Exhibit
10.3


PRIVILEGED & CONFIDENTIAL


EXECUTION COPY


Confidential
Materials omitted and filed separately with the

Securities and Exchange Commission. 
Asterisks denote omissions.


MEMORANDUM
OF UNDERSTANDING (the “MOU”)


July
25, 2006


Parties                                                                                                            Sandoz
AG, a Swiss corporation (“Sandoz”), with a corporate office located at
Lichtstraße 35, CH 4058 Basel BS, Switzerland (Notices:  Attention:  Peter Rupprecht, Authorized Signatory), and
Momenta Pharmaceuticals, Inc., a Delaware corporation (“Momenta”), with
a corporate office located at 675 West Kendall Street, Cambridge, MA 02142, USA
(Notices:  Attention:  Chief Executive Officer), hereby enter into
this Memorandum of Understanding as of the date referenced above (this “MOU”).  Each is a “Party”, and collectively,
the “Parties”.


Collaborative
Scope                                   Sandoz
and Momenta shall work collaboratively to develop, commercialize, and maximize
the value in the Field (as defined below) of generic injectable versions for
which glatiramer acetate (Teva’s Copaxone®) (“CPX”) worldwide, [**] for
the USA, enoxaparin sodium (Aventis’ Clexane®/Lovenox®) (“ENX”) for the
EU, and [**] for the EU is the reference listed drug, and for which an ANDA or
other abbreviated approval pathway could be approved by the FDA (or foreign
counterparts, as applicable) (each, a “Product”). The aim of such
collaboration is to develop, register and commercialize these Products (a) for
CPX and ENX, with the authorized claim of AP-rated, AB-rated or otherwise
therapeutic substitutability in the FDA’s Orange Book or foreign equivalent,
and (b) for [**], as non-substitutable if appropriate, but with the goal of
achieving therapeutic substitutability to the relevant reference innovator
products for the applicable territories. In addition, the Parties shall work collaboratively
to develop, commercialize and maximize the value of generic or follow-on
versions of any other Biosimilar product as specifically agreed with respect to
Potential Projects (as defined below) according to the Selection Process.  Furthermore, the Parties will collaboratively
work to articulate and present a scientific basis for substitutable follow-on
protein products to key thought leaders and decisions makers and to help shape
USA, European Union (“EU”) and rest of world (“ROW”) (as mutually
agreed) legislative and regulatory agenda/policy intended to develop a
regulatory pathway for substitutable follow-on proteins regulated under the USA
Public Health Service Act (or foreign equivalent).


Selection Process                                                  [**]
starting [**], the Parties shall discuss all Momenta and Sandoz project ideas
within the Collaborative Scope which the relevant Party makes available for
collaboration.  Sandoz and Momenta shall
mutually select projects of joint commercial interest (“Potential Projects”).  For the sake of clarity, neither Party is
obligated to make any particular project or product available for collaboration
as a possible Potential Project.  For
such Potential Projects, the Parties agree to negotiate in



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good faith, for [**] days after the date such Potential
Project is so selected, a definitive collaboration agreement, including
territory, project plan and financial terms. 
During such [**] day period, the Parties are allowed to discuss and
negotiate with Third Party(ies) regarding such Potential Project, but shall not
enter into a definitive agreement with any Third Party with respect to such
Potential Project.  If the Parties do not
execute such agreement within [**] days of such selection date, neither Party
shall have any further obligation to the other with respect to such Potential
Project, except (a) to the extent, if any, that the Parties again mutually
select such project as a Potential Project, or (b) if such Potential Project is
a Sandoz MFN Project, in which case the provisions of the next two (2)
paragraphs shall apply.  For purposes of
this MOU, “Third Party” shall have the meaning assigned to it in the
Collaboration and License Agreement, dated November 1, 2003, by and among
Momenta, Sandoz N.V. and Sandoz Inc. (the “US-ENOX Agreement”).


Sandoz shall have the
right to select up to three (3) Potential Projects in total over the course of
such [**] year period for which, if the Parties do not execute a definitive
agreement with respect to such Potential Project within the [**] day period
described above, Sandoz shall have the rights described in the next paragraph
(such 3 projects [same comment here], the “Sandoz MFN Projects”).  Sandoz shall notify Momenta in writing of its
selection of such Potential Project as a Sandoz MFN Project at the time it is
selected as a Potential Project.  In
addition, each of the following is an additional Sandoz MFN Project (so that
there may be a maximum of [**] Sandoz MFN Projects in total):  (a) [**] outside the USA, and (b) [**]
outside the EU.  Either Party may trigger
the initial [**]-day negotiation period for either such additional Sandoz MFN
Project upon written notice to the other Party.


If the Parties do not
sign a definitive agreement on any Sandoz MFN Project within such [**] day
period, Momenta shall be free, for a period of [**] thereafter, to execute a
definitive agreement with a Third Party with respect to such Sandoz MFN
Project, which shall be on terms not less favorable, taken as a whole, to
Momenta than those last offered by Momenta to Sandoz.  The Parties recognize that, in evaluating the
favorability to Momenta of the terms of such Third Party transaction relating
to such Sandoz MFN Project, numerous factors may be taken into account and
given appropriate weight, including, without limitation, the amount of up-front
payments, the amount and timing of subsequent license or research payments, the
royalty rate(s) or profit sharing terms, the definition of territory, marketing
and promotion rights, and the purchase and pricing of equity, if applicable.  If after the expiration of such [**] period,
Momenta has not entered into a transaction with any Third Party with respect to
such Sandoz MFN Project, then the Parties shall again negotiate for [**] days
with respect to such Sandoz MFN Project and if the Parties do not execute a
definitive agreement during such [**] day period, the provisions of this



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paragraph shall again apply.  Momenta shall not be obligated to reveal to
Sandoz the identity of any Third Party involved in any such transaction.  Except as expressly provided in this section “Selection
Process” or as expressly otherwise stated in the Collaboration Agreement (as
defined below), the terms of this MOU and the terms of the Collaboration
Agreement will not apply to the Potential Projects.


Nothing shall restrict either Party from undertaking,
alone or with its Affiliates (as defined below) or any Third Party, any
activities, including without limitation entering into any contracts, with
respect to any compounds, biologics or products other than the Products and, to
the extent provided in this Section “Selection Process”, the Sandoz MFN
Projects.


