeable alternative, that will:


 


(a)                                  permit
BII to keep its prior binding commitments to Genentech, Inc.; and


 


(b)                                  notwithstanding
(a), will nonetheless permit the timely [*] by BMI or
its Affiliates or Sublicensees, of the Licensed Product in the United States.


 


11.4                        BII Affiliate(s).  BII
represents and warrants that it will contractually obligate its Affiliate(s) to
adhere substantially to the terms of the Agreement regarding any
responsibilities transferred by BII to said Affiliate pursuant to the Agreement,
if any. BII further warrants and represents that it will indemnify BMI against
financial losses, direct or indirect, incurred by BMI because of breach of any
contractual obligations of any BII Affiliate to BMI or because of gross
negligence by a BII Affiliate with regard to its duties to BMI within the
limitations in the R&D Agreement and subsequent supply agreements.


 


11.5                        BMI Sublicensee(s).  BMI represents and warrants that it will
contractually obligate its Affiliate(s) and Sublicensee(s) to adhere
substantially to the terms of the Agreement regarding any responsibilities
transferred by BMI to said Affiliate(s) or Sublicensee(s) pursuant to the
Agreement. BMI further warrants and represents that it will indemnify BII
against financial losses, direct or indirect, incurred by BII because of breach
of any contractual obligations of BMI to BII or because of gross negligence by
a BMI Affiliate or sublicensee with regard to duties to BII BMI has transferred
to its Affiliate or sublicensee.


 










[  * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


 


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12.                               ASSIGNMENT, CHANGE IN CONTROL


 


12.1                        Ability of BMI to Assign Agreement.  The Agreement shall be assignable by BMI with
the prior written consent of BII, which consent shall not be unreasonably
withheld.


 


12.2                        Waiver of Consent.  BII agrees to waive its rights to withhold
consent for assignment by BMI if a sublicense has been granted for each country
and only in such country or if the Licensed Product has been approved for
marketing (whether or not Licensed Product has actually been sold) in the
European Union or Japan.


 


12.3                        Change in Control.  A change in control in BMI (as evidenced by
the acquisition by one person or entity of more than fifty percent {50%} of
voting stock), except for that occasioned by the bankruptcy of BMI, shall not
affect the right of BMI to assign the Agreement. BMI agrees, however, to inform
BII promptly upon any such change in control. In addition, acquisition of
voting control of BMI by any or all of current BMI shareowners shall not, for
purposes of the Agreement, constitute a change in control.


 


13.                               TERM AND TERMINATION


 


13.1                        Duration of Agreement.  Except as otherwise specifically provided
herein, or unless sooner terminated pursuant to other provisions within the
Agreement, the Agreement and the licenses and rights granted to BMI hereunder
shall remain in full force and effect for as long royalties are payable on
sales in any country of the Territory pursuant to Section 9.4.


 


13.2                        Paid-Up License.  Following expiration of the Agreement
pursuant to Section 13.1 hereof, BMI and/or its Sublicensee(s) as applicable,
shall have a perpetual, fully paid up non-exclusive license under the rights
granted.


 


13.3                        Termination Because of Unremedied
Breach.  Either BII or BMI shall have
the right to terminate the Agreement with thirty (30) days’ notice in written
form to BMI or BII, respectively, in the event that:


 


(a)                                  BMI
or BII, respectively, fails to remedy any material failure to fulfill its
obligations under the Agreement; or


 


(b)                                  a
material breach of the terms or conditions hereof is not cured within sixty
(60) days after receipt of notice in written form specifying the circumstances
giving rise to failure or breach.


 


13.4                        Termination Because of Insolvency.  Either BII or BMI may terminate the
Agreement with immediate effect by notice in written form in the event that BMI
or BII, respectively, becomes insolvent, is declared bankrupt or adopts a plan
of liquidation and dissolution.


 


13.5                        Court-Awarded Damages.  Any court-awarded damages granted to BMI
arising from material breach or bankruptcy, respectively, may be deducted from
milestone, royalty, or other like payments which may be subsequently due to
BII, respectively.


