EXHIBIT 10.6


 










[ *
] = 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.


 


 


ATAMESTANE


 


LICENSE AGREEMENT


 





















Atamestane


License Agreement

Confidential


 


Table of Contents


 


	
   

  	
   

  	
   

  	
  Page no.

  
	
  1.

  	
   

  	
  DEFINITIONS

  	
  IV

  
	
  1.1

  	
   

  	
  ACCOUNTING
  STANDARDS

  	
  IV

  
	
  1.2

  	
   

  	
  ACTUAL
  MANUFACTURING COSTS

  	
  IV

  
	
  1.3

  	
   

  	
  AFFILIATE

  	
  V

  
	
  1.4

  	
   

  	
  ATAMESTANE

  	
  V

  
	
  1.5

  	
   

  	
  CMC
  DEVELOPMENT

  	
  V

  
	
  1.6

  	
   

  	
  CMC
  COSTS

  	
  V

  
	
  1.7

  	
   

  	
  CMC
  PLAN

  	
  V

  
	
  1.8

  	
   

  	
  DEVELOPMENT

  	
  V

  
	
  1.9

  	
   

  	
  DEVELOPMENT
  COSTS

  	
  V

  
	
  1.10

  	
   

  	
  DEVELOPMENT
  PLAN

  	
  VI

  
	
  1.11

  	
   

  	
  EFFECTIVE
  DATE

  	
  VI

  
	
  1.12

  	
   

  	
  FIELD

  	
  VI

  
	
  1.13

  	
   

  	
  GOOD
  MANUFACTURING PRACTICES

  	
  VI

  
	
  1.14

  	
   

  	
  JOINT
  DEVELOPMENT COMMITTEE

  	
  VI

  
	
  1.15

  	
   

  	
  KNOW-HOW

  	
  VI

  
	
  1.16

  	
   

  	
  LICENSED
  PRODUCT(S)

  	
  VII

  
	
  1.17

  	
   

  	
  MANUFACTURING
  IMPROVEMENTS

  	
  VII

  
	
  1.18

  	
   

  	
  MANUFACTURING
  PROCESS(ES)

  	
  VII

  
	
  1.19

  	
   

  	
  NET
  SALES

  	
  VII

  
	
  1.20

  	
   

  	
  PATENT
  RIGHTS

  	
  VIII

  
	
  1.21

  	
   

  	
  PHASE
  III STUDY(-IES)

  	
  VIII

  
	
  1.22

  	
   

  	
  REGISTRATION
  BATCH(ES)

  	
  VIII

  
	
  1.23

  	
   

  	
  SUBLICENSEE

  	
  VIII

  
	
  1.24

  	
   

  	
  TERRITORY

  	
  VIII

  
	
  2.

  	
   

  	
  GRANT

  	
  IX

  
	
  2.1

  	
   

  	
  LICENSE

  	
  IX

  
	
  2.2

  	
   

  	
  RIGHT
  AND SUBLICENSE

  	
  IX

  
	
  3.

  	
   

  	
  DATA AND DUE DILIGENCE

  	
  IX

  
	
  3.1

  	
   

  	
  ACCESS
  TO SCHERING KNOW-HOW

  	
  IX

  
	
  3.2

  	
   

  	
  JOINT
  DEVELOPMENT COMMITTEE

  	
  X

  
	
  3.3

  	
   

  	
  EXERCISE
  OF DILIGENCE BY BIOMEDICINES

  	
  XII

  
	
  3.4

  	
   

  	
  NEED
  FOR APPROVAL OF REGULATORY AUTHORITIES

  	
  XII

  
	
  3.5

  	
   

  	
  DEVELOPMENT
  COSTS

  	
  XII

  
	
  4.

  	
   

  	
  CMC DEVELOPMENT

  	
  XII

  
	
  4.1

  	
   

  	
  PLANNING

  	
  XII

  
	
  4.2

  	
   

  	
  IMPROVEMENTS
  TO MANUFACTURING

  	
  XIII

  
	
  4.3

  	
   

  	
  NEW
  PATENTS RELATED TO MANUFACTURING

  	
  XIII

  
	
  4.4

  	
   

  	
  EXISTING
  DRUG SUBSTANCE

  	
  XIII

  
	
  4.5

  	
   

  	
  INITIAL
  DRUG PRODUCT

  	
  XIII

  
	
  4.6

  	
   

  	
  COSTS
  OF CMC DEVELOPMENT COSTS

  	
  XIV

  
	
  4.7

  	
   

  	
  REIMBURSEMENT
  OF SCHERING

  	
  XIV

  
	
  5.

  	
   

  	
  SCHERING MANUFACTURING OPTION

  	
  XIV

  
	
  5.1

  	
   

  	
  DRUG
  SUBSTANCE OPTION

  	
  XIV

  
	
  5.2

  	
   

  	
  DRUG
  PRODUCT OPTION

  	
  XV

  
	
  5.3

  	
   

  	
  PAYMENTS
  BY BIOMEDICINES TO SCHERING FOR MANUFACTURING

  	
  XV

  
	
  5.4

  	
   

  	
  MANUFACTURING
  DATA

  	
  XV

  
	
  5.5

  	
   

  	
  SCHERING
  COMPLIANCE WITH GOOD MANUFACTURING PRACTICES

  	
  XVI

  
	
  5.6

  	
   

  	
  BIOMEDICINES
  MANUFACTURING

  	
  XVI

  
	
  5.7

  	
   

  	
  BIOMEDICINES
  COMPLIANCE WITH GOOD MANUFACTURING PRACTICES

  	
  XVI

  



 


i





















 


	
  5.8

  	
   

  	
  NO
  INTENDED SURRENDER OF COMMERCIAL RIGHTS TO A THIRD PARTY

  	
  XVII

  
	
  5.9

  	
   

  	
  SCHERING
  MARKETING WITHOUT MANUFACTURING

  	
  XVII

  
	
  5.10

  	
   

  	
  REIMBURSEMENT
  OF ACTUAL MANUFACTURING COSTS

  	
  XVII

  
	
  6.

  	
   

  	
  MARKETING AND MARKETING OPTIONS

  	
  XVIII

  
	
  6.1

  	
   

  	
  SCHERING
  OPTION IN THE NON-US TERRITORY

  	
  XVIII

  
	
  6.2

  	
   

  	
  SCHERING
  OPTION IN THE UNITED STATES

  	
  XXI

  
	
  6.3

  	
   

  	
  OTHER
  RIGHTS AND OBLIGATIONS

  	
  XXI

  
	
  6.4

  	
   

  	
  DEVELOPMENT
  AFTER EXERCISE OF AN OPTION

  	
  XXII

  
	
  6.5

  	
   

  	
  FAILURE
  TO PURSUE COMMERCIALISATION

  	
  XXII

  
	
  6.6

  	
   

  	
  SUBLICENSING
  BY BIOMEDICINES

  	
  XXIII

  
	
  6.7

  	
   

  	
  SUB-LICENSING
  BY SCHERING

  	
  XXIII

  
	
  7.

  	
   

  	
  POTENTIAL COMPETITION FOR
  LICENSED PRODUCT

  	
  XXIII

  
	
  7.1

  	
   

  	
  INTERESTS
  OF BOTH PARTIES

  	
  XXIII

  
	
  7.2

  	
   

  	
  PROTECTION
  OF INTERESTS

  	
  XXIV

  
	
  8.

  	
   

  	
  INITIAL FEE, MILESTONE AND
  ROYALTY PAYMENTS

  	
  XXIV

  
	
  8.1

  	
   

  	
  CURRENCY

  	
  XXIV

  
	
  8.2

  	
   

  	
  INITIAL
  FEE

  	
  XXIV

  
	
  8.3

  	
   

  	
  MILESTONES

  	
  XXV

  
	
  8.4

  	
   

  	
  ROYALTY
  PAYMENTS AND OTHER POTENTIAL AGREEMENTS

  	
  XXV

  
	
  8.5

  	
   

  	
  POTENTIAL
  REDUCTION IN ROYALTIES

  	
  XXVI

  
	
  8.6

  	
   

  	
  BIOMEDICINES
  REPORTS REGARDING ROYALTIES

  	
  XXVI

  
	
  8.7

  	
   

  	
  SCHERING
  REPORTS REGARDING ROYALTIES

  	
  XXVI

  
	
  8.8

  	
   

  	
  TIMELINESS
  OF PAYMENTS

  	
  XXVI

  
	
  8.9

  	
   

  	
  TIMING
  AND DURATION OF ROYALTY PAYMENTS

  	
  XXVI

  
	
  8.10

  	
   

  	
  FINANCIAL
  RECORDS AND VERIFICATION

  	
  XXVII

  
	
  8.11

  	
   

  	
  TAXES

  	
  XXVIII

  
	
  9.

  	
   

  	
  INTELLECTUAL PROPERTY AND
  RELATED MATTERS

  	
  XXVIII

  
	
  9.1

  	
   

  	
  MAINTENANCE

  	
  XXVIII

  
	
  9.2

  	
   

  	
  PATENT
  TERM EXTENSION OR EQUIVALENT

  	
  XXIX

  
	
  9.3

  	
   

  	
  NOTIFICATION
  REGARDING INFRINGEMENT

  	
  XXIX

  
	
  9.4

  	
   

  	
  LITIGATION

  	
  XXIX

  
	
  9.5

  	
   

  	
  PAYMENTS
  AND PATENT LITIGATION

  	
  XXX

  
	
  9.6

  	
   

  	
  OTHER
  INTELLECTUAL PROPERTY

  	
  XXX

  
	
  9.7

  	
   

  	
  OTHER
  PATENT-RELATED MATTERS

  	
  XXX

  
	
  10.

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
  XXXI

  
	
  10.1

  	
   

  	
  FREEDOM
  TO EXECUTE AGREEMENT

  	
  XXXI

  
	
  10.2

  	
   

  	
  PATENT
  RIGHTS

  	
  XXXI

  
	
  10.3

  	
   

  	
  KNOW-HOW

  	
  XXXI

  
	
  10.4

  	
   

  	
  NO
  WARRANTY ON FITNESS FOR USE

  	
  XXXII

  
	
  10.5

  	
   

  	
  PAST
  COMPLIANCE WITH GOOD MANUFACTURING PRACTICES

  	
  XXXII

  
	
  11.

  	
   

  	
  LIABILITY AND INDEMNIFICATION

  	
  XXXII

  
	
  11.1

  	
   

  	
  BIOMEDICINES
  OBLIGATIONS

  	
  XXXII

  
	
  11.2

  	
   

  	
  BIOMEDICINES
  AFFILIATE(S) OR SUBLICENSEE(S)

  	
  XXXII

  
	
  11.3

  	
   

  	
  SCHERING
  OBLIGATIONS

  	
  XXXII

  
	
  11.4

  	
   

  	
  SCHERING
  AFFILIATE(S) OR SUBLICENSEE(S)

  	
  XXXIII

  
	
  11.5

  	
   

  	
  UNALLOCATED
  LIABILITY

  	
  XXXIII

  
	
  12.

  	
   

  	
  ASSIGNMENT, CHANGE IN CONTROL

  	
  XXXIII

  
	
  12.1

  	
   

  	
  ABILITY
  OF BIOMEDICINES TO ASSIGN AGREEMENT

  	
  XXXIII

  
	
  12.2

  	
   

  	
  CHANGE
  IN CONTROL

  	
  XXXIII

  



 


 


ii





















 


	
  13.

  	
   

  	
  TERM AND TERMINATION

  	
  XXXIII

  
	
  13.1

  	
   

  	
  DURATION
  OF AGREEMENT

  	
  XXXIII

  
	
  13.2

  	
   

  	
  TERMINATION
  BECAUSE OF UNREMEDIED BREACH

  	
  XXXIV

  
	
  13.3

  	
   

  	
  TERMINATION
  BECAUSE OF INSOLVENCY

  	
  XXXIV

  
	
  13.4

  	
   

  	
  SCHERING
  SPECIAL OPTION

  	
  XXXIV

  
	
  13.5

  	
   

  	
  COURT-AWARDED
  DAMAGES

  	
  XXXV

  
	
  13.6

  	
   

  	
  CONTINUATION
  OF OBLIGATIONS

  	
  XXXV

  
	
  14.

  	
   

  	
  CONFIDENTIALITY

  	
  XXXV

  
	
  14.1

  	
   

  	
  TRANSMITTAL
  OF INFORMATION

  	
  XXXV

  
	
  14.2

  	
   

  	
  APPROVAL
  OF PUBLIC DISCLOSURE

  	
  XXXVI

  
	
  14.3

  	
   

  	
  ACKNOWLEDGMENT
  OF PRIVATE DISCLOSURE

  	
  XXXVI

  
	
  15.

  	
   

  	
  COMMUNICATIONS

  	
  XXXVI

  
	
  15.1

  	
   

  	
  INSTRUCTIONS
  FOR COMMUNICATIONS

  	
  XXXVI

  
	
  16.

  	
   

  	
  MISCELLANEOUS PROVISIONS

  	
  XXXVI

  
	
  16.1

  	
   

  	
  GOVERNANCE
  OF AGREEMENT

  	
  XXXVI

  
	
  16.2

  	
   

  	
  ENTIRE
  AGREEMENT

  	
  XXXVI

  
	
  16.3

  	
   

  	
  SEVERABILITY

  	
  XXXVII

  
	
  16.4

  	
   

  	
  ORIGINAL
  AGREEMENT AND COUNTERPARTS

  	
  XXXVII

  
	
  16.5

  	
   

  	
  NO
  WAIVER OF RIGHTS

  	
  XXXVII

  
	
  16.6

  	
   

  	
  SECTION
  TITLES

  	
  XXXVII

  
	
  16.7

  	
   

  	
  FORCE
  MAJEURE

  	
  XXXVII

  
	
   

  	
   

  	
   

  	
   

  



 


APPENDICES


 


Appendix A:         Patents
and Patent Applications


Appendix B:          Preliminary
Clinical Development Plan


Appendix C:          Considerations
for Chemistry, Manufacturing and Controls


 


 


 


 


iii





















 


DRAFT
LICENSE AGREEMENT


 


This agreement (“Agreement”)
is made and entered into this 1st day of February 1999 by and between SCHERING AKTIENGESELLSCHAFT, a German corporation, with an
address for purposes of this Agreement at Berlin-Wedding, Müllerstralbe
178, Berlin, Germany (“Schering”), 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.)
94501 (“BioMedicines”).