Field                                                                                                                      The
injectable administration of the Products for all therapeutic indications,
which Product may be in any formulation, combinations, presentations or dosage
forms.


Grant of Rights                                                               Each
Party grants the other Party an exclusive license under the relevant
Intellectual Property Controlled by such Party which is necessary or reasonably
useful to develop, make, have made, use, distribute, offer to sell, lease,
import, export and sell the Product(s) in the Field for sale in the relevant
joint territory and a non-exclusive license under such Intellectual Property to
make, have made and use the Product outside such territory but only for
purposes of selling such Product in or into the relevant joint territory; provided,
that each Party retains the right to exercise rights under its IP to perform
its obligations to the other Party under this MOU and the Collaboration
Agreement and to make, have made and use the Product in the joint territory for
purposes of selling such Product in or into the non-joint territories.  Such licenses shall be sublicenseable only as
permitted pursuant to mutual written agreement of the Parties.  “Intellectual Property” or “IP”
shall conform to the definition of Patent Rights and Know-How, collectively,
under the US-ENOX Agreement, thereby including patents, patent applications,
copyrighted materials, and know-how (including data), but excluding trademarks.  “Controlled” means with respect to any
item of Intellectual Property, the possession, whether by ownership or license
(other than pursuant to a license granted under this MOU or the Collaboration
Agreement), by a Party or its Affiliates of the ability to grant to the other
Party access and/or a license as provided herein under such item of
Intellectual Property without violating the terms of any agreement or
arrangement with any Third Party.  The
terms of this MOU are subject to and limited by the provisions of any
applicable agreement with Third Party licensors of a Party’s IP, including, as
applicable, the MIT Agreement (as defined in the US-ENOX Agreement) and the
insurance obligations therein; provided, however, that, if a
Party enters into a license with a Third Party licensor for any IP that may be
licensed to the other Party hereunder, such Party shall notify the other Party
of the restrictions and obligations imposed



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by such licensor, and, if such other Party does not
wish to comply with such restrictions and obligations, such IP shall not be
licensed to the other Party hereunder. 
Neither Party shall amend any such Third Party license agreement
existing as of the Execution Date (including, without limitation, the MIT Agreement
and the [**] Agreements) in a manner that would be inconsistent with this MOU,
nor enter into any agreement after the Execution Date that would be
inconsistent with this MOU.


In no event may Sandoz use or cross-reference any
Momenta IP (whether or not included or disclosed in any regulatory filings, whether
such filings are owned by Sandoz or otherwise) (a) in [**] for which Sandoz has
chosen to develop or commercialize CPX on its own; or (b) otherwise with
respect to any products or in any countries, other than to support the joint
development and commercialization of a Product in the Field in the countries
for which the Parties are jointly developing and commercializing such Product.


Exclusivity                                                                                      Sandoz
and Momenta will work exclusively together, using Commercially Reasonable
efforts, to develop and commercialize the Products in the Field for the
respective joint territories; provided, however, that for [**]
for CPX, Sandoz shall have the option to develop and commercialize CPX on its
own and, if it wishes to do so, it will notify Momenta in writing at the time
when Sandoz commits resources (consistent with its internal decision process)
to develop CPX on its own for [**], in which case Momenta will have the right,
without any further obligation to Sandoz, to develop and commercialize CPX for
[**].


“Commercially Reasonable” means, with respect
to the efforts to be expended by a Party with respect to any objective, or with
respect to the decision to be made by a Party, reasonable, diligent, good faith
efforts to accomplish such objective as such Party would normally use to
accomplish a similar objective, or making such decision in reasonable, good
faith as such Party would normally make, in each case under similar
circumstances exercising reasonable business judgment, it being understood and
agreed that, with respect to the development or commercialization of a Product,
such efforts, or decisions, shall be substantially equivalent to those efforts
and resources commonly used, or decisions commonly made, by such Party for a
product owned by it or to which it has rights, which product is at a similar
stage in its development or product life and is of similar market potential,
taking into account efficacy, safety, approved labeling, the competitiveness of
alternative products in the marketplace, the patent and other proprietary
position of the Product, the likelihood of regulatory approval given the
regulatory structure involved, the profitability of the Product, alternative
products and other relevant factors commonly considered in similar
circumstances.  It is anticipated that
the level of effort, and the decisions, will change over time, reflecting
changes in the status of the Product.



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Development and


Commercialization                                                The
Parties will work collaboratively to develop and commercialize each Product and
to maximize Product revenues and profits with respect thereto.  Primary responsibility for executing specific
functions will be mutually determined in good faith according to the Parties’
respective capabilities and expertise; however, regulatory, legal, development
and commercialization activities will be planned by a joint project team for
each Product, with representatives from both Parties.  Each Party’s representatives on the joint
project teams and Joint Steering Committee shall have one vote, collectively.


Final decision on
development, regulatory, legal and commercial strategy shall reside with Sandoz
for [**], however Sandoz shall consult with and give due consideration to
Momenta’s input related thereto.  For CPX
and ENX, all decisions shall be joint decisions; provided, however, that final
decisions for all Products on patent challenge litigation and launch prior to
receipt of Legal Clearance shall reside with Sandoz. Under no circumstances may
Sandoz use the foregoing final decision-making authority to (a) obligate
Momenta to spend money or devote resources outside those previously agreed to
in the mutually-agreed Annual Collaboration Plan and Budget (as defined below),
(b) unilaterally amend the terms of this MOU or the Collaboration Agreement or
override Momenta rights in this MOU or the Collaboration Agreement, or (c)
unilaterally determine that it has fulfilled any obligations hereunder or that
Momenta has breached any obligations hereunder. 
Except with its decision to launch prior to receipt of Legal Clearance,
which is made in Sandoz’s sole discretion, Sandoz shall exercise its final
decision-making authority in good faith and in a Commercially Reasonable
manner.