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


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13.6                        Continuation of Obligations.  Upon termination of the Agreement pursuant to
provisions contained herein, nothing herein shall be construed to release
either BII or BMI from any obligation that matured prior to the termination.


 


13.7                        Duties of BMI After Breach.  Upon termination of the Agreement by BII
pursuant to Section 13.3 herein, BMI will transfer or have transferred to BII
any approvals for clinical trials or sale of Licensed Product granted to and/or
owned by BMI or its Affiliates or Sublicensees and will do so free of charge to
BII. BII may use such authorisations freely in its sole discretion.


 


13.8                        Duties of BMI After Bankruptcy.  Upon termination of the Agreement by BII
pursuant to Section 13.4 herein, BMI will transfer or have transferred to BII
any authorisations for clinical trials or sale of Licensed Product granted to
and/or owned by BMI or by its Affiliates, but not by its Sublicensees, upon
payment to BMI by BII of an amount representing the fair market value of the
assets to be transferred. Following such transfer, BII may use such
authorisations freely in its sole discretion.


 


14.                               CONFIDENTIALITY


 


14.1                        Transmittal of Information.  Any information which is transmitted by one
party to the other party in connection with the entering into or the
performance of the Agreement, shall be kept confidential by the receiving party
and its Affiliates and/or Sublicensees prior to the expiration or termination
of the Agreement and for a period of five (5) years thereafter its expiration.
The foregoing obligation shall not apply to:


 


(a)                                  any
information which at the time of disclosure or acquisition is part of the
public knowledge or literature, or thereafter becomes part of the public
knowledge or literature otherwise than by unauthorised disclosure by the
recipient;


 


(b)                                  any
disclosure of information to the United States Food and Drug Administration
(“FDA”) or other similar governmental authority for the purpose of complying
with regulatory requirements regarding Licensed Product;


 


(c)                                  any
information which at the time of disclosure or acquisition was in the recipient’s
possession as evidenced by its written records;


 


(d)                                  any
information which became available to the recipient from another source not
bound to secrecy to the disclosing party with respect to such information;


 


(e)                                  disclosure
by the recipient to third parties under provisions of confidentiality similar
to those contained in the Agreement for the purposes of development or
marketing of the Licensed Product or financing thereof; and


 


(f)                                    any
disclosure of information required by law; provided; however, that BII shall
have the right to review any press releases relating to the Agreement prior to
dissemination by BMI.


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


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14.2                        Approval of Public Disclosure.  Notwithstanding the provisions of Section
14.1 herein, in the event that either BII or BMI, its Affiliates and/or
Sublicensees, shall determine that it wishes to disclose publicly any
information regarding the Agreement, such party shall present to BMI or BII, as
appropriate, a written request for such disclosure. The recipient of the
request to permit disclosure shall have a period often (10) calendar days to
approve the requested disclosure. The requested approval shall not be
unreasonably withheld.


 


14.3                        Acknowledgment of Private Disclosure.  Notwithstanding the provisions of Sections
14.1 and 14.2 herein, BMI may disclose to a third party or parties confidential
or nonconfidential information regarding the Licensed Product or the Agreement
in the pursuit of commercialisation of the Licensed Product.


 


15.                               COMMUNICATIONS


 


15.1                        Instructions for Communications.  Any payment, notice or other communication
pursuant to the Agreement shall be sufficiently made or given on the date of
mailing if sent to such party by certified or registered first class mail,
postage prepaid, or by recognised public courier (for example,  “Federal Express”) addressed to it at its
address below or as it shall otherwise subsequently designate by written
notice:


 


In the
case of BII:


 


Boehringer
Ingelheim International GmbH


D-55216
Ingelheim/Rhein, Germany


Attention:
Corporate Licensing


with a copy to:
Legal Department


 


 


In the
case of BMI:


 


BioMedicines, Inc.


909 Marina Village
Parkway #583


Alameda, CA 94501


with a copy to:
Legal Department


 


16.                               MISCELLANEOUS PROVISIONS


 


16.1                        Governance of Agreement.  The Agreement shall be construed,
governed, interpreted and applied in accordance with the laws of Germany,
except that questions affecting the construction and effect of any patent shall
be determined by the law of the country in which the patent was granted; and
disputes arising out of the Agreement which cannot be settled between the
Parties will be brought before the courts of Germany.