 


WHEREAS,
Schering is the owner of certain Patent Rights, Know-How, and Manufacturing
Process(es) as defined herein; and


 


WHEREAS,
Schering has the right to grant a license (“License”) as set forth herein and,
moreover, has conducted limited preclinical and clinical development of
Atamestane as further defined herein; and


 


WHEREAS,
BioMedicines desires to establish whether the Licensed Product as defined
herein is useful in treating patients with breast cancer and, if so, to complete
the development of and to commercialise Licensed Product; and


 


WHEREAS,
BioMedicines desires to obtain an exclusive license in respect of the Licensed
Product in the Territory as defined herein under the Patent Rights, Know-How,
and the Manufacturing Process(es); and


 


WHEREAS,
Schering wishes to grant such an exclusive license to BioMedicines subject to
the Schering manufacturing and marketing option rights and other terms
hereinafter described;


 


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


 


1.                                      DEFINITIONS


 


1.1                               Accounting Standards shall mean, for Schering, the
International Accounting Standards (so-called “IAS” accounting) as amended from
time to time and, for BioMedicines, Generally Accepted Accounting Principles
(so-called “GAAP” accounting), also as amended from time to time.  The Parties agree that if changes in GAAP or
IAS after the date hereof result in economically material differences between
GAAP and IAS, the parties will attempt to reach an equitable resolution of such
differences through good faith negotiations.


 


1.2                               Actual Manufacturing Costs shall mean the cost of
producing drug substance or drug product or Licensed Product, as the case may
be, calculated by using the manufacturer’s standard accounting procedures
computed in accordance with Accounting Standards, applicable to the individual
manufacturer, and applied on a consistent basis.  Such costs shall include, without limiting
the generality hereof, the fully-burdened cost of all raw materials, labor and
overhead for the synthesis, formulation, filling, finishing, labeling,
packaging, storing, testing, and quality control and quality assurance
activities.  Such costs shall also
include any value-


 










[ * ] = 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





















 


added taxes or reasonable transportation charges and any payments made
to unrelated third parties in connection with the manufacturing process or
materials used therein.


 


1.3                               Affiliate shall mean any person, corporation,
partnership, firm, joint venture or other entity which, directly or indirectly,
through no intermediary or through one or more intermediaries controls, is
controlled by, or is under common control with either BioMedicines or Schering,
as the case may be.  Control is
understood to mean the possession of the authority, power or right to direct or
to cause the direction of the management and/or policies and actions of the
Affiliate.


 


1.4                               Atamestane shall mean the compounds described in
Appendix A


 


1.5                               CMC Development shall mean those activities associated
with the development of a process or processes for the manufacture of
Atamestane and/or Licensed Product, including but not limited to development of
chemistry, manufacturing and controls (“CMC”) of Licensed Product (as defined
herein), including but not necessarily limited to the synthesis, formulation,
filling, finishing, labeling, packaging, storing, testing, and quality control
and quality assurance activities, completion of documentation, and compilation
of regulatory dossiers, and the like, where such activities are understood to
be necessary or desirable to facilitate the registration and approval of
Licensed Product in the Territory (as defined herein).  CMC Development also includes transfer of
manufacturing processes to and validation at the manufacturing sites as a
pre-requisite for a successful Pre-approval inspection.


 


1.6                               CMC Costs shall mean those fully-burdened costs incurred
either by Schering, by BioMedicines, by an Affiliate or by a third party, and
accounted for in accordance with the applicable Accounting Standards, in
carrying out CMC Development activities according to the CMC Plan (as defined
herein) and in accordance with this Agreement. 
Where Schering carries out Manufacturing Improvements at BioMedicines’
request, the costs of such Manufacturing Improvements shall also constitute CMC
Costs.  Costs included under Actual
Manufacturing Costs shall in no event constitute CMC costs.


 


1.7                               CMC Plan shall mean that plan jointly developed and
jointly approved by Schering and BioMedicines, and related specifically to CMC
Development matters, for the specific purpose of successfully developing,
registering and commercialising Licensed Product and shall also be understood
to mean a plan whose execution is overseen by the Schering-BioMedicines Joint
Development Committee.


 


1.8                               Development shall mean all activities other than CMC
Development activities understood to be necessary or desirable to facilitate
the registration and approval of Licensed Product in the Territory and shall
include, without limiting the generality thereof: preclinical testing (such as
pharmacology, pharmacokinetics, absorption/distribution/metabolism/excretion,
toxicity or toxicology, or the like); clinical testing (such as design,
execution, data collection and analysis); technical, advisory, third-party
vendor support, and all related internal or external legal and regulatory
affairs activities.


 


1.9                               Development Costs shall mean those fully burdened costs
incurred either by Schering, by BioMedicines, by an Affiliate or by a third
party, and accounted for in accordance


 










[ * ] = 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





















 


with applicable Accounting Standards, in carrying out Development
activities according to the Development Plan (as defined herein).


 


1.10                        Development Plan shall mean that plan jointly developed
by Schering and BioMedicines, and specifically related to all Development
activities other than CMC Development activities, for the specific purpose of
successfully developing, registering and commercialising Licensed Product and
shall also be understood to mean a plan whose execution is overseen by the
Schering-BioMedicines Joint Development Committee (as defined herein).


 


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


 


1.12                        Field shall mean the treatment of humans for breast
cancer.


 


1.13                        Good Manufacturing Practices shall mean compliance with
the most stringent of:


 


a)                                      the
regulatory requirements for current good manufacturing practices (“GMP”)
promulgated by the United States Food and Drug Administration (“FDA”) under the
United States Federal Food and Drug and Cosmetic Act, as amended, 21 C.F.R. § 210
et seq and 21 C.F.R. § 600-610, as now applicable, or any manufacturing
standards set after the Effective Date by the FDA; or


 


b)                                      the
regulatory requirements for good manufacturing practices as established in the
European Union by applicable regulations, directives, or decisions of the
European Union (as now published in the Official Journal of the European
Community or its successor publication); or


 


c)                                      the
regulatory requirements directed specifically to Schering or Schering
Affiliates by appropriate regulatory authorities.


 


To these ends, “most
stringent” shall be understood to mean those GMP standards as mutually agreed
and documented by Schering and BioMedicines during the course of development
and commercialisation with particular reference to duties described in Sections
3.2 and 4.1 herein.


 


1.14                        Joint Development Committee (or “JDC”) shall mean that
group of individuals designated by Schering and by BioMedicines whose principal
duty shall be the collaborative oversight of the Development and CMC
Development of Licensed Product and whose other duties are described further
herein.  The principle of good faith
negotiations shall govern the activities of the JDC in all matters between
Schering and BioMedicines.


 


1.15                        Know-How shall mean:


 


a)                                      any
and all technical data or non-technical information, expertise, knowledge and the
like which relates to the Licensed Product, Patent Rights, or to the
Manufacturing Process(es) and which is owned or licensed by Schering or an
Affiliate or which


 










[ *
] = 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





















 


becomes owned or becomes licensed by Schering or an Affiliate and which
Schering or an Affiliate is now or subsequently authorized to license or
transfer to a third party;


 


b)                                      data
or information of the kind described in (a) above which is recorded, or which
could be or could have been recorded, in any form including but not limited to
on paper or using electronic or magnetic media;


 


c)                                      all
pharmacological, toxicological, formulation, assay, chemical, manufacturing,
control, clinical, regulatory and marketing or sales-oriented information; of
the kind described in (a) above;


 


d)                                      any
other data, information, knowledge, or designs used, or specifically useful,
for the development or commercialisation of the Licensed Product, and which are
owned or licensed by Schering or an Affiliate, or which become owned or become
licensed by Schering or an Affiliate, and which Schering or an Affiliate is
authorized or becomes authorized to license or transfer to a third party.


 


1.16                        Licensed Product(s) shall mean one or more
pharmaceutical products containing Atamestane as active ingredient for use in
the Field.


 


1.17                        Manufacturing Improvements shall mean those activities
other than CMC Development activities that are jointly approved by both
Schering and BioMedicines and for which the principal purpose of such other
activities is to improve the cost, efficiency, quality or quantity of
manufacturing of Licensed Product.


 


1.18                        Manufacturing Process(es) 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 (as defined herein) 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 to such processes suggested, developed or
introduced by Schering, BioMedicines or Affiliates thereof during the course of
either development or commercialisation of the Licensed Product.


 


1.19                        Net Sales shall mean the amount invoiced by Schering or
BioMedicines or by and Affiliate or Sublicensee (as described further herein),
as the case may be, for sales of Licensed Product to an unaffiliated third
party but less deductions for:


 


a)                                      reasonable
shipping or freight charges prepaid or allowed and other reasonable charges,
such as insurance, relating thereto;


 


b)                                      sales
or excise taxes or customs duties paid by the selling party;


 










[ *
] = 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





















 


c)                                      any
other non-refundable governmental charges imposed upon the sale of Licensed
Product;


 


d)                                      distributor’s
fees, rebates, non-cash rebates or allowances actually granted, allowed or
incurred, and not otherwise in violation of local or international laws;


 


e)                                      quantity
discounts, cash discounts or chargebacks actually granted, allowed or incurred
in the ordinary course of business in connection with the sale of Licensed
Product;


 


f)                                        allowances
or credits to customers, but not in excess of the selling price of Licensed
Product, on account of governmental requirements, rejection of Licensed Product
for good reason, recalls made because of Licensed Product becoming outdated, or
for the value of returned trade goods of Licensed Product; and


 


g)                                     an
allowance for bad debts not to exceed one-half percent (0.5%) of Net Sales, and
otherwise in accordance with the selling party’s Accounting Standards and
otherwise consistently applied within and across all Affiliates or operating
business units or divisions, such allowance or any portion thereof to be
refunded in the next quarter if such bad debts are less than one-half percent (0.5%).


 


For purposes of
calculating Net Sales, Schering and BioMedicines also recognize that:


 


1)                                     customers
may include persons or entities in the chain of commerce (such as so-called “Health
Maintenance Organizations” in the United States, for example) that enter into
contractual and binding agreements with the selling party to establish and set
a price for Licensed Product even though


 


(a)                                  title
to Licensed Product does not actually pass directly from selling party to such
customers;


 


(b)                                  payment
for the Licensed Product is not made by such customers; and that


 


2)                                     in
such cases, chargebacks paid by the selling party to or through a third party
such as a wholesale distributor can then be deducted by the selling party from
gross revenues in order to calculate the selling party’s Net Sales.


 


In addition, the
definition of Net Sales may be amended for sales within the United States by
the mutual consent of both Schering and BioMedicines if Schering exercises its
co-promotion option per Section 6.2 herein.


 


1.20                        Patent Rights shall mean all of the following
intellectual property:


 


a)                                      the
patents and patent applications listed in Appendix A;


 


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


 










[ *
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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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c)                                      any
reissue or extension of patents in Appendix A; and


 


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


 


e)                                      any
patents, divisionals, continuations, reissues, extensions or improvement patents
subsequently added to Appendix A as further described herein.


 


1.21                        Phase III Study(-ies) shall mean the clinical study or
studies as reasonably judged by BioMedicines to be adequate by the results of a
meeting (or other communication) with the United States Food and Drug
Administration (or other similar regulatory authority) to support the filing of
a marketing application for the Licensed Product.


 


1.22                        Registration Batch(es) shall mean that batch or batches
of Atamestane drug substance and/or drug product made under GMP conditions that
is or are necessary to support the filing of a marketing application or a new
drug application for Licensed Product.


 


1.23                        Sublicensee shall mean an unaffiliated third party to
whom Schering or BioMedicines grants a sub-license of any rights licensed to
Schering or BioMedicines respectively hereunder, in accordance with the terms
of this Agreement.


 


1.24                        Territory.  The
territory (“Territory”) shall be worldwide. 
In addition, territorial rights as described in the Agreement shall not
be abridged because of a change in the official name of a country or
principality or the like or a change in geographic boundaries associated with
same.


 


2.                                      GRANT


 


2.1                               License.  Schering hereby grants to BioMedicines, and
BioMedicines hereby accepts from Schering, under the Patent Rights, Know-How
and Manufacturing Process(es) an exclusive right and license (the “License”),
even as to Schering (except as otherwise provided herein), to use, develop,
market, and sell Licensed Product in the Territory for one or more uses within
the Field, in accordance with the terms of this Agreement.


 


2.2                               Right
to Sublicense.  Schering also hereby
grants to BioMedicines and BioMedicines hereby accepts from Schering the right
to sublicense Licensed Product to the extent and in accordance with the
conditions specified in other sections of this Agreement.


 


3.                                      DATA
AND DUE DILIGENCE


 


3.1                               Access
to Schering Know-How


 


3.1.1                     Know-How.  Schering will make available to BioMedicines
Know-How and Manufacturing Process information in Schering’s possession on the
Effective Date and any modifications thereof or improvements thereto which come
into Schering’s possession (with the right to transfer or sublicense) after the
Effective Date and that are necessary or desirable for optimal Licensed Product
development and registration.  To achieve
these goals, Schering shall make available such Know-How, data, information and
other documents as may be reasonably requested by BioMedicines from time to
time during the term of the Agreement and shall make


 










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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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available certain quantities of Atamestane and Licensed Product as
provided in Sections 4.4 and 4.5 below or otherwise as agreed between the
Parties.  Such Know-How, data,
information, documents and quantities of Atamestane will ordinarily be made
available as soon as reasonably possible, but in any event within sixty (60)
days of such reasonable request by BioMedicines unless prevented by
circumstances beyond the reasonable control of Schering.  BioMedicines may use such information,
Know-How, data and documents solely for the purposes of developing,
manufacturing and commercializing Licensed Product in the Territory in
accordance with the terms of this Agreement.


 


Documents and data
associated with any United States Investigational New Drug application (IND)
associated with manufacturing, testing, safety or potential efficacy of
Atamestane for one or more uses in the Field in the possession of Schering or
Affiliates or which come into the possession of Schering or an Affiliate from
time to time and which Schering or an Affiliate is free to transfer to a third
party will be transferred in a timely manner to BioMedicines.