Sandoz will control
patent challenge litigation relating to each Product and, subject to the prior
paragraph, shall have the sole authority in each country in the relevant
territory to decide whether to launch a Product prior to final legal clearance
by a court of competent jurisdiction or settlement with the innovator (“Legal
Clearance”), provided that such decision is subject to reasonable
consultation with, and due consideration of input from, Momenta. Sandoz shall
select counsel to assist with patent challenge litigation which counsel shall
be reasonably acceptable to Momenta. 
Sandoz shall make all regulatory filings.  All Product filings with the applicable
regulatory authorities in a particular country/territory shall be in Sandoz’s
name and shall be owned by Sandoz. 
Sandoz shall book all sales for the Products.  A joint steering committee (the “Joint
Steering Committee” or “JSC”) will oversee the joint project team’s
planning and execution of the development, regulatory, legal and
commercialization plans for the Products. 
The Joint Steering Committee also will approve an Annual Collaboration
Plan and Budget, which will include goals, resources, and responsibilities
during each year of the collaboration and forecasts for subsequent years.  In the Annual Collaboration Plan and Budget,
the Parties will further define the responsibilities of each Party with respect



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to the development,
regulatory, legal and commercialization activities for each Product.


Financial Terms


Equity Purchase                                                         Subject
to the provisions below, Novartis Pharma AG, one of Sandoz’s Affiliates (as
defined in the ‘Assignment’ section of this MOU) will make a USD$75
million (“MM”) investment in Momenta common stock (the “Equity
Purchase”).  The date of execution
and public announcement (after market-close) of the definitive Stock Purchase
Agreement will be the “Execution Date”.


The Equity Purchase will be made pursuant to a
definitive Stock Purchase Agreement and Investor Rights Agreement which will
have been executed concurrently with this MOU. 
Closing of the Equity Purchase is anticipated to occur as soon as
possible after the Execution Date, following the filing and obtaining of HSR
clearance (if required) (the “Closing”).


Product Costs                                            Development
Expenses:  Development Expenses are
all internal (FTE) costs and external costs to develop a particular Product up
to and including development of commercial scale process (including
formulation, characterization, bioequivalence, regulatory filings, QA/QC,
analytical, product and process development), and making of regulatory filings
with respect to such Product, which expenses are incurred in accordance with
the then current Annual Collaboration Plan and Budget.


Commercialization Expenses:  Commercial Expenses are all internal (FTE)
and external costs for the validation of commercial scale process (for drug
substance and drug product, as well as associated stability studies),
production inventory build prior to and post launch, marketing, promoting,
distributing and selling of a Product, which expenses are incurred by either
Party in accordance with the then-current Annual Collaboration Plan and
Budget.  Failed validation batches and
inventory not sold are included in Commercialization Expenses.


“FTE Rate” will be
$[**] per FTE (i.e., [**] hours of scientific, legal, technical or managerial
work), which rate is subject to annual increase pursuant to the US CPI.


1.
CPX worldwide:


Momenta will fund [**]
Development Expenses of both Parties (other than human clinical trials beyond a
bioequivalence study) for the USA (both Momenta and Sandoz FTEs (at the FTE
Rate) and external expenses) until an ANDA is filed with the appropriate
regulatory agencies as well as from filing to approval.



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Momenta and Sandoz will
each pay 50% of the cost (both Momenta and Sandoz FTEs (at the FTE Rate) and
external expenses) of any CPX Development Expenses specifically for ex-US
applications; provided, however, that the Parties will jointly
decide whether to apply for approval and/or market CPX in any territories other
than USA and EU (subject to the Parties’ rights with respect to [**], as
described in the “Exclusivity” section).


In addition, if human
clinical studies beyond a bioequivalence study are required, Momenta and Sandoz
will each pay 50% of such costs (including the Parties’ FTEs and out-of-pocket
costs) unless a Party(ies) has terminated the MOU with respect to such Product,
as provided below.


Sandoz shall fund all
Legal Costs (other than Momenta’s FTEs) (subject to the “Indemnification/Share
of Legal Costs” section below) and Commercialization Expenses (including
Momenta’s FTEs, at the FTE Rate).  For
avoidance of doubt, [**].  If Sandoz
requests Momenta’s assistance with commercial manufacturing activities, Sandoz
will reimburse Momenta’s “Cost of Goods Sold” (defined consistent with
the explanation attached as Exhibit A (provided, however,
that Third Party Royalties shall be treated as provided below)) thereof within
[**] days after receipt of such invoice.


2.    ENX EU


Momenta will fund
[**]%, and Sandoz will fund [**]%, of future Development Expenses of both
Parties (both Momenta and Sandoz FTEs (at the FTE Rate) and external expenses)
(other than human clinical trials beyond a bioequivalence study) until the EU
equivalent of an ANDA is filed with the appropriate regulatory agencies as well
as from such filing to approval for ENX.


In addition, if human
clinical studies beyond a bioequivalence study are required, the Parties will
split such costs [**]% (Sandoz) and [**]% (Momenta) unless a Party(ies) has
terminated the MOU with respect to such Product, as provided below.


Sandoz shall fund all
Legal Costs (other than Momenta’s FTEs) (subject to the “Indemnification/Share
of Legal Costs” section below) and Commercialization Expenses (including
Momenta’s FTEs, at the FTE Rate).  For
avoidance of doubt, Momenta’s [**]  If
Sandoz requests Momenta’s assistance with commercial manufacturing activities,
Sandoz will reimburse Momenta’s Cost of Goods Sold thereof within [**] days
after receipt of such invoice.



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3.
[**]


Sandoz funds [**]
Development Expenses. Such Development Expenses shall include FTE expenses of
both Parties’ FTEs (Momenta’s FTEs at the FTE Rate) and any Third Party
expenses. Momenta will be reimbursed for its Development Expenses.


Sandoz shall fund all
Legal Costs (including Momenta’s FTEs (at the FTE Rate) with respect to
activities related thereto incurred in accordance with the Annual Collaboration
Plan and Budget) and Commercialization Expenses (including Momenta’s FTEs at
the FTE Rate).  For avoidance of doubt,
[**].  If Sandoz requests Momenta’s
assistance with commercial manufacturing activities, Sandoz will reimburse
Momenta’s Cost of Goods Sold thereof within [**] days after receipt of such
invoice.


4.
[**]


Sandoz funds [**]
Development Expenses.  Such Development
Expenses shall include FTE expenses of both Parties’ FTEs (Momenta’s FTEs at the
FTE Rate) and any Third Party expenses. 
Momenta will be reimbursed for its Development Expenses.