 


16.2                        Entire Agreement.  Both BII and BMI acknowledge that the
Agreement sets forth the entire agreement and understanding of both BII and BMI
as to the subject matter hereof. No other previous oral or previous written
communications between BII and BMI with respect to the License granted
hereunder shall be of any force or effect. In addition, the


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


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Agreement may be modified only by the execution of a subsequent written
amendment approved by both BII and BMI.


 


16.3                        Severability.  The provisions of the Agreement are
severable, and in the event that any provision(s) of the Agreement shall be
determined to be invalid or unenforceable under any controlling body of the
law, such invalidity or unenforceability shall not in any way affect the
validity or enforceability of the remaining provisions hereof.


 


16.4                        Original Agreement and Counterparts.  The Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.


 


16.5                        No Waiver of Rights.  The failure of either BII or BMI to assert a
right hereunder or to insist upon compliance with any term or condition of the
Agreement shall not constitute a waiver of that right or excuse a subsequent
failure to perform any term or condition by BMI or BII, respectively.


 


16.6                        Section Titles.  The
titles or headings of various numbered or unnumbered Sections in the Agreement
are for reference only and do not limit or modify the substance of the
Agreement in any way.


 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


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IN
WITNESS WHEREOF, the BII and BMI have hereunto duly executed
the Agreement as of the day and year set forth above.


 


	
  Boehringer Ingelheim International GmbH

  
	
   

  
	
  By:

  	
  /s/ C. Hauke

  	
   

  	
  /s/ D. A. Mitchard

  	
   

  
	
  Name: Dr. C. Hauke

  	
   

  	
  Dr. D. Mitchard

  
	
   

  	
  (Authorised Signatories)

  
	
   

  	
  28.6.1998

  
	
   

  
	
   

  
	
  BioMedicines, Inc,

  
	
   

  
	
  By:

  	
  /s/ S. M. Moran

  	
   

  
	
  Name:

  	
  S. M. Moran, M.D.

  
	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
  23 July, 1998

  
	
   

  
	
   

  
	
  Appendices

  
	
   

  
	
  A

  	
   

  	
  Structure of Omega Interferon

  
	
  B

  	
   

  	
  Patents and Patent Applications

  
	
  C

  	
   

  	
  Countries of Asia

  
	
  D

  	
   

  	
  Clinical Trial Protocol

  
											



 










[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


21


















 


Appendix
A


 


Structure
of Omega Interferon


 


The following
figure shows the amino acid sequence of human [*] (underlined).


 












[  * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.


 


1






















 


Appendix
B


Patents
and Patent Applications


 


[*]


 


The
legal status of the patents or patent applications corresponding to [*]
in other countries is as follows:


 


[*]


 












[  * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.


 


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Appendix C

Countries of Asia


 


Afghanistan


Armenia


Azerbaijan


Bahrain


Bangladesh


Belorussia


Brunei


Cambodia


China


Georgia


Hong
Kong


India


Indonesia


Iran


Iraq


Israel


Japan


Jordan


Kazakhstan


Kirghizia


Korea
(North and South)


Kuwait


Laos


Lebanon


Malaysia


Mongolia


Myanmar


Nepal


Oman


Pakistan


Philippines


Qatar


Russia


Saudi
Arabia


Singapore


Sri
Lanka


Syria


Tadzhikistan


Taiwan


Thailand


Turkey


Turkmenistan


Ukraine


United
Arab Emirates


 












[  * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.


 


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Uzbekistan


Viet
Nam


Yemen


 












[  * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.


 


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Appendix
D


Clinical
Trial Description


 


(rest of page blank)


 












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CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.


 


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[*]


 












[  * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.


 


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LETTER
AMENDMENT TO THE OMEGA INTERFERON LICENSE AGREEMENT


 


BioMedicines,
Inc.


1301
Marina Village Parkway


Suite
200


Alameda,
CA  94501


U.S.A.