 


BioMedicines will
update, amend, file or re-file, and/or transfer the IND only between Divisions
with the Food and Drug Administration within the United States (or similar
document outside the United States) in order to facilitate development and
registration of Licensed Product, but BioMedicines shall not be entitled to
otherwise transfer the IND (or similar document outside the United States)
without the prior written consent of Schering.


 


Both Schering and
BioMedicines acknowledge and agree that all existing Know-How, in whatever form
(paper, electronic or other) in Schering’s possession will be required to be
made available in order to update and to amend the existing IND, particularly
with regard to preclinical and clinical safety data.


 


3.1.2                     Schering
Expertise.  Schering will also
provide further expertise, and otherwise free of charge (and independent of
that described in Sections 5.4 and 5.6), on a reasonable basis, and if
requested by BioMedicines, so long as the provision of this service does not
require a significant capacity of the respective Schering employees.  In this regard, it is expected that “significant
capacity” will not exceed in aggregate one-half person-year unless otherwise
approved by Schering.


 


3.1.3                     Requests
by Regulatory Authorities.  Both
Schering and BioMedicines acknowledge that regulatory authorities may request
information during the term of this Agreement. 
Should this occur, Schering and BioMedicines agree to discuss in good
faith and to agree on the actions to be taken by BioMedicines and/or by
Schering or by a Schering Affiliate in order to address such requests in a
timely and successful manner but subject always to the limitation on Schering’s
obligation set out in Section 3.1.2 above.


 


3.1.4                     Translation.  Where English-language documents or summaries
exist, such materials will be provided to BioMedicines.  Related documents in German or other languages
will also be provided.  However, the cost
for translating documents from German or other languages into English will be
the responsibility of and will be paid for by BioMedicines.  Where new documents can be produced in either
language by Schering, by an Affiliate, Sublicensee, or by a third party vendor
of services related to CMC Development or 


 










[ *
] = 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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Development, such documents will be produced in English unless
otherwise requested by BioMedicines.


 


3.2                               Joint
Development Committee


 


3.2.1                     Planning.  Schering and BioMedicines agree to form a
joint development committee (“Joint Development Committee” or “JDC” as
previously noted).  The purpose of the
JDC will be to review, discuss in good faith, and to decide all Development
activities regarding Atamestane and Licensed Product.  Schering and BioMedicines agree to make
available information regarding developmental activities sufficient for each party
to understand the full scope of pre- or post-marketing clinical testing of
Atamestane and Licensed Product, whether conducted by Schering, by
BioMedicines, or by an Affiliate or agent of either party as well as any
post-marketing surveillance data or information that is reportable by regulation
to any regulatory body.  Representation
for Schering will be at the discretion of Schering.  Representation for BioMedicines will be at
the discretion of BioMedicines.  The JDC
will meet at times and places as reasonably agreed by the members of the JDC
but at least twice per calendar year. 
Written minutes of the meetings will be agreed between the Parties.


 


3.2.2                     Disagreements
Regarding Development or CMC Development.  In the event that the members of the JDC
cannot reach a consensus on matters related to Development or CMC Development,
but excluding matters related to human safety, which matters are addressed
below, and subject always to Section 3.2.3 below, BioMedicines will have
the final responsibility for deciding and carrying out Development and CMC
Development activities in accordance with its good business judgment and
otherwise consistent with the requirements of the Agreement.  Both Schering and BioMedicines agree,
however, that both parties will endeavor to agree and to take into account the recommendations
and wishes of both parties.


 


3.2.3                     Preliminary
Clinical Development Plan.  The
essential features of the proposed clinical development of Licensed Product in
the Field (“Clinical Development Plan”) are described in Appendix B.
BioMedicines may not make any change to the Clinical Development Plan which
would have the effect of altering the initial indication for which the Licensed
Product is to be developed without the prior consent of Schering, such consent
not to be unreasonably withheld.


 


3.2.4                     Revised
Clinical Development Plan.  Subject
to Sections 3.2.2 and 3.2.3 above and Section 3.2.5 below, a revised
Clinical Development Plan will be developed during the course of JDC
deliberations.  It is anticipated that
such revision, if any, will be provided principally by BioMedicines as soon as
reasonably possible after any meeting(s) by BioMedicines with the Food and Drug
Administration (“FDA”), or with similar governmental authority, with the agreed
goal to provide said revision within eight (8) weeks after said meeting(s).


 


Subject to
Sections 3.22 and 3.2.3 above and Section 3.2.5 below, BioMedicines may
further modify the Clinical Development Plan from time to time where such
modifications are, in the reasonable judgement of BioMedicines, necessary or
desirable for efficient Development of the 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.


 


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3.2.5                     Disagreements
Regarding Issues of Human Safety.  In
the event that the members of the JDC cannot reach a consensus on matters
related to human safety during the clinical testing of Atamestane, Schering and
BioMedicines agree to assemble as rapidly as reasonably possible an
appropriately constituted panel of experts to review the relevant data and to
make recommendations to the JDC. The JDC and panel members shall then agree
upon modifications, if any, to the Clinical Development Plan.  The expenses associated with such expert
panel, if any, shall be shared equally by Schering and BioMedicines.


 


3.2.6                     Reporting
and Schering Requests for Information.  In the context of meetings of the JDC,
BioMedicines will provide at least semi-annually to Schering a suitably
detailed written status report of Development activities regarding the Licensed
Product.  BioMedicines may, however,
submit reports at more frequent intervals should results from Development
activities warrant, in the reasonable judgment of BioMedicines, more frequent
reporting.  Schering may make reasonable
requests for additional information and BioMedicines agrees to provide such
additional information if such information is already in the possession of BioMedicines,
an Affiliate or a Sublicensee.  If such
additional information is not available but becomes available subsequently
through execution of the Development Plan, the additional information will be
provided to Schering as soon as reasonably possible after the information does
become available.  BioMedicines will
supply Schering promptly with copies of all new final clinical trial reports
and with copies of all material submissions to the FDA or other similar
regulatory authorities.  (In this regard,
“material submissions” are understood to include, without limiting the
generality hereof, Investigational New Drug applications (IND’s), significant
amendments thereto, periodic reports required by regulation or otherwise by
regulatory authorities, all reports of serious safety events whether in animals
or in humans, and any special safety analyses or other special or one-time
safety reports requested by or otherwise provided to the FDA.)


 


3.2.7                     Reporting
and BioMedicines Requests for Information.  In the context of meetings of the JDC,
Schering will likewise provide information to BioMedicines that is
substantially similar to that described in the preceding Section 3.2.6 and
which relates to Atamestane.


 


3.3                               Exercise
of Diligence by BioMedicines.  Except
as otherwise provided for herein, BioMedicines will conduct its Development
activities with Licensed Product at its own expense and consistent with the
Clinical Development Plan or other agreements between Schering and BioMedicines
made in the context of JDC deliberations and recorded in writing and signed by
both Parties.  BioMedicines will proceed
with due diligence, consistent with good business judgment, with those
Development activities judged by BioMedicines as desirable or necessary to
achieve registration, at least for the United States of America and/or within
the European Union, including the activities described in the Clinical
Development Plan, without limiting the generality of the foregoing, as soon as
reasonably possible.


 


It is understood,
however, that not all of the countries in the Territory will necessarily be
subject to Development activities during the course of pursuing the first
marketing approval.


 


3.4                               Need
for Approval of Regulatory Authorities. 
Schering acknowledges that approval by or the consent of regulatory
authorities may be necessary prior to the


 










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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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commencement of any clinical development activities by BioMedicines,
Affiliates or Sublicensees.  Both
Schering and BioMedicines acknowledge that there is no guarantee that such
approval or consent will be granted. 
Accordingly, while development plans, protocols, protocol outlines, and
the like will be provided in good faith to Schering by BioMedicines, such plans
or proposals must be viewed as subject to modification subject always to Sections
3.2.2 and 3.2.3 and 3.2.5 above.  It is
expected, however, that BioMedicines will make reasonable and good faith
efforts to provide development plans, protocols, protocol outlines, and the
like that could reasonably be expected to be approved by the regulatory
authorities.


 


3.5                               Development
Costs.  Development Costs will be
paid by BioMedicines unless otherwise agreed by both Schering and
BioMedicines.  Development Costs will be
reported periodically during regular JDC meetings, and at any rate in the semi-annual
reports to be provided by BioMedicines to Schering pursuant to Section 3.2.6
above


 


4.                                      CMC
DEVELOPMENT


 


4.1                               Planning.  Schering and BioMedicines have agreed upon a
preliminary CMC development plan (“Preliminary CMC Development Plan,” Appendix
C) which sets out the next steps to be taken in CMC Development in order to
continue Development with the goal of obtaining approval of the Licensed
Product in the Territory.


 


A more detailed CMC plan
(“CMC Plan”) will be devised jointly by Schering and BioMedicines in the
context of the JDC within four (4) months after the Effective Date.  The purpose of the CMC Plan will be to
identify those steps necessary or desirable for subsequent Development and
necessary or desirable to obtain approval of the Licensed Product in the
Territory.  The CMC Plan may be modified
from time to time as agreed by the JDC as further described above.


 


4.2                               Improvements
to Manufacturing.  Schering and
BioMedicines also agree to discuss possible improvements to manufacturing and
further agree to incorporate plans, if judged appropriate, for such possible
improvements into the CMC Plan referred to in Section 4.1 above.  In the event that BioMedicines wishes
Schering to develop or implement a different or improved synthesis for the manufacture
of the Licensed Product and Schering agrees, all activities related to the
development, scale-up, and validation of an improved synthesis would be
conducted at the expense of BioMedicines, and would constitute CMC Development
and the costs would be included as a part of CMC Costs.


 


4.3                               New
Patents Related to Manufacturing. 
Any new patent applications resulting from the activities referred to in
Section 4.2 above will be filed by Schering and any patents that issue
will be jointly owned by Schering and BioMedicines.  Such patent applications and patents will be
maintained in the same way as Patent Rights pursuant to Section 9 of this
Agreement.


 


4.4                               Existing
Drug Substance.  Schering will
utilise up to three hundred twenty (320) kilograms (kg) of micronized
Atamestane (currently suitable for final formulation and packaging) and up to
three hundred seventy (370) kg of pure, unmicronized Atamestane (which will
require further processing) to produce Atamestane drug product for use in
clinical testing (otherwise known within Schering as a “Clinical Service Form”)
of the drug.  Such drug supplies


 










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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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may not be sold by BioMedicines and will be utilised by BioMedicines
only for preclinical and clinical studies. 
There will be no charge to BioMedicines for the provision of this
maximum of six hundred ninety kilograms (690 kg) Atamestane drug substance
itself.  However, any reasonable costs
incurred by Schering in re-testing or releasing Atamestane drug substance, and
any costs of any further micronization required, will constitute CMC Costs to
be reimbursed by BioMedicines in accordance with Section 4.7 below.  If BioMedicines requires further quantities
of Atamestane drug substance Schering will use all reasonable efforts to produce
such further quantities and the terms of this Section 4.4 will apply.


 


4.5                               Initial
Drug Product.  Using the initial drug
substance provided by Schering pursuant to Section 4.4 above, Schering or
a Schering Affiliate will also supply BioMedicines, as and when reasonably
requested by BioMedicines and where amounts and timing are agreed upon in the
JDC but subject always to a notice period of at least 6 months, with tested,
released and packaged one hundred (100) mg tablets produced in accordance with
the current manufacturing process in use at the Effective Date at
Schering.  If Schering or a Schering
Affiliate is unable or unwilling to produce such Initial Drug Product, Schering
may sub-contract the production of such Initial Drug Product to a third party
subject to the consent of BioMedicines such consent not to be unreasonably
withheld.  {In this case, “100 mg” is
understood to be the amount of active Atamestane drug substance in the tablets
exclusive of excipients.} In the event that Schering is manufacturing initial
drug product, costs for manufacturing these tablets from drug substance will be
the Actual Manufacturing Costs to Schering and will be paid by BioMedicines in
accordance with Section 4.7 below Such costs are subject to verification
according to the principles of Section 8.10 of this Agreement.


 


In the event that
Schering does not, within the notice period referred to in the preceding
paragraph, elect to manufacture or have manufactured the initial drug product
required by BioMedicines, BioMedicines may obtain such initial drug product
from a third party subject to Schering’s consent, such consent not to be
unreasonably withheld.


 


In the event that such a
third party is manufacturing initial drug product for BioMedicines, the terms
of the agreement governing the third party activities will be the subject of
joint approval by Schering and BioMedicines. 
The costs related to said jointly approved third party sub-contractor
activities will be paid by BioMedicines and will be included in CMC Costs.


 


Schering and BioMedicines
also agree that periodic on-site monitoring of the activities of the third
party sub-contractor by BioMedicines or a designated BioMedicines
representative (with or without a Schering representative at the discretion of
Schering) will be accommodated in all instances.


 


4.6                               Costs
of CMC Development Costs  Schering
agrees that the costs of CMC Development, where such costs are within the
reasonable control of Schering, will be the minimum reasonably necessary to
accomplish the CMC Plan and related Manufacturing Plan.  Both Schering and BioMedicines acknowledge,
however, that certain developmental expenditures related to changes in
manufacturing scale, from pilot plant to commercial plant, will be
necessary.  CMC Development Costs as related
specifically to Licensed Product Development and Approval shall be paid by
BioMedicines and shall also be reported periodically during the course of JDC
meetings.


 










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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.


 


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4.7                               Reimbursement
of Schering.  Schering
shall invoice BioMedicines on a monthly basis for CMC Costs incurred by
Schering in the month preceding the month of invoice.  Such CMC Costs will be payable by
BioMedicines within 60 (sixty) days of the end of the month in which the
invoice is sent.  This procedure will
also apply to Actual Manufacturing Costs incurred by Schering and payable by
BioMedicines prior to the date of exercise by Schering of its manufacturing
option pursuant to Section 5 below


 


5.                                      SCHERING
MANUFACTURING OPTION


 


In addition to the rights
and obligations of Schering in respect of initial drug substance and drug
product described in Section 4 above. 
Schering will have the option to manufacture or have manufactured all of
BioMedicines’ requirements of drug substance and drug product for Licensed
Product as described below.