Sandoz shall fund all
Legal Costs (including Momenta’s FTEs (at the FTE Rate) with respect to
activities related thereto incurred in accordance with the Annual Collaboration
Plan and Budget) and Commercialization Expenses (including Momenta’s FTEs at
the FTE Rate).  For avoidance of doubt,
Momenta’s [**] If Sandoz requests Momenta’s assistance with commercial
manufacturing activities, Sandoz will reimburse Momenta’s Cost of Goods Sold
with respect thereto.


Profit Sharing                                               Profits
from sale of the Product(s) in the respective territory will be shared:


1. For CPX (worldwide):


50% to Sandoz and 50% to Momenta


2. For ENX (EU)


[**]% to Sandoz, [**]% to Momenta


3. [**]


[**]% to Sandoz and [**]% to Momenta



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4. [**]


[**]% to Sandoz and [**]% to Momenta


“Profits” are equal to Net Sales (defined
consistent with the explanation attached as Exhibit A, provided, however,
that Third Party Royalties shall be treated as provided below) minus Cost of
Goods Sold for units sold; (i) regarding CPX: 
minus [**]% of the Net Sales minus any payments pursuant to milestone
lettered 1.c. (as described below), (ii) regarding [**]: minus [**]% of the Net
Sales, (iii) regarding [**]: minus [**]% of the Net Sales, and (iv) regarding
ENX, minus [**]% of Net Sales minus any payments pursuant to milestone lettered
2.b. (as described below).


Sandoz agrees not to use any Product as a loss
leader.  Sandoz also agrees that if it
prices a Product in order to gain or maintain sales of other products, then for
purposes of calculating the payments due hereunder, the Net Sales shall be
adjusted to reverse any discount which was given to a customer that was in
excess of customary discounts for such Product (or, in the absence of relevant
data for such Product, other similar products under similar market conditions),
if such discount was given in order to gain or maintain sales of other
products.


Milestones                                                            Sandoz
shall make Milestone payments to Momenta as follows:


1. For CPX:


a. USD$[**] upon receipt of final approval from US FDA
for ANDA if no Third Party other than [**] has, as of the date of such receipt,
received final approval for a U.S. ANDA filed by such Third Party for a
therapeutically-substitutable CPX-Equivalent Product.


“CPX-Innovator” means, collectively, [**] (d)
the successors and assigns of any of the persons in clauses (a), (b) or (c)
with respect to any rights to any CPX-Equivalent Product.


“CPX-Equivalent Product” means (a) Copaxone® in
injectable form sold as a brand, including Copaxone® sold by the CPX-Innovator
using another tradename (collectively, “Branded Copaxone”), or (b) any
product sold in the USA (other than Branded Copaxone) that is a generic
AB-rated, AP-rated or otherwise therapeutically substitutable for Copaxone® in
injectable form.


b.  USD$[**]
upon first commercial sale in USA


c. USD$[**] annual milestone payable at the end of
years [**] through [**] following first commercial sale for which CPX is the
[**] for such entire 12-month period, if Profits (calculated without deducting
such



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milestone from Net Sales) in that year are at least
USD$[**] in the USA.


d.  USD$[**]
payable at the end of the first 12 month period for which CPX Net Sales are
equal to or greater than USD$[**] in USA


e.  USD$[**]
payable at the end of a subsequent, non-overlapping 12 month period for which
CPX Net Sales are equal to or greater than USD$[**] in USA


2. For ENX (EU)


a.                                       USD$[**]                                           ENX
First Commercial Sale in EU


b.                                      USD$[**]                                           Annual
milestone payable at the end of years [**] through [**] following First
Commercial Sale for which M-ENX is the [**] for such entire 12-month period, if
Profits (calculated without deducting such milestone from Net Sales) in that
year are at least $[**] in the EU.


3. 
For [**]


USD$ [**] upon first commercial sale


4. For [**]


USD$[**] upon first
commercial sale


Third Party
Royalties                               Third
Party Royalties under agreements existing as of the Execution Date between
Momenta and MIT (patent licenses) (with respect to all Products), and between
Momenta and [**] (Momenta collaborator) (with respect to CPX and ENX) (the “[**]
Agreements”), shall be the responsibility of Momenta. Any other Third Party
royalties that are necessary or reasonably useful for development or commercialization
of a particular Product shall be (a) for CPX and ENX, mutually agreed upon by
the Parties, and the costs and royalties therefor split by the Parties in
accordance with the respective Profit split for such Product, and (b) for [**],
decided on by Sandoz and the costs and royalties therefor borne by Sandoz.


Payments                                                                                            Within
[**] days after the end of each quarter, the Party owed money with respect to
Development Expenses, Legal Costs (including FTE costs with respect to the
relevant activities for [**] incurred in accordance with the Annual
Collaboration Plan and Budget) and Commercialization Expenses shall provide to
the other Party a report of such expenses and payments will be due by the owing
Party within [**] days after receipt of such report.  Milestone and Profit payments will be made in
substantial accordance with the payment periods described in the US-ENOX
Agreement, and the provisions of Section 4.11 of the US-ENOX Agreement shall
apply.



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Intellectual Property                                    Ownership
of Intellectual Property created under the collaboration shall follow the US
laws of inventorship such that any Intellectual Property created by Momenta or
Sandoz will be owned by Momenta or Sandoz, respectively, and any Intellectual
Property jointly created by Momenta and Sandoz will be jointly owned by them; provided,
however, that, substantially in accordance with Section 8.1.1 of the
US-ENOX Agreement, each Party shall own any improvements to its core
technology. Substantially in accordance with Section 8.1.2 of the US-ENOX
Agreement, the Party so assigning improvements it invented shall have a
non-exclusive, royalty free license to practice such assigned improvements for
all purposes other than to develop and commercialize the Products in the Field
in the respective joint territories.  The
provisions of Section 8.1.3 of the US-ENOX Agreement shall apply to jointly
owned IP; provided, however, that, should the Parties jointly
license such IP, the income therefrom shall be split pursuant to the Profit
split for the relevant Product.  The
provisions of Sections 8.2 through 8.9 of the US-ENOX Agreement shall
substantially apply with respect to CPX and ENX, mutatis mutandis in accordance with the Profit splits
hereunder.  With respect to [**], the
Parties shall mutually agree in writing on the rights and obligations of each
Party with respect to the principles of Sections 8.2 through 8.9 of the US-ENOX
Agreement.