 


21 February 2000


 


Dear
Sirs:


 


Under
an Agreement dated July 17, 1998, Boehringer Ingelheim International GmbH
(“BII”) has granted BioMedicines, Inc. (“BMI”) certain rights to formulations
of Omega Interferon (the “Agreement”) and BMI is commencing clinical trials
with one such formulation.  This letter
Amendment is to confirm the agreement between BII and BMI to more specifically
define the rights granted in relation to new dosage forms and indications.


 


Therefore,
BII and BMI hereby agree as follows:


 


A.                                    Definitions:  All capitalised items not otherwise defined
in this letter Amendment shall have the meaning given to them in the Agreement.


 


B.                                    Section
1.3 is amended to read as follows:  “1.3
“Field”
shall mean the treatment of humans by the administration of Licensed Product
for diseases, disorders, conditions and the like except multiple sclerosis.”


 


C.                                    Section
1.6 is amended to read as follows:  “1.6
“Licensed
Product” shall mean one or more pharmaceutical products initially
developed by BII and containing Omega Interferon (which is described more fully
in Appendix A), including all such products suitable for administration [*]
whether or not initially developed by BII, and for use in the Field, including
new formulations, if any, developed by BII or BMI after the Effective Date.”


 


D.                                    A
new Section 2.4 is added as follows: 
“2.4 BII agrees to inform BMI in advance before BII grants rights to any
[*]
of Omega Interferon to any third party and to discuss any possible conflict
between BMI and such third party. BII agrees to exclude the indications [*]
from any such rights granted to a third party. 
Any agreement between BII and such third party will provide for a fair
compensation to BMI in the event such third party benefits from [*]
at BMI’s expense under the R&D Agreement.”


 


E.                                      The
beginning of the first sentence of Section 5.2.3 is amended to read as
follows:  “5.2.3 “Rights of First Refusal”  Within thirty (30) days after receiving from
BMI the final clinical trial report for one of the clinical studies described
in Appendix D...”


 












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CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.


 


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The definition of
“Reversion Terms” in Section 5.2.3 is extended by adding a new sentence as
follows:  “Reversion Terms” shall also
apply to development of the oral dosage form referred to in Section 5.2.4 (new)
and the sustained release dosage form referred to in Section 5.2.5 (new)
as the case may be.”


 


F.                                      New
Sections 5.24. and 5.2.5 are added:


 


“5.2.4 “Oral Form”  If BMI develops an oral form of Licensed
Product, than within thirty (30) days after receiving from BMI both the final
preclinical report for a study reporting the results of oral [*]
testing in an animal model of Omega Interferon and the results of one of the
clinical trials pursuant to Section 5.2.3, BII shall inform BMI in writing
whether it wishes to negotiate the reversion of some or all of the rights
granted to BMI under this Agreement in the countries of the Territory except
for countries where BMI has granted a Sublicense under Clause 5.2.2.  If BII does so wish, then both BMI and BII
agree to negotiate in good faith for no more than an additional sixty (60) days
the Reversion Terms.  Until the
expiration of this sixty (60) day period, BMI may not conclude a Sublicense
agreement with any third party except for countries in Asia pursuant to Section
3.2.  Discussions shall then continue as
described in paragraphs 2 and 3 of Clause 5.2.3.”


 


“5.2.5 “[*]”  If BMI develops a [*] for Licensed Product,
then within thirty (30) days after receiving from BMI both the final [*]
report referred to in Appendix F and the results of one of the clinical trials
pursuant to Section 5.2.3, BII shall inform BMI in writing whether it
wishes to negotiate the reversion of some or all of the rights granted to BMI
under this Agreement in the countries of the Territory except for countries
where BMI has granted a Sublicense under Clause 5.2.2.  If BII does so wish, then both BMI and BII
agree to negotiate in good faith for no more than an additional sixty (60) days
the Reversion Terms.  Until the
expiration of this sixty (60) day period, BMI may not conclude a Sublicense
agreement with any third party except for countries in Asia pursuant to Section
3.2.  Discussions shall then continue as
described in paragraphs 2 and 3 of Clause 5.2.3.”.