 


5.1                               Drug
Substance Option.  Schering will have the option to
manufacture or have manufactured amounts of Licensed Product drug substance
necessary or useful in the development and/or commercialisation of Licensed
Product, such option to be exercisable within one (1) month after Schering has
been notified in writing of a decision by BioMedicines to manufacture the first
Registration Batch of drug substance for the Licensed Product, such decision to
be consistent with the Development Plan and the CMC Plan and such notification
to be at least six (6) months in advance of the reasonably projected start date
for such manufacture the avoidance of doubt, it is hereby expressly
agreed.  This option applies to drug
substance required for manufacture of the first Registration Batch and for
subsequent development and commercialization of Licensed Product.  The manufacture of drug substance for use in
development prior to the manufacture of the first Registration Batch is covered
by the terms of Section 4 of this Agreement.


 


5.2                               Drug
Product Option.  Schering will have
the option to manufacture or have manufactured amounts of Licensed Product drug
product necessary or useful in the development and or commercialization of
Licensed product, such option to be exercisable within one (1) month after
Schering has been notified of a decision by BioMedicines to manufacture the
first Registration Batch of drug substance for the Licensed Product, such
decision to be consistent with the Development Plan and the CMC Plan and such
notification to be at least six (6) months in advance of the reasonably
projected start date for such manufacture. 
This option applies to drug product required for manufacture of the first
Registration Batch and for subsequent development and commercialization of
Licensed Product.  The manufacture of
drug product for use in Development prior to the manufacture of the first
Registration Batch is covered by the terms of Section 4 of this Agreement.


 


5.2.1                     Placebo
Tablets.  If Schering or a Schering Affiliate has
exercised the manufacturing option for drug product pursuant to Section 5.2
above, then Schering also agrees to supply (or will obligate its Affiliate to
supply) matching placebo tablets as required to support the Development
Plan.  “Matching placebo tablets” is
understood to mean tablets that do not contain the active ingredient Atamestane
but are otherwise identical in size, shape and other qualities and that contain
the same excipients in approximately the same proportions as are found in
Atamestane-containing tablets.


 










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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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5.3                               Payments
by BioMedicines to Schering for Manufacturing.  If Schering exercises one or more of its
manufacturing options according to Sections 5.1 or 5.2 above, Schering will
manufacture such drug substance or drug product for BioMedicines.  For drug substance or drug product supplied
for development purposes after exercise by Schering of the Manufacturing Option
BioMedicines will pay to Schering 120% of Schering’s Actual Manufacturing
Costs.  During commercialisation by
BioMedicines, Schering may also recover additional, administrative costs of 5%
of Schering’s Actual Manufacturing Costs. 
If a third party, rather than Schering or a Schering Affiliate, is
performing such manufacturing services, Schering shall not be entitled to
recover such administrative costs.  Such
Costs are payable by BioMedicines in accordance with Section 5.10 below
and subject to verification according to the principles of Section 8.10 of
this Agreement.


 


Current good faith
estimates for the cost of manufacturing drug substance by various synthetic
routes and for formulating and manufacturing drug product appear in Appendix C.
Both Schering and BioMedicines acknowledge that these estimates are made in
good faith by Schering to BioMedicines on the basis of existing information and
are subject to change.


 


5.4                               Manufacturing
Data.  Appropriate data regarding
chemistry, manufacturing, controls, stability, and the like, necessary or
useful in supporting development of Licensed Product will be obtained by
Schering during all manufacturing activities conducted by Schering.  These data will be made available in a timely
manner to BioMedicines as required to support development, registration and/or
commercialisation of Licensed Product in accordance with the Development Plan
and the CMC Plan but will remain at all times the exclusive property of
Schering, subject, however, to the rights granted to BioMedicines hereunder.


 


5.5                               Schering
Compliance with Good Manufacturing Practices.  Schering will conduct, or will obligate an
Affiliate to conduct, all manufacturing activities described herein in
accordance with Good Manufacturing Practices as defined in the Agreement.  Appropriate documentation will be maintained
and provided to BioMedicines as required or otherwise reasonably requested in
order to facilitate development, registration, and commercialisation of
Licensed Product.


 


5.6                               BioMedicines
Manufacturing.  Even if Schering does
not exercise its manufacturing option(s) per Sections 5.1 or 5.2 or has
declined to manufacture otherwise supply requested drug substance in support of
Licensed Product Development, Schering agrees to cooperate with, and to work in
good faith with, BioMedicines to facilitate third party manufacturing such that
the original manufacturing timelines remain reasonably intact.


 


5.6.1                     When
Schering or an Affiliate manufactures raw materials or intermediates used in
the manufacture of Atamestane or Licensed Product such cooperation will
include, but will not be limited to, providing good faith and fairly priced
access (taking into account Schering’s costs) to raw materials or to chemical
intermediates, made by Schering or by an Affiliate of Schering, that are
necessary or useful in the manufacture of Licensed Product.


 


5.6.2                     When
Schering or an Affiliate does not manufacture useful raw materials or
intermediates used in the manufacture of Atamestane or Licensed Product but
such raw materials or intermediates are otherwise purchased or obtained by Schering
from a third party for


 










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EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


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Schering’s own use, then Schering shall use reasonable efforts to have
such materials or intermediates provided to BioMedicines at the same price as
paid by Schering (“raw materials price”). 
However, BioMedicines shall also pay an additional sum to Schering which
shall be an administrative fee of five percent (5%) of said raw materials
price.


 


In addition, such
cooperation between Schering and BioMedicines will include making available
promptly to BioMedicines, or to a third party(-ies) acting at the behest of
BioMedicines and approved by Schering, such approval not to be unreasonably
withheld, necessary or useful manufacturing methods and data, subject to
appropriate undertakings of confidentiality by said third party(-ies).


 


Schering also
agrees to take no action that is designed to create any impediment to
manufacturing Licensed Product whether by BioMedicines or by a third party on
behalf of BioMedicines in accordance with the terms of this Agreement.  If any action by Schering or an Affiliate
inadvertently creates an impediment to such manufacture by BioMedicines or a
third party, Schering and BioMedicines agree to negotiate promptly and in good
faith to endeavour to eliminate such impediment within a reasonable period of
time so as not to prejudice ongoing manufacturing activities.


 


5.7                               BioMedicines
Compliance with Good Manufacturing Practices.  In the event that Schering has exercised one
of its marketing options as described below and BioMedicines is responsible for
manufacturing either Atamestane drug substance or drug product, BioMedicines
will conduct, or will obligate an Affiliate or other third party vendor of such
services to conduct, all manufacturing activities described otherwise herein in
accordance with the mutually agreed Good Manufacturing Practices standards
defined in the Agreement.  Appropriate
documentation will be maintained and provided to Schering as reasonably
required or otherwise reasonably requested specifically in order to facilitate
development, registration, and commercialisation of Licensed Product for use
within the Field.


 


5.8                               No
Intended Surrender of Commercial Rights to a Third Party.  In the event that Schering does not exercise
its manufacturing option for either drug substance or drug product BioMedicines
shall be free to obtain drug substance and/or drug product from a third party
subject to Schering’s prior written consent, such consent not to be
unreasonably withheld.  Schering’s
refusal to perform process development work related to Manufacturing
Improvements described in Section 4.2 shall not constitute a waiver of its
option to supply drug substance and/or drug product for commercial
purposes.  BioMedicines shall not be
entitled to sub-contract the manufacture of commercial drug substance, or drug
product, manufacturing rights to any party until such time as Schering has
waived its option(s) according to the terms of this Agreement or the time for
exercise of these options has expired per Section 5.1 or 5.2 respectively,
and then only subject to appropriate confidentiality and use restrictions.  Should Schering exercise its manufacturing
option for drug substance or drug product hereunder, having declined to manufacture
Initial Drug Product pursuant to Section 4.5 above, Schering agrees to
assume full financial responsibility for the costs of resuming such
manufacturing activities, including such costs as may be incurred by
BioMedicines in discontinuing manufacturing activities, whether such activities
are or have been conducted by BioMedicines or by a third party, provided that
BioMedicines agrees that such costs, where they are under the reasonable


 










[ *
] = 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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control of BioMedicines, will be the minimum reasonably necessary to
achieve such discontinuance.


 


5.9                               Schering
Marketing Without Manufacturing.  If
Schering has exercised any of its marketing options as provided for in Sections
6.1 and 6.2 below and is not manufacturing Atamestane drug substance or is not
manufacturing Atamestane drug product and BioMedicines is manufacturing
Atamestane drug substance and/or drug product, then BioMedicines will supply
Atamestane drug substance and/or drug product to Schering, and Schering will
pay BioMedicines at one hundred twenty percent (120%) of BioMedicines’ Actual
Manufacturing Costs.  However, rather
than one hundred twenty percent (120%), Schering shall be obligated to pay
BioMedicines one hundred percent (100%) of that portion of BioMedicines’ Actual
Manufacturing Costs that are directly attributable to purchases of goods or
services by BioMedicines from Schering (or from a Schering Affiliate) during
the course of BioMedicines’ manufacturing activities, plus a five percent (5%)
administrative fee.  Such administrative
fee shall be calculated on the basis of the purchases of such goods and
services by BioMedicines from Schering. 
Such Costs are subject to verification according to the principles of Section 8.10.


 


5.10                        Reimbursement
of Actual Manufacturing Costs. 
Schering shall invoice BioMedicines in the month following the month in
which any drug substance or drug product has been supplied pursuant to an order
from BioMedicines.  Such payments will be
made by BioMedicines within 60 (sixty) days of the end of the month in which
the invoice is received by BioMedicines.


 


Where Schering exercises
one or both of its Manufacturing Options pursuant to this Section 5 but
does not exercise all of its Marketing Options pursuant to Section 6
below, the parties shall, within three (3) months following an NDA filing or
equivalent agree upon procedures for forecasting, order and supply of drug
substance and/or drug product from Schering to BioMedicines hereunder.


 


6.                                      MARKETING
AND MARKETING OPTIONS


 


6.1                               Schering
Option in the Non-US Territory. 
Schering has an option to obtain exclusive marketing rights in the
Territory outside the United States (hereinafter the “Non-US Territory”), such
option to be exercisable at any time by notice in writing prior to the expiry
of ninety (90) days after receipt by Schering of


 


(i)
the final, audited report of the first Phase III Study carried out by
BioMedicines for the first clinical indication of the Licensed Product
specified in the Development Plan (hereinafter the “First Clinical
Indication”); and


 


(ii)
all available clinical or statistical information newly generated by
BioMedicines (including, without limitation, all raw data) Schering may
reasonably require to evaluate whether to exercise its option hereunder.  The costs of making available (but not of
generating) such clinical information shall be borne exclusively by Schering.


 


It is understood by both
Schering and BioMedicines that the ninety day period will only start to run at
such time as Schering has received from BioMedicines both the report referred
to in (i) above and all of the information referred to in (ii) above.


 










[ *
] = 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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Alternatively, Schering
may, at its sole discretion, decide to forego such rights prior to the point in
time specified immediately above.


 


6.1.1                     Schering
Exercise of Option.  In the event
that Schering decides to exercise such rights in the Non-US Territory, Schering
will promptly inform BioMedicines in writing of this decision and Schering
shall thenceforth be responsible for completion and full funding of Development
in the Non-US Territory.  Schering and
BioMedicines agree to work diligently to complete the registration of Licensed
Product in the Non-US Territory as soon as practicable.  It is expected, however, that BioMedicines
will compile the final regulatory dossier(s) for purposes of seeking such
marketing approval(s) although Schering shall be free to assume this
responsibility.  Once Schering has
exercised its option hereunder, no decisions on development in the Non-US
Territory may be made without the consent of Schering.


 


In the event that
Schering does exercise its option for the Non-US Territory, then, within twelve
(12) months following the first approval to commercialise Licensed Product in
the Non-US Territory, Schering shall be obligated to inform BioMedicines in
writing of Schering’s intentions regarding planned registrations in all
countries in the Non-US Territory.


 


For the avoidance
of doubt, it is hereby agreed that BioMedicines’ sole remedy, in the event of
any failure by Schering to pursue Development or commercialization in any
country of the non-US Territory, will be the right to convert Schering’s rights
from exclusive to non-exclusive pursuant to Section 6.5.1 of this
Agreement.


 


6.1.2                     Report
on Development Costs.  Within 60 days
of exercise by Schering of the Marketing Option for the Non-US Territory,
BioMedicines will provide to Schering a written report detailing:


 


(i)                                    all
CMC Costs and Development Costs properly incurred and paid by BioMedicines, and
assignable to the Non-US Territory pursuant to Section 6.1.4 (c) below, up
to the date of exercise by Schering of the Marketing Option for the Non-US
Territory;


 


(ii)                                all
CMC Costs and Development Costs properly incurred and not yet paid by
BioMedicines, and assignable to the Non-US Territory pursuant to Section 6.1.4(c)
below, up to the date of exercise by Schering of the Marketing Option for the
Non-US-Territory, listing the dates on which such incurred costs will become
payable,


 


(iii)                            an
allocation of the CMC Costs and Development Costs described in sub-sections (i)
and (ii) above between those costs incurred for the First Clinical Indication
and all other clinical indications, such allocation to be made in accordance
with the provisions of Section 6.1.4 below


 


(iv)                               all
financial and supporting data reasonably required by Schering to verify such
CMC Costs and Development Costs which BioMedicines is required to collect in
accordance with Sections 6.1.4 and 8.10 below.


 










[ *
] = 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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6.1.3                     Payment
of Development Costs.


 


(i)                                    Within
60 days of receipt by Schering of all of the information required pursuant to Section 6.1.2.
above, Schering shall pay to BioMedicines 100% of the CMC costs and Development
Costs described in Section 6.1.2 (i) above.


 


(ii)                                As
and when the CMC Costs and Development Costs described in Section 6.1.2
(ii) fall due and are paid by BioMedicines, BioMedicines shall notify Schering
in writing that BioMedicines has made such payments and Schering will reimburse
100 % of such payments to BioMedicines in each case within 60 days of receipt
of such notice.


 


(iii)                            Within
60 days of grant of regulatory approval to market the Licensed Product in a
Major Market in the Non-US Territory for the First Clinical Indication,
Schering will pay to BioMedicines an additional sum (hereinafter the “Risk
Premium”) equal to 50% of that part of the CMC Costs and Development Costs paid
or payable pursuant to subsections 6.1.3(i) and (ii) above which is allocated
to the First Clinical Indication in accordance with subsection 6.1.2(iii)
above.