Termination Rights                                          1.                                       Bankruptcy:  To the extent permitted under applicable law,
either Party may terminate this MOU effective immediately with written notice
to the other Party if such other Party files for bankruptcy, is adjudicated
bankrupt, files a petition under insolvency laws, is dissolved or has a
receiver appointed for substantially all of its property.  All rights and licenses granted under or
pursuant to any Section of this MOU are, and will otherwise be deemed to be,
for purposes of Section 365(n) of the United States Bankruptcy Code, licenses
of rights to “intellectual property” as defined under Section 101(35A) of the
United States Bankruptcy Code.  The
Parties will retain and may fully exercise all of their respective rights and
elections under the Bankruptcy Code. 
Upon the bankruptcy of any Party, the non-bankrupt Party will further be
entitled to a complete duplicate of (or complete access to, as appropriate) any
such intellectual property to the extent needed to allow such non-bankrupt
Party to manufacture, commercialize and sell the Products under this MOU, and
such, if not already in its possession, will be promptly delivered to the
non-bankrupt Party by the bankrupt Party, unless the bankrupt Party elects to
continue, and continues to perform all of its obligations under this MOU.


2.                                       Breach:  Either Party may terminate this MOU upon a
material breach of this MOU by the other Party [**] days after written notice
containing details of the breach if the breach remains uncured at the end of
the notice period.  If such material
breach is specific to a



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particular product, the non-breaching Party may terminate
this MOU with respect to such Product only.


3.                                       For
CPX and ENX:


Each Party shall have the right to terminate these
Products on a Product-by-Product and Region-by-Region basis (where each of the
USA, all European countries which are part of the EMEA regulatory regime taken
together, and each country separately in the ROW is a separate “Region”)
if human clinical studies beyond a bioequivalence study are required (as
reasonably determined by the JSC or as stated in writing from the applicable
regulatory authority) in order to achieve regulatory approval for CPX in the
relevant Region, and for ENX in EU, which termination shall take effect on
ninety (90) days written notice provided to the other Party within sixty (60)
days after such determination or receipt of regulatory authority statement;
provided, however, that if human clinical studies beyond a bioequivalence study
are required (as reasonably determined by the JSC or as stated in writing from
the FDA) in order to achieve regulatory approval for CPX in the USA, each Party
may select to terminate such Product in all Regions.  If one Party provides notice to the other
Party of such termination, the other Party shall have thirty (30) days
thereafter to provide notice of such termination for such reason to the first
Party, in which case the Parties will be considered to have jointly terminated
such Product with respect to the relevant Region(s).


4.                                       For
[**]:


Sandoz shall have the right to terminate these
Products on a Product-by-Product basis:


(a)                                  at
Sandoz’s convenience upon ninety (90) days written notice to Momenta, which
notice may be provided to Momenta no sooner than fifteen (15) months, and no
later than twenty-one (21) months, after the date of this MOU, so that such
termination shall be effective between eighteen months and two (2) years after
the date of this MOU;


(b)                                 if,
in the reasonable determination of the Parties, the Intellectual Property of
Momenta does not and will not materially contribute to the ability to achieve
regulatory approval or therapeutic substitutability for [**], respectively; provided,
however, that once any Momenta IP is used in a regulatory filing for
such Product in such country, such termination right automatically expires;


(c)                                  on
ninety (90) days written notice to Momenta if the [**] states in writing that
the Momenta IP did not contribute to the approval of such Product; or



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(d)                                 on
ninety (90) days written notice to Momenta upon Sandoz’s decision to
permanently cease development and commercialization of such Product, and all
development and commercialization of all [**] respectively.


Effect of Termination


With respect to CPX worldwide and ENX EU:


a.                                       Unless
the termination is (a) for Momenta’s breach, (b) for Momenta’s bankruptcy or
(c) by Momenta alone due to the need for clinical studies, such terminated
Product(s) revert to Momenta (with appropriate provisions relating to licenses
and transfer of activities substantially in accordance with Section 11.6.1 of
the US-ENOX Agreement, which licenses shall include any Sandoz IP or joint IP
developed in the collaboration existing on the termination date which (i) was
used in the collaboration with respect to such Product prior to termination or
(ii) is otherwise necessary or reasonably useful for the development and
commercialization of such Product).


b.                                      If
termination is for Momenta’s breach or bankruptcy, Sandoz retains control of
such terminated Product(s) but, unless Momenta breached the “Exclusivity”
provisions hereunder, Sandoz must pay Momenta the financial obligations described
in this MOU (with appropriate provisions relating to licenses and transfer of
activities substantially in accordance with Section 11.6.2 of the US-ENOX
Agreement).


c.                                       If
termination is by Momenta alone due to the need for clinical studies, Sandoz
retains control of such terminated Product(s) but must pay Momenta the
financial obligations described in this MOU (with appropriate provisions
relating to licenses and transfer of activities substantially in accordance
with Section 11.6.2 of the US-ENOX Agreement); provided, however,
that Sandoz may offset from the Profit split due to Momenta with respect to
such Product [**] percent ([**]%) of the portion of such clinical trial costs
which would otherwise have been borne by Momenta.


With respect to [**]:


Sandoz maintains control of such terminated
Product(s).


a.                                       If
the termination is pursuant to clause 4(a), (b), (c) or (d) of the “Termination
Rights” section above, then Sandoz will have no license to Momenta IP, and
Sandoz will not owe any Profit share or further milestone payments to Momenta
for such Product.


b.                                      If
the termination is due to Momenta’s breach or bankruptcy, then Sandoz may,
along with notice of termination, notify Momenta that it chooses to retain the
Momenta licenses, but Sandoz



 13
 






 



will not owe any Profit share or further milestone
payments to Momenta for such Product.


c.                                       If
the termination is due to Sandoz’s breach or bankruptcy, Sandoz will lose the
Momenta licenses, and Sandoz will not owe any Profit share or further milestone
payments to Momenta for such Product.


General:


Upon expiration or termination of this MOU for any
reason, nothing in this MOU shall be construed to release either Party from any
obligations that were incurred prior to the effective date of expiration or
termination.