 


G.                                    Section
5.3 is revised as follows:  “5.3 “One-Time
Rights”  Both BII and BMI
agree that the reversion rights described in Section 5.2.3, 5.2.4 and 5.2.5
shall be “one-time” rights only and shall expire following the earliest of the
following independent and mutually exclusive events:


 


a.                                       the
decision by BII to decline to review the report regarding one of the clinical
studies of Appendix D or the preclinical reports of Sections 5.2.4 or 5.2.5 as
the case may be; or


 


b.                                       the
end of the thirty (30)-day period referred to in Section 5.2.3, 5.2.4 or 5.2.5
as the case may be but then if, and only if, BII has not yet informed BMI in
writing of BII’s wish to negotiate Reversion Terms; or


 












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c.                                       the
end of the sixty (60)-day negotiation period referred to in Section 5.2.3,
5.2.4 or 5.2.5 as the case may be but then if, and only if, BII and BMI have
not yet agreed on said Reversion Terms.”


 


H.                                    A
new sentence is added at the end of Section 6.2:  “The obligation to provide such written reports shall also apply
to [*]
of Omega Interferon developed by BMI during the term of this Agreement.”


 


I.                                         Wherever
the word “trial” appears in Section 7.1., 7.2 and 7.3 it is replaced by the
word “trials.”


 


J.                                      The
second sentence of Section 7.4 is amended to read as follows:  “BII through its Affiliate BI Austria
(formerly Bender and Co. GmbH) or BI Pharma KG, agrees to supply BMI at
mutually agreed intervals, to be laid down in the R&D Agreement, additional
[*]
of Licensed Product or matching Placebo subject for each batch of [*]
to the stability and release for clinical trials of the Omega Interferon drug
substance batches which were available at BI Austria on the Effective Date.”


 


K.                                    New
Sections 7.6 and 7.7 are added:


 


“7.6  “Bulk Drug Substance”.  BII shall supply to BMI [*] of Omega Interferon bulk
substance.  BMI agrees to use such bulk
substance exclusively for [*] as described in Appendix E and a [*]
as described in Appendix F.  BMI
acknowledges that this bulk drug substance has not been released for use in
humans.”


 


7.7  “Additional Supplies of Bulk Drug Substance”.  One completion of the [*] studies described in
Appendices E and F and the clinical trials in Appendix D, BMI will inform
BII in each case of its interest in proceeding with the development of each [*]
BMI shall inform BII on the proposed changes with respect to bulk drug
substance and final [*] supply requirements, based on the
results from such studies.  Within sixty
days upon receiving such information BII or BI Pharma KG shall prepare a
proposal on further drug supply for the support of clinical trials.  If appropriate, BMI shall negotiate with BII
or BI Pharma KG in good faith the terms for BII or BI Pharma KG to supply BMI
with committed quantities of bulk drug substance and drug product for further
development.  BMI and BI Pharma KG will
also agree on a new project plan and on the conditions of supply in terms of
feasibility, time, costs and workscope to be laid down as an Amendment to the
R&D Agreement.  Notwithstanding the
second paragraph of Section L, BMI and BI Pharma KG will also agree to the
terms for the transfer of BI Pharma KG’s rights and obligations to manufacture
sustained release injectable drug product to BMI and/or a third party.


 


L.                                     A
new Section 7.8 is added as follows: 
“7.8 “[*]”.  Within sixty
(60) days after BMI has provided BII with all relevant information regarding
its plans for development of a [*] including product requirements,
expected market size and manufacturing technology, the Parties will negotiate
in good faith the basic terms of a supply agreement including prices for commercial
supplies, minimum orders, reserved capacity at BII and commitments to


 












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CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
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purchase
by BMI.  A detailed supply agreement
will be concluded at the latest [*] prior to the launch of each Licensed
Product.


 


At its sole discretion,
BI Pharma KG may decide to exercise its rights to manufacture [*]
under Section 9 of the R&D Agreement by describing the CMC information for
regulatory submissions in the form of a master file.  BMI agrees to ensure that such BI Pharma KG rights are
acknowledged in any BMI agreements with third parties on the development of new
dosage forms.”