 


(iv)                               Within
60 days of grant of regulatory approval to market the Licensed Product for any
clinical indication other than the First Clinical Indication in a Major Market
in the Non-US Territory, Schering will pay to BioMedicines a Risk Premium equal
to 75% of that part of the CMC Costs and Development costs paid or payable
pursuant to Sub-sections 6.1.3(i) and (ii) above which has not been allocated
to the First Clinical Indication in accordance with sub-section 6.1.2


 


(v)                                   All
Development Costs and CMC Costs incurred by BioMedicines after the date of
exercise by Schering of its Marketing Option in the Non-US Territory will be
incurred only with the prior consent of Schering.  Such costs will be fully reimbursed by
Schering (without any Risk Premium) within 60 days of notification.


 


6.1.4                     Calculation
of Development Costs.


 


Without prejudice
to the general provisions of this agreement the following principles will apply
to the calculation of Development Costs and CMC Costs and their reimbursement
under this Section 6.


 


a)                                      BioMedicines
will maintain a project-specific cost accounting system maintained according to
Accounting Standards and subject to verification according to Section 8.10


 


b)                                      The
Licensed Product project will have its own independent cost center.  The Licensed Product cost center reports will
be provided to Schering on a regular basis as part of BioMedicines’ routine
reporting of Development activities as otherwise described in the Agreement.  Such cost center reports will be provided
only as long as Schering has a potential obligation to pay any sum related to
BioMedicines’ CMC Costs or Development Costs or both.


 


c)                                      for
the purposes of Section 6.1.3 above, only one-half (50%) of CMC Costs and
Development Costs (in whatever country contractually obligated or incurred)
will be


 










[ *
] = 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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assignable to the Non-US Territory, and the remaining one half (50%)
will be assignable to the United States.


 


d)                                      As
part of the project-specific cost accounting referred to in Section 6.1.4(a)
above, BioMedicines will allocate all CMC Costs and Development Costs incurred
specifically in the Development of the Licensed Product for the First Clinical
Indication to one account and all CMC Costs and Development Costs incurred
specifically for other clinical indications will be allocated to another
account.  Where CMC Costs or Development
Costs have not been incurred specifically in the development of the Licensed
Product for a specific indication, such CMC Costs and Development Costs will be
allocated to the account specified for the First Clinical Indication.


 


e)                                      CMC
Costs and Development Costs incurred but not yet paid by BioMedicines at the
date of exercise by Schering of the Marketing Option for the Non-US Territory
may only be included in Section 6.1.2(ii) as properly incurred costs if:


 


(i)                                    BioMedicines
is, at the date on which Schering exercises its option, contractually committed
to paying the costs in question; and


 


(ii)                                BioMedicines
has acted reasonably, and consistently with the usual practice in the
pharmaceutical industry, in committing itself contractually in advance to such
CMC Costs or Development Costs;


 


6.1.5                     Schering
Decision Not to Exercise Its Option. 
If Schering decides to forego such rights for the Non-US Territory,
before the date on which Schering’s option expires Schering will promptly inform
BioMedicines in writing of such decision. 
If Schering has so informed BioMedicines or if the period described in Section 6.1
above expires without exercise by Schering of its Marketing Option and
BioMedicines is in compliance with the terms of this Agreement, then exclusive
marketing rights in the Non-US Territory will pass immediately thereafter to
BioMedicines.


 


In addition, if
Schering has not yet exercised its rights, and more than ninety (90) days have
passed since Schering has received the Phase III report, then marketing rights
will pass immediately thereafter to BioMedicines.


 


In the event that
Schering does forego such rights, or marketing rights otherwise pass to
BioMedicines for the portion of the Territory referenced in this subsection, then
Schering shall have no obligation to pay BioMedicines any sums related to
BioMedicines’ CMC or Development Costs or Risk Premium associated therewith
referable to said portion of the Territory.


 


6.2                               Schering
Option in the United States. Schering has an option to obtain co-promotion
rights in the United States, such option to be exercisable at any time by
notice in writing prior to the expiry of ninety (90) days after receipt by
Schering of


 


(i)                                    the
final, audited report of the first Phase (III) Study carried out by
BioMedicines for the First Clinical Indication; 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.


 


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(ii)                                all
available clinical or statistical information newly generated by BioMedicines
(including, without limitation, all raw data) Schering may reasonably require
to evaluate whether to exercise its option hereunder.  The costs of making available (but not of
generating) such clinical information shall be borne exclusively by Schering.


 


It is understood by both
Schering and BioMedicines that the 90 day period will only start to run at such
time as Schering has received from BioMedicines both the report referred to in
(i) above and all information referred to in (ii) above.


 


Otherwise, the terms,
conditions, limitations, guidelines and timing are the same as those described
in Section 6.1 above.  Further
duties of both parties with regard to Schering’s exercise of its co-promotion
rights, and BioMedicines rights and responsibilities, are described in Section 6.3
below.


 


6.3                               Other
Rights and Obligations.


 


6.3.1                     Schering
Exercises Its Rights.


 


6.3.1.1           Both
Inside and Outside the United States. In the event that Schering exercises
both its marketing and its co-promotion rights as described in Sections 6.1 and
6.2 above, and unless otherwise subsequently agreed, Schering will have the
right to decide all Development and CMC Development activities and to revise
the Development Plan and CMC Development Plan in its sole discretion.  Such rights could include, for example, the
initiation of new clinical trials or the cancellation of ongoing studies.  Schering agrees, however, to assume full
financial responsibility for such decisions and such CMC Development or other
Development activities.


 


6.3.1.2           Either
Inside or Outside the United States But Not Both.  In the event, however, that Schering exercises
its rights in only a portion of the Territory as described herein, then
Schering and BioMedicines will negotiate in good faith subsequent development
activity and any revisions to the CMC Plan and/or to the Development Plan.


 


6.3.1.3           Exclusive
United States Rights.  In the event
that Schering exercises its rights with respect to the United States (with or
without any other part of the Territory), BioMedicines may also, at
BioMedicines sole option, allow Schering to exercise exclusive
commercialisation rights in the United States, in which case the rights and
obligations of BioMedicines and Schering shall be those described herein that
apply when Schering alone is marketing Licensed Product.


 


6.4                               Development
After Exercise of an Option.  Should
Schering exercise one or more of its marketing options and then elect to
continue any Developmental or CMC Development activity that BioMedicines does
not otherwise approve, such Development or CMC Development activity will be
conducted by and at the sole expense of Schering.  The results of such CMC Development or other
Development activities will be the sole property of Schering and may not be
used by BioMedicines for any purpose without the prior written consent of
Schering.  Specifically, use of such
results by BioMedicines for marketing or for commercial purposes is forbidden
unless otherwise approved by Schering.


 










[ * ] = 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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Should BioMedicines elect
to continue any developmental activity that Schering does not approve, such
activity will be conducted at the sole expense of BioMedicines.  The results of such activities will be the
sole property of BioMedicines and may not be used by Schering for any purpose
without the prior written consent of BioMedicines.  Specifically, use of such results by Schering
for marketing or commercial purposes is forbidden unless otherwise approved by
BioMedicines.


 


Schering and BioMedicines
further agree to provide sufficient information to the other party regarding
these and other developmental activities to facilitate full and appropriate
compliance with regulatory laws, guidelines, and the like.  However, the provision of information to the
receiving party regarding developmental activities that are not mutually and
jointly approved shall not constitute a license or permission to utilise such
information in any manner other than for purposes of regulatory reporting.


 


6.4.1                     Schering
Does Not Exercise Its Rights.  If
Schering does not exercise either or both of the above marketing options as
described in Sections 6.1 and 6.2, then BioMedicines may, in its sole judgment,
continue the development, registration and commercialisation of Licensed
Product in accordance with this and other provisions of the Agreement, provided
however that if BioMedicines fails to diligently pursue development or
commercialization then Schering may convert BioMedicines’ license from
exclusive to non-exclusive and may sub-license the Licensed Product to a third
party with ensuing royalties being shared 50:50 between Schering and
BioMedicines.


 


In the event that
Schering does not exercise its option outside the United States, then
BioMedicines shall be obligated to inform Schering in writing of BioMedicines’
intentions regarding planned registrations in all countries of this portion of
the Territory within twelve (12) months following the first approval for
marketing of Licensed Product in said portion of the Territory.


 


6.5                               Failure
to Pursue Commercialisation.


 


6.5.1                     By
Schering.  If Schering exercises its
marketing rights per Section 6.1, or exercises its co-promotion rights per
Section 6.2,, Schering shall pursue regulatory approvals and marketing
with all due diligence, i.e. Schering shall use the same diligence as it
applies to its other proprietary products of similar potential.  Schering further agrees to inform
BioMedicines on a regular basis, and in any event at least semi-annually, of
the status of achieving approvals in the countries of the Territory.


 


If after
exercising its rights per Section 6.1 or Section 6.2 Schering fails
without reasonable cause to pursue diligently regulatory approvals of Licensed
Product in a country in the Territory, or fails to market the Licensed Product
at least one year after registration and price approval in a country, then, at
the sole discretion of BioMedicines, Schering’s rights will be converted from
exclusive to non-exclusive with royalties from any sub-license being split
50:50 between Schering and BioMedicines. 
Schering and BioMedicines agree that the conversion of Schering’s rights
from exclusive to non-exclusive shall be the sole remedy available to
BioMedicines for any failure by Schering to develop or commercialize the
Licensed Product in any country.


 










[ *
] = 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 the event that
neither Schering nor BioMedicines decides to actively pursue registration or
marketing in any country, then Schering and BioMedicines agree to discuss
promptly and to decide whether to effect, on mutually agreeable terms, a
sublicense to a third party in said country. 
Royalties shall still be due to the appropriate party.


 


6.6                               Sublicensing
by BioMedicines.


 


6.6.1                     Except
for the United States of America.  If
Schering does not exercise or otherwise waives or foregoes the option described
in Section 6.1, then BioMedicines is free to sublicense the Licensed
Product in the Territory outside the United States of America, with the consent
of Schering, such consent not to be unreasonably denied.  Such sub-license will not relieve BioMedicines
of its obligations to Schering under this Agreement.


 


6.6.2                     For
the United States of America.  If
Schering does not exercise or otherwise waives or foregoes the option described
in Section 6.2, then BioMedicines is free to sublicense the Licensed
Product in the United States of America, with the consent of Schering, such
consent not to be unreasonably withheld. 
Such sub-license will not relieve BioMedicines of its obligations to
Schering under this Agreement


 


6.7                               Sub-Licensing
by Schering.  Schering shall be free
to sub-license any rights granted to it by BioMedicines under this Agreement
but such sub-license will not relieve Schering of its obligations to
BioMedicines under this Agreement.


 


7.                                      POTENTIAL
COMPETITION FOR LICENSED PRODUCT


 


7.1                               Interests
of Both Parties.  Schering acknowledges
that BioMedicines has the exclusive right to Licensed Product within the Field
subject to the terms of this Agreement. 
BioMedicines acknowledges that Schering has all rights to Atamestane and
Licensed Product outside the Field Schering further acknowledges, however, that
Schering is obligated, in connection with the development or commercialisation
of any product containing Atamestane for use outside the Field, to take such
appropriate and active measures as are commercially reasonable and permissible
under law and regulatory obligations to discourage or prevent the use of such
product within the Field and to discourage or prevent the sale of such product
for use within the Field.


 


7.2                               Protection
of Interests.  To protect these
interests, Schering and BioMedicines agree that, as long as BioMedicines is
developing or commercialising Licensed Product:


 


a)                                      Schering
will promptly inform BioMedicines of any potential or planned product
development activity for a use or uses outside the Field and, unless Schering
itself intends to develop exclusively such potential product, will offer first
BioMedicines an opportunity to negotiate rights to develop and commercialise
the potential product before offering such rights to any other party.


 


b)                                      If
BioMedicines declines to proceed with development of said potential product(s)
outside the Field, and Schering, an Affiliate or other third party partner or
licensee of Schering does so proceed, then Schering agrees, to the extent
commercially reasonable and to 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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extent permissible under law and regulatory obligations, to obligate
the appropriate party to take every reasonable step to discourage or prevent
“off-label” use within the Field by, at a minimum:


 


1)                                     utilising
a formulation different than any currently described in Know-How or otherwise
currently known to Schering or Schering Affiliate(s);


 


2)                                     utilising
a strength that is different than that currently described in Know-How or
otherwise then known to Schering or Schering Affiliate(s); and


 


3)                                     taking
other reasonable such steps as may be necessary to minimise the potential for
“off-label” use within the Field.


 


c)                                      if
a new product containing Atamestane or containing any substance covered by the
claims of Appendix A is introduced by Schering, a Schering Affiliate or by a
third party and is used within the Field and competes with a Licensed Product
developed by BioMedicines, then Schering and BioMedicines will negotiate in
good faith and agree on the additional compensation (if any) to be paid to
BioMedicines, in the event that BioMedicines has suffered loss or unrealized
gains thereby.


 


8.                                      INITIAL
FEE, MILESTONE AND ROYALTY PAYMENTS


 


8.1                               Currency.  All payments shall be made in United States
dollars ($).  Any currency conversions shall
be calculated from end-of-quarter average data reported by the Deutsche Bank,
Frankfurt am Main, the “Frankfurt Fixing” 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).  Any currency conversion ratios will be
extended to three (3) places after the comma (German numeric system) or,
equivalently, to three (3) places after the decimal point (American numeric
system).


 


8.1.1                     Form
of Payments.  All payments for any
purpose by either Schering or BioMedicines (“Payer”) to the other party (a
“Recipient”) will be made by the Payer using a wire transfer of funds into an
account designated by the Recipient.


 


8.2                               Initial
Fee.  Within sixty (60) days after
the Effective Date, BioMedicines shall pay to Schering the sum of [*].