Termination of this MOU shall be in addition to, and
shall not prejudice, the Parties’ remedies at law or in equity, including,
without limitation, the Parties’ ability to receive legal damages and/or
equitable relief with respect to any breach of this MOU, regardless of whether
or not such breach was the reason for the termination.


Indemnification/


Share of Legal Costs                                  (a)  Sandoz shall indemnify Momenta (and the
Momenta Indemnified Parties, as defined in the US-ENOX Agreement) against all
losses, costs, damages, judgments, settlements or other expenses (including all
reasonable attorneys’ fees, experts’ or consultants’ fees, expenses and costs)
(“Liabilities”) awarded to a Third Party or awarded to a Third Party
against any Momenta Indemnified Party, or that may be incurred or paid by any
Momenta Indemnified Party in the defense or compromise of legal or equitable
claims asserted by a Third Party, resulting from (i) patent litigation related
to the Product(s), (ii) Third Party claims arising out of activities related to
the Products, (iii) property damage or personal injury (including death), or
other product liability, relating to the Products, and (iv) breach of Sandoz’s
representations, warranties, covenants, obligations or agreements.


(b)  Momenta
will indemnify Sandoz (and the Sandoz Indemnified Parties, as defined in the
US-ENOX Agreement) against all Liabilities awarded to a Third Party against the
Sandoz Indemnified Parties or that may be incurred or paid by any of the Sandoz
Indemnified Parties in the defense or compromise of legal or equitable claims
asserted by a Third Party, arising out of or (a) resulting from any breach by
Momenta of any of its representations, warranties, covenants, obligations or
agreements, or (b) any actual misappropriation by any Momenta Indemnified Party
of any Third Party trade secret or know-how, provided that, (i) with
respect to actual misappropriation, there has been a final adjudication of
liability for misappropriation by a court of competent jurisdiction, or, (ii)
with respect to misappropriation that has been alleged but not finally
adjudicated, there is a settlement with a



 14
 






 



Third Party which the Parties determine by mutual
agreement constitutes an acknowledgement by Momenta of actual misappropriation
(either case under (i) or (ii) being a “Final Misappropriation Determination”)
and subject to the penultimate sentence of Section 12.2 of the US-ENOX
Agreement.


The indemnity procedures shall be consistent with the
provisions of Section 12.3 of the US-ENOX Agreement.


Notwithstanding the indemnification provisions above,
for the types of claims/cases mentioned in (a) (i)-(iii), Momenta shall be
responsible for reimbursement to Sandoz via offset from payments due to Momenta
for a Product-by-Product agreed percentage of the legal fees and expenses,
losses and damages (including but not limited to, any amounts due as a result
of settlement of a claim/case or losing a claim/case) (collectively, “Legal
Costs”) associated with any such claim/case under (a)(i)-(iii) in
accordance with the percentages provided below (whether or not a claim has been
made against or naming Momenta); provided, however, that, if the
relevant Product is no longer being marketed, then [**] percent ([**]%) of
Momenta’s remaining share of such Legal Costs may be offset against the
payments due to Momenta for the other Product; provided, further,
however, that (a) Sandoz shall be responsible for legal fees and
expenses to litigate any case (patent or otherwise) necessary to achieve
regulatory approval of and to be permitted to market the Products and (b) the
Parties shall bear, in the percentages provided below, the Product-Specific
Patent Costs (defined in accordance with the US-ENOX Agreement) for CPX and
ENX.


Regarding CPX the above mentioned percentage is 50%/50%.


Regarding ENX for
EU, [**]% (Sandoz)/[**]% (Momenta).


Although Momenta has partial responsibility for
certain Legal Costs as outlined above, in no event will profit split payments
to Momenta in any quarterly payment period be reduced below [**]% of the amount
otherwise owed for profit split to Momenta for such period.


In addition and notwithstanding anything to the
contrary herein, each Party shall be solely responsible for 100% of the damages
for any actual misappropriation by such Party of any Third Party trade secrets
or know-how, determined in accordance with a Final Misappropriation
Determination.


Sandoz shall bear the Product-Specific Patent Costs
for [**].


Confidentiality                                                                 The
terms and conditions of 1) the Confidentiality Agreement effective as of June
17, 2003 by and between Sandoz Inc. (formerly Geneva Pharmaceuticals, Inc.) and
Momenta Pharmaceuticals, Inc., as amended by Amendment One effective as of
January 5, 2006 and 2) the Confidentiality Agreement made as of the 16th day of April, 2003 by



 15
 






 



and between Biochemie GmbH and Momenta
Pharmaceuticals, Inc. shall apply to the Parties regarding this MOU.


Neither this MOU, nor the fact that Sandoz is the
counterparty to this MOU, or the name of Sandoz or any of its Affiliates, may
be disclosed to potential investors, the public or regulatory authorities, by
Momenta, for purposes of any offering of securities of Momenta or for any other
reason, without the prior written consent of Sandoz which shall be granted in
Sandoz’s discretion not to be unreasonably withheld.  Notwithstanding the foregoing, neither Party
shall issue a press release or other public announcement with respect to this
MOU absent the prior written consent of each Party which it shall be entitled to
give in its sole discretion; provided, that a mutually agreed upon press
release(s) for each Party will be issued on, or within one (1) business day
after, the Execution Date. 
Notwithstanding the foregoing, (a) each Party may disclose this MOU to
the extent required by applicable law; and (b) pursuant to an agreement to
maintain confidentiality, Momenta may provide a copy of this Agreement or
relevant portions thereof, to MIT and any other Third Party licensor, if
required pursuant to the relevant license agreement with respect to Momenta IP.


Governing Law                                                               This
MOU shall be governed by and construed in accordance with the laws of the State
of New York, without regard to the conflict of law principles thereof.


In the event of a dispute between the Parties, such
dispute will be presented in writing to the JSC.  The JSC will meet within 14 days after
receipt of such notice and attempt in good faith to resolve the dispute.  If the JSC is unable to resolve a dispute
(whether raised by a joint project team or arising within the JSC), such
dispute will be presented in writing to the chief executive officer of each
Party (or an executive officer designated by such CEO).  Such executives will meet within 14 days
after receipt of such notice and attempt in good faith to resolve the
dispute.  All such negotiations between
the executives are confidential and will be treated as compromise and
settlement negotiations for purposes of applicable rules of evidence.  Each Party reserves its right to any and all
remedies available under law or equity with respect to any such dispute which
such executives cannot resolve within such 14-day period.  For the sake of clarity, the provisions of
this paragraph and the next paragraph are subject to the final decision-making
authority granted in this MOU.