 


M.                                  Appendix
D is updated and consists of the 3 BMI protocols dated 19.04.1999, 15.09.1999
and 18.09.1999.


 


N.                                    Two
new Appendices are added:


 


“E.                                Development
of [*]


 


F.                                      Development
of [*]”


 


Best
regards


Boehringer
Ingelheim


International
GmbH


pps.


 


/s/ Dr.
D. Mitchard


 


Dr. C.
Hauke Dr. D. Mitchard


 


Please
acknowledge your agreement to the above letter Amendment by signing below where
indicated.


 


BioMedicines,
Inc.


 


	
  By:

  	
  /s/ S M Moran

  	
   

  
	
   

  
	
  Name:

  	
  SM Moran, M.D.

  	
   

  
	
   

  
	
  Title:

  	
    Chief Executive Officer

  	
   

  
	
   

  
	
   

  	
  24 February 2000

  	
   

  
						



 












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Appendix
E


 


Oral
Formulation Research Plan


 


BioMedicines,
Inc. (BMI) and Protein Delivery, Inc. (PDI) have executed an agreement to
explore the feasibility of developing an oral formulation of omega
interferon.  PDI will utilize patented
technology to [*] to produce one of two general structures:


 


[*]


 


After
generating up to three different OFP or OPF structural classes representative
structures from each class will be examined with the BM8233 commercial assay
for quantitating omega interferon.  BMI
will supply the assay and methodology. PDI will establish the assay in its facilities.


 


In
addition, these representative structures will be assayed for bioactivity.  Currently, the two companies intend to
develop the A549-EMCV bioassay utilizing cells and virus obtained from the U.S.
ATCC and methods to be developed by the two companies.  It is anticipated, however, that the assay
system will be established in a Biohazard 3 capable laboratory extrinsic to
both companies.  The most probable sites
are the University of Utah and Duke University.  Final selection of a bioassay laboratory will be made at a later
date.


 


If a
suitable OFP or OPF structure can be identified which is both measurable and
active, the molecule will be scaled up sufficiently to permit testing of oral
absorption.  Currently, PDI is utilizing
a rodent model developed collaboratively with Duke University.  In addition, BMI is now negotiating with XTL
Biotherapeutics regarding the XTL Trimeris biosystem.


 


The
overview described above is necessarily brief and will be expanded during the
course of detailed planning and execution. 
Subsequent, more detailed plans can be made available as they are
developed.  Currently, PDI and BMI
expect to pursue the activity-timetable shown on the following page.


 












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CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.


 


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Oral
Formulations Activity Timetable


 


[*]


 












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THE SECURITIES ACT OF 1933, AS AMENDED.


 


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Appendix
F


 


Sustained
Release Formulation Research Plan


 


Bio-Medicines,
Inc. (BMI) and Durect, Inc. (DI) have a non-binding agreement to explore the
feasibility of developing a sustained release formulation of omega
interferon.  DI will utilize patented
technology to produce both a new formulation of unmodified omega interferon
suitable for inclusion in the Duros® technology.


 


DI has
certain rights under license from the Alza Corporation.  Currently the rights to develop a [*]
will need to be obtained from Alza.  BMI
and DI have agreed upon a structure for the feasibility, development and
subsequent commercialization duties and rewards, if any, for the successful
development of a sustained release formulation.


 


The two
companies have agreed in principle that a formal proposal will be made to Alza
once it is established that the feasibility work can be executed. BMI will
provide omega interferon, assay reagents and methodologies and conduct the
appropriate quantitative and bioassay testing. 
DI will be responsible for developing a formulation containing omega
that is compatible with Duros, will be responsible for [*] will be conducted [*]
to include a maximum of [*] will be the responsibility of BMI.  The principal goal will be to determine if
omega [*].


 


The
overview described above is necessarily brief and will be expanded during the
course of detailed planning and execution. 
Subsequent, more detailed plans can be made available as they are
developed.  Currently, DI and BMI expect
to pursue the activity-timetable shown on the following page.


 












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CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.


 


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Sustained
Release Formulation Activity Timetable


 


[*]


 












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CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.


 


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