 


8.3                               Milestones.  BioMedicines shall also pay to Schering the
following sums within sixty (60) days of:


 


a) the
successful completion of the first Phase III Study in the Field: [*] where “successful completion” is understood to mean the
successful achievement of valid clinical endpoints per the Clinical Development
Plan.;


 


b)
first filing of an application with a regulatory authority for marketing approval
for either the European Union or for the United States: [*];


 


c)
first grant of marketing approval either for the European Union or for the
United States: [*];


 










[ *
] = 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) on
first grant of marketing approval for the European Union but only if Schering
has decided not to exercise its marketing rights per Section 6.1 an
additional [*];


 


e) on
first grant of approval for the United States but only if Schering has decided
not to exercise its co-promotion rights per Section 6.2 an additional [*].


 


Therefore, the maximal
total of milestone payments per this section and the initial fee of the
preceding section is [*].


 


8.4                               Royalty
Payments and Other Potential Agreements.


 


a)                                      If
Schering exercises its marketing rights per Section 6.1 then Schering will
pay BioMedicines a royalty on Net Sales by Schering, Affiliates or Sublicensees
as follows:


 


1)                                     a
baseline royalty of [*] percent [*] on all annual Net Sales


 


2)                                     a
supplemental royalty of [*] percent [*] only on that portion of aggregate annual Net Sales in
the Non-US Territory in the range of U.S. [*] dollars [*] to U.S. [*] dollars [*]


 


3)                                     a
supplemental royalty of [*] percent [*] only on that portion of aggregate annual Net Sales in
the Non-US Territory in excess of U.S. [*] dollars [*]


 


b)                                      If
Schering exercises its co-promotion rights per Section 6.2, then Schering
(or a Schering Affiliate as the case may be) and BioMedicines shall negotiate
in good faith, and to execute as soon as practicable, a new co-promotion
contract.  This co-promotion agreement
will follow the principles of cost- and profit-sharing.  (50:50) BioMedicines may not sub-contract the
performance of co-promotion to a third party without Schering’s prior written
consent, such consent not to be unreasonably withheld.  Schering will be the “lead partner” in any
co-promotion agreement and, therefore, will be responsible for booking sales.


 


c)                                      In
case Schering does not exercise its marketing rights per Section 6.1 or
its co-promotion rights per Section 6.2, and the Licensed Product has been
commercialised in the respective Territory, then BioMedicines or a BioMedicines
Sublicensee or Affiliate, as applicable, will pay Schering a royalty on Net
Sales or by as follows:


 


1)                                     [*]
percent [*] on aggregate Net Sales of less than
U.S. [*] dollars [*];


 


2)                                     [*]
percent [*] on that portion of aggregate Net
Sales, in the territory where BioMedicines is commercializing Licensed Product
between U.S. [*] dollars [*];


 


3)                                     [*]
percent [*] on that portion of aggregate Net
Sales in the territory where BioMedicines is commercializing Licensed Product
in excess of U.S. [*] dollars [*].


 


8.5                               Potential
Reduction in Royalties.  In the
absence of patent protection or marketing exclusivity, and in the presence of
an approved generic competitor drug, the amount


 










[ *
] = 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.


 


23





















 


of royalties described above shall be reduced by [*]
percent [*]. 
This means, for example, that a royalty due from one party to the other
of [*] percent [*]
would be reduced to [*] percent [*].


 


8.6                               BioMedicines
Reports Regarding Royalties. 
BioMedicines agrees that BioMedicines will continue to be responsible
for and will be obligated to deliver to Schering periodic financial
reports.  These reports will be consistent
with generally accepted accounting principles and in a format consistent with
Schering’s internal accounting policies. 
The reports will be delivered to Schering within sixty (60) days after
the close of each calendar quarter and will show separately for each Licensed
Product:


 


a)                                      Net
Sales, categorised by units sold and by total revenue


 


b)                                      details
of the quantities sold in each country; and


 


c)                                      royalties
or other like compensation due pursuant to the Agreement Schering agrees to
make available sufficient information regarding its internal accounting
policies to facilitate preparation of the required reports.


 


8.7                               Schering
Reports Regarding Royalties. 
Schering agrees that any party marketing Licensed Product in the
Territory on behalf of Schering (also “Selling Party” for purposes of this Section 8)
will be responsible for and will be obligated to deliver to BioMedicines
periodic financial reports.  These
reports will be consistent with Accounting Standards and in a format consistent
with BioMedicines’ internal accounting policies.  The reports will be delivered to BioMedicines
within sixty (60) days after the close of each calendar quarter and will show
separately for each Licensed Product:


 


a)                                      Net
Sales, categorised by units sold and by total revenue


 


b)                                      details
of the quantities sold in each country; and


 


c)                                      royalties
or other like compensation due pursuant to the Agreement


 


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


 


8.8                               Timeliness
of Payments.  Concurrently with the
making of any such financial reports as described above in either Section 8.6
or 8.7, the Selling Party shall pay the amount due on Net Sales during the
preceding calendar quarter.  If the
Selling Party 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.


 


8.9                               Timing
and Duration of Royalty Payments. 
Royalties shall be paid within sixty (60) days of the end of each calendar
quarter from which royalties are due. 
For purposes of royalty payments, the end of the calendar quarter shall
occur in any year during the months of March, June, September, and December.


 


The duration of royalties
due for sales in any country in the Territory shall be ten years from the date
of the launch of Licensed Product in said country.


 










[ *
] = 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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8.10                        Financial
Records and Verification.


 


8.10.1              When
BioMedicines is selling Licensed Product. BioMedicines, or its Affiliates
or Sublicensees as appropriate (a “Selling Party”), shall keep sufficiently
complete and accurate records to properly reflect all sales and deductions from
Net Sales; and to enable the amounts payable hereunder to be determined.


 


Upon the written
request of Schering, the Selling Party shall permit an independent certified
public accounting firm to verify the accuracy of reports and amounts paid to
Schering.  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 Schering, 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
Schering 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 Schering. 
The accounting firm shall disclose in writing all information gathered
to the Selling Party.  In the form of a
written report, the accounting firm shall disclose to Schering only whether or
not payments made to Schering were reasonably correct and the specific details
concerning any purported discrepancies. 
No other information shall be shared with Schering.  The accounting firm will provide its report
simultaneously to Schering, to BioMedicines, and to the BioMedicines Affiliate
or the BioMedicines 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, three percent (3%) of amount actually paid, then the
Selling Party shall take additional actions to remedy this underpayment.  The Selling Party will then:


 


a)                                      pay
all reasonable costs associated with the audit that demonstrated the
underpayment (or repay Schering 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 Schering and BioMedicines; 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 Schering, then Schering shall credit any such overpayment
to BioMedicines (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 Schering.


 


8.10.2              When
Schering is Selling Licensed Product. Schering, or its Affiliates or
Sublicensees as appropriate (a “Selling Party”), shall keep sufficiently
complete and accurate


 










[ *
] = 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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records to properly reflect all gross sales and deductions from Net
Sales; and to enable the amounts payable hereunder to be determined.


 


Upon the written
request of BioMedicines, the Selling Party shall permit an independent
certified public accounting firm to verify the accuracy of reports and amounts
paid to BioMedicines.  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 BioMedicines, 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 BioMedicines 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 BioMedicines. 
The accounting firm shall disclose in writing all information gathered
to the Selling Party.  In the form of a
written report, the accounting firm shall disclose to BioMedicines only whether
or not payments made to BioMedicines were reasonably correct and the specific
details concerning any purported discrepancies. 
No other information shall be shared with BioMedicines.  The accounting firm will provide its report
simultaneously to BioMedicines, to Schering, and to the BioMedicines Affiliate
or BioMedicines 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, three percent (3%) of amount actually paid, then the Selling
Party shall take additional actions to remedy this underpayment.  The Selling Party will then:


 


a)                                      pay
all reasonable costs associated with the audit that demonstrated the underpayment
(or repay BioMedicines 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 BioMedicines and Schering; 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
Citibank, New York, 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 BioMedicines, then BioMedicines shall credit any such
overpayment to Schering (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 BioMedicines.


 


8.10.3              Costs.
 Costs related to Development
(Development Costs as herein defined), to CMC Development (CMC Development
Costs as herein defined), and other costs related to Manufacturing Improvements
or to carrying out the Manufacturing Plan shall all be subject to verification
according to the principles and practices described in this Section 8.10.


 










[ *
] = 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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8.11                        Taxes.  The Selling Party shall deduct any
withholding taxes from the payments due under the Agreement.  Each Selling Party 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.  All Selling Parties 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 Germany and the United States of America or
between Germany or the United States of America and any other country.


 


9.                                      INTELLECTUAL
PROPERTY AND RELATED MATTERS


 


9.1                               Maintenance.


 


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


 


b)                                      If
Schering shall elect not to maintain Patent Rights in any country within the
Territory, Schering shall inform BioMedicines in writing at least three (3)
months in advance of any action to abandon such maintenance, and BioMedicines
shall have the right to assume, at BioMedicines’ sole cost and expense, the
maintenance of any Patent Rights abandoned by Schering.  If BioMedicines does assume such maintenance
following abandonment by Schering in any country, royalty or other payments, if
any, shall be reduced by the cost to BioMedicines of assuming the maintenance
of Patent Rights.  If BioMedicines elects
not to assume such maintenance or if, having assumed such maintenance,
BioMedicines subsequently decides not to continue such maintenance, it must
give Schering three months notice in advance and allow Schering, at Schering’s
discretion, to assume such maintenance.


 


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


 


d)                                      Schering
shall make information available to BioMedicines on a regular and timely basis
to ensure that patent maintenance is facilitated and to provide BioMedicines
the opportunity to take any desirable or necessary actions in a timely manner.


 


9.2                               Patent
Term Extension or Equivalent.


 


a)                                      In
the event an extension of a patent(s) is available, the company that is then
responsible for maintaining said patent shall have the right to designate the
patent or patents for which such extension will be applied.


 


b)                                      If
the responsible company (Schering or BioMedicines as the case may be) shall
elect not to extend Patent Rights in any country within the Territory, then the
other company (BioMedicines or Schering, respectively) shall have the right to
extend, at its sole cost and expense, any Patent Rights not otherwise
extended.  If one company does assume
such maintenance following abandonment by the other in any country, royalty or
other payments, if any, shall be reduced by the cost of assuming such
responsibilities.  If one company elects
not to extend such rights or, having elected to extend, decides to abandon such
rights, that company shall provide the other company with at least three months
written notice in advance and allow the other company to execute such
extension.


 










[ *
] = 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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9.3                               Notification
Regarding Infringement.  Each of the
Parties shall notify the other promptly in the event that it becomes aware of
any:


 


a)                                      alleged
infringement of the Patent Rights by a third party and of any available
evidence thereof; or


 


b)                                      alleged
infringement of patent rights of third parties specifically related to the
matters described elsewhere in this Agreement.


 


9.4                               Litigation.


 


a)                                      The
company having patent maintenance rights 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 Schering shall elect not to defend Patent Rights against
challenge or infringement, BioMedicines, its Affiliates or Sublicensees, may
prosecute and/or defend any infringement and/or challenge to the Patent Rights.


 


c)                                      In
addition, in the event that Schering has not exercised or has abandoned its
marketing options in any portion of the Territory, then BioMedicines shall have
the first right to prosecute and/or defend Patent Rights against challenge or
infringement by any third party or parties.


 


d)                                      In
any infringement suit BioMedicines, 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 BioMedicines, its Affiliates or
Sublicensees is defending the Patent Rights, Schering shall cooperate in all
reasonable respects and, to the extent practicable, have its employees and, if
practicable, former employees, testify when requested.  Schering will also make available relevant
records, papers, information, samples, specimens and the like.  Schering will obligate its own Affiliates to
cooperate in a similar manner.


 


9.5                               Payments
and Patent Litigation.  If
BioMedicines, its Affiliates or Sublicensees, shall undertake the enforcement
or defense by litigation of the Patent Rights in any country in the Territory,
any royalties on Net Sales in such country or related milestone payments may be
withheld.  Such withholding may be applied
only toward the reimbursement of expenses, including reasonable attorney’s fees
and related costs.  Such withholding
shall not, however, exceed fifty percent (50%) of the amount that would
otherwise have been due to Schering.  If
such withheld sums are specifically recovered, however, from an offending third
party, then the withheld sum will be remitted to Schering.  The remission will occur within sixty (60)
days of said recovery.  No interest
shall be paid on such sums.


 


9.6                               Other
Intellectual Property.  Trademarks,
service marks, and tradenames, or any applications pertaining thereto, as shall
be selected, chosen, created or developed by BioMedicines, its Affiliates or
Sublicensees shall be the exclusive property of BioMedicines, its Affiliates or
Sublicensees, as appropriate.


 












[ *
] = 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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Any new invention within
the Field made by and paid for BioMedicines, a BioMedicines Affiliate or
Sublicensee and which is not based on Schering Know-How shall be the property
of BioMedicines but shall be promptly disclosed to Schering.


 


Any new invention within
the Field made by and paid for by Schering or by a Schering Affiliate shall be
the property of Schering or the Affiliate as appropriate but shall be promptly
disclosed to BioMedicines.


 


Any new invention within
the Field made by BioMedicines or by a BioMedicines Affiliate or made by
Schering or a Schering Affiliate, but which is paid for by the other, i.e.,
Schering or BioMedicines, respectively, shall be fully disclosed to both Schering
and BioMedicines.  Said new invention
shall be jointly owned by both Schering and BioMedicines.  Any such new invention shall be added to
Appendix A and the terms of the Agreement shall govern.


 


Notwithstanding the
foregoing, however, Schering and BioMedicines will then negotiate in good faith
regarding the subsequent use and disposition of any such new invention made by
either party or the Affiliates or Sublicensees thereof.


 


9.7                               Other
Patent-Related Matters.  Should any
payments be due to current or former employees of Schering or a Schering
Affiliate because of successful commercialisation of Licensed Product, Schering
or the Schering Affiliates, as appropriate, shall be solely responsible for
making said payments to current or former employees.


 


10.                               REPRESENTATIONS
AND WARRANTIES


 


10.1                        Freedom
to Execute Agreement.  Each of
Schering and BioMedicines represent and warrant to the other 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:


 


e)                                      respective
certificate of incorporation or by-laws;


 


f)                                        a
material indenture, lease, any other agreement or material instrument;


 


g)                                     an
applicable decree, judgment or order; or


 












[ *
] = 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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h)                                     any
applicable law, statute, rule or regulation.