The Parties agree that any action arising out of this
MOU shall be commenced in the federal or state courts of New York, as
appropriate, and that such court is a proper venue for such action, that
effective process may be served to a Party at the address set forth above, and
that A RIGHT TO TRIAL BY JURY IS WAIVED.



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Each Party may change its address for receiving
notices, or may request that courtesy copies of notices be provided to up to
two (2) additional addresses in total, by providing written notice thereof to
the other Party.


Insurance                                                                                           Sandoz
shall be self-insured.  To the extent
Momenta is required to obtain the consent or waiver of MIT under the MIT
Agreement to permit such self-insurance by Sandoz, Momenta shall use its best
efforts to obtain such waiver or consent. 
Momenta shall comply with the insurance obligations imposed on Momenta
pursuant to the MIT Agreement.


Entire Agreement                                                   This
MOU supersedes all prior discussions and writings and constitutes the entire
agreement between the Parties with respect to the subject matter hereof (other
than the Confidentiality Agreements described above and the US-ENOX
Agreement).  No waiver or modification of
this MOU will be binding upon either Party unless made in writing and signed by
a duly authorized representative of such Party, and no failure or delay in
enforcing any right will be deemed a waiver. 
In addition, this MOU may be executed in two or more counterparts, each
of which shall constitute an original and all of which together shall
constitute one and the same instrument. 
The provisions of Sections 14.9 (Severability), 14.13 (Affiliates),
14.14 (Exports), 14.15 (Force Majeure) and 14.16 (Non-Use of MIT Name) of the
US-ENOX Agreement shall apply to this MOU.


Assignment                                                                               Each
Party shall be permitted to assign its rights and obligations, in whole or in
part, in this MOU to any of its Affiliates, provided that in such case,
the assigning Party remains liable with the assignee for all of its obligations
hereunder; or as otherwise permitted in Section 14.3 of the US-ENOX Agreement.  Any attempted assignment that does not comply
with the terms of this Section shall be void. 
This MOU shall be binding upon and inure to the benefit of the Parties,
their successors and permitted assigns.  “Affiliate”
means any corporation, company, partnership, joint venture and/or firm that
controls, is controlled by, or is under common control with an entity
determined in accordance with the definition of Affiliate in the US-ENOX
Agreement.  If a Party assigns this MOU
to (i) the purchaser (which, immediately prior to such transaction, is a Third
Party) of (A) all or substantially all of the assets of the assigning Party’s
business to which this MOU relates, or (B) a majority of the voting equity
securities of the assigning Party, or (ii) the surviving Person, in the event
of a merger of the assigning Party and another Person, any such purchaser or
successor shall be bound by the terms hereof, and such assignment or
transaction shall not provide the other Party with rights or access to
intellectual property rights of the acquirer of such Party which were not
already intellectual property rights Controlled by such Party prior to such
assignment or such transaction.



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Binding Nature                                                               The
Parties agree to negotiate in good faith a definitive collaboration agreement
(the “Collaboration Agreement”), using commercially reasonable efforts
to execute such agreement within sixty (60) days after the Execution Date
(which Collaboration Agreement will be effective as of the date of its
execution or the Closing, whichever comes later) to establish the collaboration
pursuant to the terms provided for in this MOU. 
The Parties agree to meet by teleconference and in person as necessary
in order to meet such timeline.  Momenta
shall provide the first draft of the definitive Collaboration Agreement for
review by Sandoz within ten days from the date hereof.  Unless the Collaboration Agreement is
executed earlier, the terms of this MOU will automatically become effective as
of the Closing; provided, however, that the “Confidentiality”
section and this “Binding Nature” section shall become effective as of the
Execution Date.  Unless and until the
Collaboration Agreement is executed, the terms of this MOU shall remain in
effect and shall govern the Parties’ rights and obligations as provided herein.


No Consequential


Damages.                                                                                            UNLESS
RESULTING FROM A PARTY’S WILLFUL MISCONDUCT OR FROM A PARTY’S BREACH OF
CONFIDENTIALITY, NO PARTY HERETO WILL BE LIABLE TO ANY OTHER PARTY OR ITS
AFFILIATES FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE,
MULTIPLE OR OTHER INDIRECT DAMAGES ARISING OUT OF THIS MOU OR THE EXERCISE OF
ITS RIGHTS HEREUNDER, OR FOR LOSS OF PROFITS, LOSS OF DATA OR LOSS OF USE
DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS MOU WHETHER BASED UPON
WARRANTY, CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, REGARDLESS OF ANY
NOTICE OF SUCH DAMAGES.  NOTHING IN THIS
SECTION IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR
OBLIGATIONS OF ANY PARTY UNDER THIS MOU.


[Signature Page Follows]



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Signature Page


IN WITNESS WHEREOF, the Parties hereby
execute this Memorandum of Understanding as of the date first above written.


	
  Sandoz AG

  	
   

  	
  Momenta Pharmaceuticals, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/J.
  Viertiotler

  	
   

  	
   

  	
  By:

  	
  /s/Alan Crane

  	
   

  
	
   

  	
  Name:

  	
  J. Viertiotler

  	
   

  	
   

  	
   

  	
  Name: Alan Crane

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  	
   

  	
   

  	
   

  	
  Title: President & CEO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Sandoz
  AG

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/Felix
  Eichhorn

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Felix
  Eichhorn

  	
   

  	
   

  	
   

  
	
   

  	
  Title:  Authorized Signatory

  	
   

  	
   

  	
   

  
												



 















 


Exhibit A


Net Sales Concepts


The Novartis Group’s
principal accounting policies are set out in note 1 of the Group’s consolidated
financial statements and conform to International Financial Reporting Standards
(IFRS). Significant judgments and estimates are used in the preparation of the
consolidated financial statements which, to the extent that actual outcomes and
results may differ from these assumptions and estimates, could affect the
accounting in the areas described in this section.