 


10.2                        Patent
Rights.  Schering hereby represents
and warrants to BioMedicines that:


 


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


 


b)                                      the
patents and patent applications listed in Appendix A include all of those
currently related in any manner to the synthesis, analysis, manufacturing or
use of Licensed Product;


 


c)                                      it
has the full legal power to convey the rights granted to BioMedicines in the
Agreement;


 


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


 


e)                                      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;


 


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


 


g)                                     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;


 


h)                                     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;


 


i)                                        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


 


j)                                        Schering
has not entered into, and will not enter into, any agreement with any other
party which is in conflict with the rights granted to BioMedicines pursuant to
the Agreement.


 


10.3                        Know-How.  Schering hereby represents and warrants to
BioMedicines that Know-How and related information now in the possession of
Schering or a Schering Affiliate and subsequently provided to BioMedicines by Schering
or its Affiliates or Sublicensees is, to the best of its knowledge, materially
complete and accurate.  Schering also
represents and warrants that no materially important Know-How or related
information previously in the possession of Schering or a Schering Affiliate
has been deliberately destroyed.  In the
event that application to a third party is necessary to ensure that the
Know-How or information to be provided to BioMedicines is materially complete
and accurate, then Schering represents and warrants that it will take all
reasonable actions which are necessary or desirable to ensure such material
completeness and accuracy.  Schering
also represents and warrants that information required to be obtained under
conditions of United States Code of Federal Regulations Good Laboratory
Practices, Good Manufacturing Practices, or Good Clinical Practices (or 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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equivalent) has, in fact, been so obtained.  The representation and warranty given in this Section 10.3
is subject expressly to the proviso that the Know-How in existence at the date
of this Agreement can only comply with the regulations and practices applicable
at the date of generation of said Know-How and not those subsequently enacted
or agreed.


 


10.4                        No
Warranty on Fitness for Use.  Any
materials provided by Schering to BioMedicines or by BioMedicines to Schering
(or to an Affiliate or Sublicensee thereof), as the case may be, are provided
“as is” and specifically without any warranty of fitness or merchantability for
any particular use.  In addition, to the
extent provided by law, the party providing the said materials shall not be
liable under any contract, negligence, strict liability or other legal or
equitability theory for any incidental or consequential damages.


 


10.5                        Past
Compliance with Good Manufacturing Practices.  Schering hereby represents and warrants to BioMedicines that all
manufacturing activities associated with the existing drug substance of
Section 4.4 were conducted in compliance with Good Manufacturing Practices
applicable at the date of manufacture.


 


11.                               LIABILITY
AND INDEMNIFICATION


 


11.1                        BioMedicines
Obligations. BioMedicines shall be liable for and shall indemnify Schering
against all claims arising from the manufacturing, development or
commercialisation of Licensed Product by BioMedicines, its Affiliates or
Sublicensees.  BioMedicines will provide
Schering with a copy of the relevant insurance policy.  The only exceptions shall be those caused by
or attributable to:


 


a)                                      fraudulent
or deliberately false or misleading information provided by Schering or its
Affiliates to BioMedicines and acted thereon in good faith by BioMedicines;


 


b)                                      gross
negligence by Schering or its Affiliates or Sublicensees; or


 


c)                                      any
illegal actions by Schering or its Affiliates or Sublicensees.


 


11.2                        BioMedicines
Affiliate(s) or Sublicensee(s). 
BioMedicines 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 BioMedicines to said
Affiliate(s) or Sublicensee(s) pursuant to the Agreement.  BioMedicines further warrants and represents
that it will indemnify Schering against financial losses, direct or indirect,
incurred by Schering because of breach of any contractual obligations of any
BioMedicines Affiliate to Schering or because of gross negligence by a
BioMedicines Affiliate with regard to its duties to Schering.


 


11.3                        Schering
Obligations.  Likewise, Schering
shall indemnify BioMedicines against all claims arising from the development or
commercialisation of Licensed Product by Schering, its Affiliates or
Sublicensees.  The only exceptions shall
be those caused by or attributable to:


 


a)                                      fraudulent
or deliberately false or misleading information provided by BioMedicines or its
Affiliates to Schering and acted thereon in good faith by Schering;


 












[ *
] = 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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b)                                      gross
negligence by BioMedicines or its Affiliates or Sublicensees; or


 


c)                                      any
illegal actions by BioMedicines or its Affiliates or Sublicensees.


 


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


 


11.5                        Unallocated
Liability.  Should any liability
remain unallocated after assumption of liability and provision of indemnification
as described herein, such unallocated liability shall be divided between
Schering and BioMedicines according to the fraction of net financial benefits
from the commercialisation of the product individually obtained by Schering,
BioMedicines or to Affiliates thereof, if any.


 


12.                               ASSIGNMENT,
CHANGE IN CONTROL


 


12.1                        Ability
of BioMedicines to Assign Agreement. 
The Agreement shall not be assignable by BioMedicines without the prior
written consent of Schering, such consent not to be unreasonably withheld.


 


12.1.1              Territory
outside the United States of America.  If Schering does not exercise the option described in
Section 6.1, then BioMedicines is free to assign the Licensed Product in
the Territory outside the United States of America, with the consent of
Schering, such consent not to be unreasonably denied.


 


12.1.2              United
States of America.  If Schering does
not exercise the option described in Section 6.2, then BioMedicines is
free to assign the Licensed Product in the United States of America, with the
consent of Schering, such consent not to be unreasonably denied.


 


12.2                        Change
in Control.  A change in control in
BioMedicines (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 BioMedicines, shall not be treated as an assignment.  BioMedicines agrees, however, to inform
Schering promptly upon any such change in control.  In addition, acquisition of voting control of BioMedicines by any
or all of current BioMedicines shareowners shall not, for purposes of the
Agreement, constitute a change in control.


 


13.                               TERM
AND TERMINATION


 


13.1                        Duration
of Agreement


 


13.1.1              Duration.
 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
BioMedicines hereunder shall remain in full force and effect for as


 












[ *
] = 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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long as royalties, or other like compensation, is payable to Schering
or to BioMedicines in any country of the Territory.


 


13.1.2              After
Expiration of Agreement.  At the end
of said term, BioMedicines shall have a fully paid-up License in the countries
of the Territory in which Licensed Product was commercialized by BioMedicines
prior to termination of the Agreement pursuant to Section 13.1 above.  In addition, Schering agrees to cooperate in
good faith with BioMedicines to ensure a continuing supply of Licensed Product
to permit continuing commercialisation.


 


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


 


a)                                      BioMedicines
or Schering, respectively, fails to remedy any material failure to fulfill its
obligations under the Agreement; or


 


b)                                      there
is a material breach of the terms of conditions hereof within sixty (60) days
after receipt of notice in written form specifying the circumstances giving
rise to failure or breach.


 


Termination for such
causes shall not preclude seeking redress or injunctive relief.


 


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


 


13.4                        Schering
Special Option.


 


13.4.1              Special
Option Right.  In addition to the
options described in Sections 6.1 and 6.2, Schering shall also have the option
to regain full control of the development and marketing of Licensed Product in
the event: (a) Dr. Moran is no longer active in the Development and CMC
Development of Licensed Product in a managerial or clinical advisory capacity
for reasons other than death or disability and (b) BioMedicines is unable to
engage another person reasonably acceptable to Schering to lead such
development within six (6) months after such cessation of activity by Dr.
Moran.


 


13.4.2              Term
of Option; Exercise.  The foregoing
option shall expire, whether or not it has become exercisable pursuant to
Section 13.1, if not exercised prior to the earlier of: (a) the second
anniversary of the Effective Date, (b) delivery of the Phase III clinical trial
report described in Sections 6.1 and 6.2 or (c) the exercise or waiver of
either of Schering’s options under Section 6.1 or 6.2.  The parties also agree to confer on or about
the first anniversary of the Effective Date in order to consider in good faith
whether the foregoing option of Section 13.4.1 may be terminated at that
time by mutual agreement.  Such option
may be exercised by Schering upon written notice to BioMedicines.


 


13.4.3              Schering
Obligations After Exercise Option. 
In the event that Schering exercises the foregoing option, then Schering
agrees as follows:


 












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EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


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a)                                      Schering
or a Schering Sublicensee will continue to diligently pursue Development and
CMC Development of Licensed Product, i. e. Schering shall use the same
diligence as it applies to its other proprietary products of similar potential.


 


b)                                      Schering
or a Schering Sublicensee will, within thirty (30) days of the decision by
Schering to exercise the foregoing option, pay to BioMedicines fifty percent
(50%) of the Development and CMC Development Costs incurred by BioMedicines
through the date of said exercise.


 


c)                                      On
resumption of Development or CMC Development activities, Schering or a Schering
Sublicensee will then repay the remaining fifty percent (50%) of Costs
previously incurred by BioMedicines.


 


d)                                      Schering
shall also be obligated to pay royalties or other payments to BioMedicines, as
required by other Sections of this Agreement, with the exception that no Risk
Premium shall be due to BioMedicines.


 


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


 


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


 


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
after 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 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 rightful possession as evidenced by its written records;


 


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


 












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EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


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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.


 


14.2                        Approval
of Public Disclosure. 
Notwithstanding the provisions of Section 14.1 such party shall
present to BioMedicines or Schering, as appropriate, a written request for such
disclosure.  The recipient of the
request to permit disclosure shall have a period of five (5) calendar days to
approve the requested disclosure.  The
requested approval shall not be unreasonably withheld.


 


14.3                        Acknowledgment
of Private Disclosure.  BioMedicines
may disclose to a third party or parties confidential or nonconfidential
information regarding the Licensed Product or the Agreement only where
necessary and then under conditions of confidentiality in the pursuit of
development or commercialisation of the Licensed Product otherwise consistent
with the terms of the Agreement.


 


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 the address below or as it
shall otherwise subsequently designate by written notice:


 


In the case of Schering:                                                                   Schering
AG 

D-13342 Berlin 

Germany 

Attention: Corporate Licensing 

with a copy to: Legal Department


 


In the case of
BioMedicines:                                        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 Schering and BioMedicines will be brought before the courts of Germany.  Place of proceedings shall be Berlin.


 


16.2                        Entire
Agreement.  Both Schering and
BioMedicines acknowledge that the Agreement sets forth the entire agreement and
understanding of both Schering and BioMedicines


 












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EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


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as to the subject matter hereof. 
No other previous oral or written communications between Schering and
BioMedicines with respect to the License granted hereunder shall be of any
force or effect.  In addition, the
Agreement may be modified only by the execution of a subsequent written
amendment approved by both Schering and BioMedicines.


 


16.3                        Severability.  The provisions of the Agreement are
severable.  In the event that any
provision of the Agreement shall be invalid or unenforceable under any
controlling body of the law, the validity or enforceability of the remaining
provisions shall remain unaffected.


 


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 Schering or BioMedicines 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 BioMedicines or Schering, 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.


 


16.7                        Force
Majeure.  Neither party shall be
held liable or responsible to the other party nor be deemed to have defaulted
under or breached this agreement for failure or delay in fulfilling or performing
any term of this Agreement, other than an obligation to make a payment, when
such failure or delay is caused by or results from fire, floods, embargoes,
government regulations, prohibitions or interventions, war, acts of war,
insurrections, riots, civil commotions, lockouts, acts of God or any other
cause beyond the reasonable control of the affected party.


 












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


 


	
  SCHERING AKTIENGESELLSCHAFT

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Ulrich Koch

  	
   

  
	
   

  
	
  Name:

  	
  Dr. Ulrich Koch

  	
   

  
	
   

  
	
  Title:

  	
  Head Corporate
  Licensing

  	
   

  
	
   

  
	
   

  
	
  By:

  	
  /s/ B. Baldus

  	
   

  
	
   

  
	
  Name:

  	
  Berthold Baldus

  	
   

  
	
   

  
	
  Title:

  	
  Head Office of Technology

  	
   

  
	
   

  
	
   

  
	
  BIOMEDICINES,
  INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ S. M. Moran

  	
   

  
	
   

  
	
  Name:

  	
  Dr. Mark Moran

  	
   

  
	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  
					



 












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AMENDED.


 


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APPENDIX A


 


[*]


 










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EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


 


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Appendix B


 


Atamestane for the Treatment of Breast Cancer

Summary of Proposed Clinical Development Activities


 


Preparation for a Pre-IND Meeting with the FDA


This meeting will be of critical importance.  We propose to prepare, if possible, an
integrated summary of safety and an integrated summary of efficacy for the
consideration of the Oncology Division.


 


Since the U.S. IND contains only a fraction of the
total clinical data, some of the work for the pre-IND meeting will also be
useful in preparing a revised IND.


 


The goal will be to obtain agreement with the Agency
on:


•      requirements for registering
Atamestane for the second-line treatment of tamoxifen- or toremifene-resistant
breast cancer


•      the number of patients
needed for a demonstration of efficacy


•      the number of patients
needed for a demonstration of safety


•      key phase III design
criteria: number of studies (1 or 2); blinded versus open-label; active control
(e.g., anastrozole) vs historical controls; endpoints


•      preclinical and clinical
considerations for registering Atamestane for combined use with tamoxifen or
toremifene as first-line treatment


 


We believe that a satisfactory preparation will
require 4-6 months after the Effective Date.


 


Chemistry, Manufacturing, and Controls


Stability testing should continue according to a
regular schedule.  We need to agree on
the timing and particulars of preparing finished drug product for the phase III
studies.  We also need to discuss the
steps needed to complete validation of analytical methods.  Preliminary discussion regarding the
synthesis of registration batches will be appropriate as well.


 


Clinical


Second Line Therapy


We will review in detail with the FDA the current
phase II data.  Currently we intend to
discuss with the FDA the following design for phase III:


        [*]


•      standard measures of
clinical response


•      objective response rates


•      duration of response


•      time to progression


•      time to treatment failure


 


The [*] Atamestane
regimens proposed above are intended to address [*]
and [*].


 


We will propose that no more than [*]
patients per group will be adequate to examine the relative rates of objective
response and the adverse event profiles of the [*]
drugs.


 










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AMENDED.


 


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We will also, of necessity, discuss with the FDA a
proposed definition of [*] We will
propose that [*] should include the
demonstration of [*].


 


The total time from end of FDA meeting to end of the
required studies could be [*]
months.  The goal will be to complete the
analysis and writing of the marketing applications within [*]
months thereafter.


 


[*] First Line Therapy (with Tamoxifen or
Toremifene)


Preclinical studies will be required first. The time
required to discover the [*] regimen may
be as short as [*] months or as long as [*].  The possibility
also exists that there is [*] drug or
regimen to which Atamestane may [*].


 


If preclinical studies are “positive,” suggesting a [*] for Atamestane, then a second discussion will be held
with the FDA. The purpose of the second discussion will be to define the
clinical study or studies required to obtain an approval for [*] first line therapy. 
In this regard, a very interesting potential study design to consider
would be [*].


 


If scientifically appropriate, one additional clinical
study, or more likely two additional clinical studies, will be required in
order to establish the safety and efficacy of the [*].  Survival may be the required endpoint;
however, objective response rates with standard additional indices of duration
of response, time to progression and time to treatment failure are projected to
be sufficient.


 


Endocrinology or Special Group Studies


It is possible that additional endocrinological
studies or studies of “special groups” of patients [*]
may be required.  We will raise this
topic with the FDA. Our hope is that the answer will be “no.”


 


Marketing Application(s)


Assuming that additional clinical testing will be
required as described, the earliest marketing application would occur [*].  Making certain
other assumptions about the duration of recruiting, dosing and follow-up, a
filing [*] might be feasible.


 


Schedule  A preliminary
Gantt chart is attached.


 


[*]


 










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Appendix C


 


Considerations for Chemistry, Manufacturing, and
Controls


(Preliminary CMC Plan)


 


Terminology


For consistency the terminology employed during the [*] meeting will be utilised.  The current synthesis is designated as the “5-step”
synthesis and the two alternatives are designated as the “3-step”synthesis and
the “l-step” synthesis.


 


I.              Considerations
for the 5-Step Synthesis


Based on calculations made in 1991, the estimated cost
of goods at that time was approximately [*] per kg when
using the “current” 5-step synthesis.


 


Improvements in the Current 5-Step Synthesis


Step 1:                   [*]


At the moment, there are no proposals to significantly
alter this step.


 


Step 2:                   [*]


This step requires further stabilization.  Alteration of stirring parameters, changing
the solvent from [*], and possibly eliminating [*] are possible modifications.  Certain preliminary work has been carried out
successfully at laboratory scale.  One
scale-up synthetic campaign in the pilot plant will be useful, followed thereafter
by a transfer of the new method to commercial facilities in Bergkamen.


 


Step 3:                   [*]


At the moment, there are no proposals to significantly
alter this step.


 


Step 4:                   [*]


At the moment, there are no proposals to significantly
alter this step.


 


Step 5:                   [*]


A second crop is a primary consideration versus a “better”
first crop that might be associated with a slightly lower, but still
acceptable, purity.  To obtain a second
crop with comparable purity to the first crop may, however, require an
additional [*] step.


 


Estimate of Lowest Cost of Goods with Improved
5-Step Synthesis


If the cost of [*] acetate can
be lowered substantially and improvements in yield can also be achieved, then
there is the reasonable potential to lower the cost of goods with a modified
5-step synthesis to [*] per kg,
with the best current estimate being [*] per
kilogram (kg) when the annual amount manufactured is approximately [*] kg.


 


Estimation of Costs for Manufacturing Improvements


To be developed during the course of CMC planning


 


II.            Considerations
Regarding the 3-Step Synthesis


The first estimate of the cost of goods with the new
3-step synthesis was approximately [*] per kg.


 










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An early comparison of the 3-step to the 1-step
synthesis, requiring approximately [*] months, is
appropriate.  This comparison will
involve primarily a re-examination of existing data rather than the generation
of new data.


 


[*] is used in the 3-step
synthesis and is [*] less [*]
than [*] used in the current 5-step
synthesis.  There is also a [*] involved in purification of Atamestane with the 3-step
synthesis.  Although the [*] is a [*] rather than
the more expensive [*], there is
still the potential for significant loss of [*]
in this [*] step.


 


In addition, the generation of increased amounts of [*], a known impurity, may obligate additional toxicological
work.  The precise change in the amount
of this impurity, among other impurities, needs further assessment.


 


There is no estimate at this time regarding the
minimal “target” cost of goods for the 3-step synthesis.


 


One possible improvement to the first step of the
3-step synthesis is the use of [*] and [*] in the presence of a [*].  The cost of [*]
may be declining from approximately [*] per kg (or
possibly less).  However, there would be
a need to accommodate the handling of [*].  The older technology for cuprate addition is
more secure.  Currently, the only
manufacturing process that would utilize [*] would be
Atamestane.


 


Estimate of the Lowest Cost of Goods with the
3-Step Process


There is currently no estimate.


 


Estimation of Costs for Manufacturing Improvements


There is no current estimate regarding the costs for
these preliminary steps.  Such estimates
will be provided in more detail in the final CUC Development Plan.


 


III.           Considerations
Regarding the 1-Step Synthesis


 


[*] of [*]
currently yields [*] Atamestane with [*] and standard [*].  Optimizing yield will involve a careful
consideration of yield versus time and the avoidance of “parallel reactions”,
as well as secondary reactions that diminish Atamestane successfully
synthesised.  Recapture of starting
materials and recycling need further evaluation.


 


One parallel reaction that has been observed is [*] of the [*].  It is possible to first [*]
the [*] as a [*].  Higher yields of Atamestane have been
achieved using the [*], but the
costs of the added protection/deprotection steps need to be considered.


 


[*] is utilized in the 1-step
synthesis.  As noted, the cost of this
material may be declining from [*] per kg or
possibly less.  However, there would
still be a need to invest in the handling of [*].  Currently, the only manufacturing process
that would utilize [*] would be
Atamestane.


 


A [*] is also
used in the 1-step synthesis.  The
presence of [*] and [*]
[*] is a potential problem.  It is unknown whether or not significant
levels of these [*] are present in the [*] from the reaction. 
Additional study will be required to determine whether or not the
concentrations of [*]


 










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can be reduced sufficiently to avoid excessive [*] costs.  There
would be a potential need to find a [*] for these [*].


 


Study of the 1-step reaction with a university
research group, particularly with regard to finding alternative [*], is a possibility worth considering.


 


Due to the complexity of the reaction, more expensive [*] is needed to produce pure Atamestane from the 1-step
synthesis.  There is a question regarding
the required purity of the crude product to optimize [*].  This [*] currently
utilizes [*] as a solvent.  Optimally, this solvent should be avoided to
minimize [*] treatment costs.  Whether avoidance is possible is
unknown.  The cost of the large-scale [*] will need further evaluation.


 


In addition, there is the generation of a [*] using the 1-step procedure.  This impurity, while new to Atamestane
synthesis, is well known within Schering, and significant toxicological data
may already exist.


 


Estimate of Lowest Cost of Goods with 3-Step
Synthesis


Despite these issues, if the cost of [*] could be reduced to [*] per kg, and
the low-yield [*]  significantly
improved, then there is the potential to lower the cost of goods to less than [*] per kg.  The
current optimistic best estimate would be [*] per kg.


 


Estimation of Costs for Manufacturing Improvements


There is no current estimate regarding the costs for
these preliminary steps.  Such estimates
will be provided in more detail in the final CMC Development Plan.


 


IV.           Considerations
for Drug Product


All clinical work to date has been performed with
tablets [*] containing [*]
film coating.


 


Current recommendations are that new tablets (possibly
the final formulation) be manufactured that will contain [*]
film coating [*].


 


In this case, it is recommended that drug product be
manufactured with the more modern standard of [*]


 


Based on historical data with other low-potency
steroids, the larger tablet would be predicted to be more stable and to have
less variable dissolution and disintegration. 
Specific consideration of Atamestane CSF data will be necessary.  Detailed review of existing batch records for
the CSF will be useful in further assessing the risk of retaining the CSF as a
possible formulation for commercial purposes.


 


Preliminary data suggest that the larger tablet would
produce more [*] and might, as a result,
generate a pharmacokinetic profile that would not favor [*].  If [*], then
conversion at a later date from the smaller [*]
to a larger but possibly more stable [*] may not be
feasible without additional clinical work. 
Accordingly, the topic of [*] will need
to be addressed carefully.


 


Additional work will be necessary to shift to the [*] F formulation.  If
done within Schering, some [*] FTE’s are
estimated to be required to effect the change. 
If the [*] is retained, then possibly
only [*] FTE’s would be required to manage
developmental activities in both


 










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pharmaceutics and analytics.  The fully burdened costs for these activities
are dependent upon the final dosage form and could range from [*] to [*].


 


If a third party vendor is required, then [*] manufacturing will be needed.  This service should be available.  [*] will be
necessary at a cost of approximately [*] per
kg.  This cost is dependent on
scale.  Within Schering, the cost of
making the tablets and packaging is estimated to be approximately [*] per kg drug substance ([*]
per tablet).


 


These drug product costs are independent of the cost
of drug substance.


 


V.            General
CMO Issues


There is a Drug Master File (DMF) at the FDA. The DMF
was filed in [*].  The DMF has not been [*].  The DMF has not been [*].  Accordingly, both the manufacturing and the
sampling sections of the DMF require [*].  The reference standard needs a new
Certificate of Analysis.  All batch
records for every batch exist and are in the possession of Schering [*].


 


Stability data are available, but additional work to
comply with the newest ICH guidelines will be needed, particularly with regard
to the effect of humidity.  There are
sixty (60) months of supporting stability data for drug substance.  Whether one or three production batches will
be required for additional study will need to be addressed.


 


VI.           Summary


As discussed in the preliminary CMC meeting between
Schering and BioMedicines on 05.08.1998, an outline of the general plan would
be:


 


Regarding Drug Substance


•      To utilise the 5-step
synthesis with the proposed modifications at the pilot plant scale to
demonstrate the effectiveness of the new process.


•      To re-evaluate the [*] new syntheses (“3-step” and “l-step”) and to design the
experiments needed to make a “final” decision about the synthetic route.


•      To agree on steps, costs and
timelines for the work described in Step 2 above.


•      To perform the work of Step
3


•      To evaluate the results of
Step 4 and then to decide whether a new synthetic route is feasible and, if
feasible, preferable to the “improved 5-step” process.


•      If a new synthetic route is
preferable, to perform the required pilot plant work and then to transfer the
process to Bergkamen.


•      If the improved 5-step
process remains preferable, to transfer this improved process to Bergkamen.


 


Regarding Drug Product


•      To review existing CSF data
and to make a decision regarding the manufacture of the larger or smaller
tablets for phase III and commercialisation.


•      To select a mutually
acceptable site for the preparatory work and the actual manufacturing of drug
product.


 










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COMPANY
LETTERHEAD


 


Biomedicines, Inc.


Attn: K. Alice
Leung


CEO


2000 Powell Street


Suite 1640


Emeryville,
California 94608


U.S.A.


 


	
  Your Ref.

  	
   

  	
  Your letter
  dated

  	
   

  	
  Our Ref. (Please
  indicated when replying)

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  RA/UK/Cie
  (4b3108_1)

  	
   

  	
  2004-09-03

  



 


Amendment
#1 to the License Agreement


 


Dear Alice,


 


Referring to our
telephone conference on [*] and
your fax of that same day, we have re-discussed internally the situation
concerning the manufacture of drug substance and drug product under the License
Agreement between Schering and Biomedicines dated February 1, 1999 (the “License
Agreement”).  After such discussion, we
have the following comments:


 


1.             Manufacture
of Drug Substance for Registration Batch


 


For the sake of clarity,
we hereby exercise again our option pursuant to Section 5.1 of the License
Agreement to manufacture drug substance for the Licensed Product (as defined in
the License Agreement) required for manufacture of the first Registration Batch
(as defined in the License Agreement). 
The exercise of this option shall, however, only become effective when
Biomedicines has countersigned and returned to Schering the CMC Plan (as defined
in the License Agreement) which is attached to this letter.


 


2.             Manufacture
of Drug Substance for Further Development and Commercialization


 


As a final decision can
only be made if the CMC Plan is amended (cf. Section 1 above) and such
amendment has not yet been finalized, we suggest that Section 5.1 of the
License Agreement be amended to the effect that the option pursuant to Section 5.1
of the License Agreement concerning the manufacture of drug substance required
for subsequent development and commercialization of Licensed Product be
exercisable within two (2) weeks after Schering has received the countersigned
new CMC Plan from Biomedicines.


 










[ *
] = 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.             Manufacture
of Drug Product for Further Development and Commercialization


 


As more communication is
required between Schering and Biomedicines in order to prepare the manufacture
of drug product for Licensed Product.  We
suggest that Section 5.2 of the License Agreement be amended to the effect
that the option pursuant to Section 5.2 of the License Agreement
concerning the manufacture of drug product required for subsequent development
and commercialization of Licensed Product be exercisable within one (1) month
after Schering has been notified of a decision by biomedicines to have such
drug product manufactured, this notification not to be made before November 1,
2004.


 


4.             Reimbursement
of CMC Costs


 


We hereby confirm the
agreement between Schering and Biomedicines that the invoice periods pursuant
to Section 4.7 of the License Agreement concerning the reimbursement of
the CMC Costs (as defined in the License Agreement) be amended to the effect
that Schering shall invoice Biomedicines on a quarterly basis for CMC Costs
incurred by Schering in the quarter preceding the quarter of invoice.


 


In all other
respects, the terms of the License Agreement shall remain unchanged.


 


To signify
acceptance of the aforementioned issues concerning the amendment of the License
Agreement, please counter-sign, date and return to us the attached duplicate of
this letter.


 


Yours sincerely


 


Schering Aktiengesellschaft


 


 


	
  /s/
  Hong Chow

  	
   

  	
   

  	
  /s/
  H. Neh

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hong
  Chow

  	
   

  	
  Harribert
  Neh

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  	
   

  	
  Accepted
  by

  
	
   

  	
   

  	
   

  	
   

  	
  Biomedicines,
  Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  /s/
  K. Alice Leung

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  K.
  Alice Leung

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attachment:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CMC
  Plan

  	
   

  	
   

  	
   

  	
   

  



 










[ * ]
= 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.


 





















 


Amendment
to the Amendment #1 to the License Agreement


Chemical
Development Plan Atamestane


 


[*]


 










[ *
] = 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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