REVENUE


Revenue is recognized
when title and risk of loss for the products are transferred to the customer.
Provisions for rebates and discounts granted to government agencies, wholesalers,
managed care and other customers are recorded as a reduction of revenue at the
time the related revenues are recorded or when the incentives are offered. They
are calculated on the basis of historical experience and the specific terms in
the individual agreements. Cash discounts are offered to customers to encourage
prompt payment. They are recorded as a reduction of revenue at the time of
invoicing. Wholesaler shelf-inventory adjustments are granted to customers
based on the existing inventory of a product at the time of decreases in the
invoice or contract price of a product or at the point of sale if a price
decline is reasonably estimable. Where there is a historical experience of
Novartis agreeing to customer returns, Novartis records a provision for
estimated sales returns by applying historical experience of customer returns
to the amounts invoiced and the amount of returned products to be destroyed
versus products that can be placed back in inventory for resale.


Cost of
Goods Sold


Cost of goods sold
comprises all the costs incurred in producing goods for sale:


·          variable
and fixed production costs including factory overhead


·          purchase
price variances


·          inventory
revaluations, inventory destroyed or written-off


·          change
in the value of inventory provisions and


·          production
variances


·          payments
related to product rights, dossiers, patents, trademarks and registration costs
that do not meet the criteria for capitalization


·          amortization
and impairment losses related to marketable products, i.e. product rights,
patent rights, trademarks and core development technologies


·          expenses
for the use of intellectual properties from 3rd parties


·          Other non-production
related cost of goods sold that cannot be allocated to any other line of COGS



 20
 






 



COGS must be valuated
with acceptable approximation to actual costs (use of standard cost plus
variances (purchase price, production, etc.) to achieve actual costs).


Free goods given in
connection with a sale count as quantity sales for the purpose of calculating
actual average selling price. The cost of free goods have to be recorded as
cost of goods sold.


Optional


DEDUCTIONS FROM REVENUES: As is typical in the pharmaceutical industry,
Novartis’ gross sales are subject to various deductions, primarily comprised of
rebates and discounts to retail customers, government agencies, wholesalers and
managed health care organizations. These deductions represent estimates of the related
obligations, requiring the use of judgment when estimating the impact of these
sales deductions on gross sales for a reporting period. These adjustments are
reported as a reduction of Gross Sales to arrive at Net Sales. The following
briefly describes the nature of each deduction and how the deduction is
estimated. The US market has the most complex arrangements related to revenue
deductions. However, in a number of countries outside the U.S., including major
European countries, Novartis provides rebates to government entities. These rebates
are often legislatively mandated. Specific references are made to the US
market, and where applicable, to [**]:


 


·          The US Medicaid program
is a state government-administered program that uses state and federal funds to
provide assistance to certain vulnerable and needy individuals and families. In
1990, the Medicaid Drug Rebate Program was established to reduce state and
federal expenditures for prescription drugs. Under the rebate program, [**].
Provisions for estimating Medicaid rebates are calculated using a combination
of historical experience, product and population growth, price increases, the
impact of contracting strategies and specific terms in the individual state
agreements. These provisions are adjusted based upon established processes for
refiling data with individual states. For Medicaid, the calculation of rebates
involves interpretation of relevant regulations, which are subject to challenge
or change in interpretative guidance by government authorities. Since Medicaid
rebates are typically billed up to six months after the products are dispensed
to patients, any rebate adjustments may involve revisions of provisions for
several periods.


 


·          [**]


 



 21
 






 



These savings vary based
on a patient’s current drug coverage and personal income levels. Provisions for
the subsidiaries’ obligations under these programs are based on historical
experience, trend analysis and current program terms. On January 1, 2006, an
additional prescription drug benefit will be added to the US Medicare program.
Individuals that have dual Medicaid/Medicare drug benefit eligibility will have
their Medicaid prescription drug coverage replaced on January 1, 2006 by the
new Medicare Part D coverage, provided through private prescription drug plans.
The change will lead to a significant shift of plan participants between
programs in which the subsidiaries participate. The [**].


·          Wholesaler
chargebacks relate to [**]. A wholesaler chargeback represents the difference
between the invoice price to the wholesaler and the indirect customer’s
contract discount price. Provisions for estimating chargebacks are calculated
using a combination of factors such as historical experience, product growth
rates and the specific terms in each agreement. The subsidiaries account for
wholesaler’s chargebacks by reducing accounts receivable. Wholesaler
chargebacks are generally settled within three months of incurring the
liability.


·          Customer
rebates are offered to key managed health care plans, group purchasing
organizations and other direct and indirect customers to [**]. These rebate
programs provide that the customer receive a rebate after attaining certain
performance parameters relating to product purchases, formulary status and/or
pre-established market share milestones relative to competitors. Since rebates
are contractually agreed upon, rebates are estimated based on the specific
terms in each agreement, historical experience and product growth rates. [**]


·          In
order to evaluate adequacy of ending provision balances, [**] Management
internally estimates the inventory level in the retail channel and in transit.


·          Where
a product with right of customer returns is sold, [**]



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Other factors are also
considered, such as product recalls and, in the case of [**]. In the US,
historical rates of return are utilized and are adjusted for known or expected changes
in the marketplace when appropriate. Sales returns amount to approximately [**]%
of gross product sales.


·          The
policy of [**]. Based on this information, the inventories on hand at
wholesalers and other distribution channels in the US are estimated to be
approximately one month at December 31, 2005. Novartis believes the third party
data sources of information are sufficiently reliable, however its accuracy
cannot be verified.


·          At
the end of 2005, [**].


·          Cash
discounts are offered to customers in the US and certain other countries to
encourage prompt payment. Cash discounts, which are typically [**]% of gross
sales in the US, are accrued at the time of invoicing.


·          Shelf-stock
adjustments are generally granted to customers based on the existing inventory
of a customer following decreases in the invoice or contract price of the
related product. Provisions for [**], are determined at the time of the [**] or
at the [**].


·          Other
sales discounts, such as consumer coupons and discount cards, are also offered.
These discounts are recorded at the time of sales or when the coupon is issued
and estimated utilizing historical experience and the specific terms for each
program.


·          Discounts,
rebates or other deductions shown on the invoice are generally recorded
directly as a reduction in the gross to net sales value and do not pass through
the provision account.



 23