Document:

Exhibit 10.14

 

Final

 

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission.  Double asterisks denote omissions.

 

License and Collaboration Agreement

 

This Agreement is entered into as of November 23, 2011 (“Execution Date”) with effect as of the Effective Date (as defined below)

 

by and among

 

F.  Hoffmann-La Roche Ltd

 

a Swiss corporation with an office and place of business at Grenzacherstrasse 124, 4070 Basel, Switzerland (“Roche Basel”)

 

and

 

Hoffmann-La Roche Inc.

 

a New Jersey corporation with an office and place of business at 340 Kingsland Street, Nutley, New Jersey 07110, U.S.A. (“Roche Nutley”; Roche Basel and Roche Nutley together referred to as “Roche”)

 

on the first hand

 

and

 

PTC Therapeutics, Inc.

 

a Delaware corporation with an office and place of business at 100 Corporate Court, South Plainfield, New Jersey 07080 (“PTC”)

 

on the second hand

 

and (solely with respect to the Foundation Provisions (as defined below))

 

Spinal Muscular Atrophy Foundation

 

with its principal place of business at 888 Seventh Avenue, Suite 400, New York, New York 10019 (“Foundation”)

 

on the third hand.

 

 

Table of Contents

 

	
 
    	
 
    	
Page(s)
    
	
 
    	
 
    	
 
    
	
1.
    	
Definitions
    	
1
    
	
 
    	
1.1
    	
Affiliate
    	
1
    
	
 
    	
1.2
    	
Agreement
    	
1
    
	
 
    	
1.3
    	
Agreement Term
    	
2
    
	
 
    	
1.4
    	
Alternative Splicing
    	
2
    
	
 
    	
1.5
    	
AS Assay
    	
2
    
	
 
    	
1.6
    	
Business Day
    	
2
    
	
 
    	
1.7
    	
Calendar Quarter
    	
2
    
	
 
    	
1.8
    	
Calendar Year
    	
2
    
	
 
    	
1.9
    	
Change of Control
    	
2
    
	
 
    	
1.10
    	
Clinical Study
    	
3
    
	
 
    	
1.11
    	
Combination Product
    	
3
    
	
 
    	
1.12
    	
Commercially Reasonable Efforts
    	
3
    
	
 
    	
1.13
    	
Compound
    	
3
    
	
 
    	
1.14
    	
Confidential Information
    	
4
    
	
 
    	
1.15
    	
Control
    	
4
    
	
 
    	
1.16
    	
Cover
    	
5
    
	
 
    	
1.17
    	
Derivative
    	
5
    
	
 
    	
1.18
    	
Development Candidate Criteria
    	
5
    
	
 
    	
1.19
    	
Effective Date
    	
5
    
	
 
    	
1.20
    	
EMA
    	
5
    
	
 
    	
1.21
    	
EU
    	
5
    
	
 
    	
1.22
    	
FBMC
    	
5
    
	
 
    	
1.23
    	
FDA
    	
6
    
	
 
    	
1.24
    	
FDCA
    	
6
    
	
 
    	
1.25
    	
Field
    	
6
    
	
 
    	
1.26
    	
Filing
    	
6
    
	
 
    	
1.27
    	
First SRA Amendment
    	
6
    
	
 
    	
1.28
    	
First Commercial Sale
    	
6
    
	
 
    	
1.29
    	
Foundation Provisions
    	
6
    
	
 
    	
1.30
    	
Fourth SRA Amendment
    	
7
    
	
 
    	
1.31
    	
FTE
    	
7
    
	
 
    	
1.32
    	
FTE Rate
    	
7
    
	
 
    	
1.33
    	
Generic Competition
    	
7
    
	
 
    	
1.34
    	
Generic Product
    	
7
    
	
 
    	
1.35
    	
Handle
    	
7
    
	
 
    	
1.36
    	
HSR Act
    	
8
    
	
 
    	
1.37
    	
HSR Clearance Date
    	
8
    
	
 
    	
1.38
    	
IFRS
    	
8
    
	
 
    	
1.39
    	
IND
    	
8
    
	
 
    	
1.40
    	
Initiation
    	
8
    
	
 
    	
1.41
    	
Insolvency Event
    	
8
    
	
 
    	
1.42
    	
Invention
    	
8
    

 

i

 

	
 
    	
1.43
    	
Joint Know-How
    	
9
    
	
 
    	
1.44
    	
Joint Patent Rights
    	
9
    
	
 
    	
1.45
    	
Know-How
    	
9
    
	
 
    	
1.46
    	
Law
    	
9
    
	
 
    	
1.47
    	
Major Countries
    	
9
    
	
 
    	
1.48
    	
Marketing Exclusivity
    	
9
    
	
 
    	
1.49
    	
NDA
    	
9
    
	
 
    	
1.50
    	
Net Sales
    	
10
    
	
 
    	
1.51
    	
New Compound
    	
10
    
	
 
    	
1.52
    	
New Compound Development Candidate
    	
10
    
	
 
    	
1.53
    	
New Product
    	
11
    
	
 
    	
1.54
    	
New Product Development Plan
    	
11
    
	
 
    	
1.55
    	
Party
    	
11
    
	
 
    	
1.56
    	
Patent Rights
    	
11
    
	
 
    	
1.57
    	
Person
    	
11
    
	
 
    	
1.58
    	
Phase I Study
    	
11
    
	
 
    	
1.59
    	
Phase II Study
    	
11
    
	
 
    	
1.60
    	
Pivotal Study
    	
11
    
	
 
    	
1.61
    	
Product
    	
12
    
	
 
    	
1.62
    	
Product Development Program
    	
12
    
	
 
    	
1.63
    	
PTC Base Patent Rights
    	
12
    
	
 
    	
1.64
    	
PTC Know-How
    	
12
    
	
 
    	
1.65
    	
PTC Patent Rights
    	
12
    
	
 
    	
1.66
    	
Quarterly R&D Fee
    	
12
    
	
 
    	
1.67
    	
Regulatory Approval
    	
13
    
	
 
    	
1.68
    	
Regulatory Authority
    	
13
    
	
 
    	
1.69
    	
Research Plan
    	
13
    
	
 
    	
1.70
    	
Research Program
    	
13
    
	
 
    	
1.71
    	
Research Term
    	
13
    
	
 
    	
1.72
    	
Roche Background Patent Rights
    	
13
    
	
 
    	
1.73
    	
Roche Group
    	
13
    
	
 
    	
1.74
    	
Roche Know-How
    	
14
    
	
 
    	
1.75
    	
Roche Patent Rights
    	
14
    
	
 
    	
1.76
    	
Roche Product Patent Rights
    	
14
    
	
 
    	
1.77
    	
Royalty Term
    	
14
    
	
 
    	
1.79
    	
Second SRA Amendment
    	
15
    
	
 
    	
1.80
    	
SMA
    	
15
    
	
 
    	
1.81
    	
SRA
    	
15
    
	
 
    	
1.82
    	
SRA Compound
    	
17
    
	
 
    	
1.83
    	
Sublicensee
    	
17
    
	
 
    	
1.84
    	
Successful Completion of Pivotal Study
    	
17
    
	
 
    	
1.85
    	
Territory
    	
17
    
	
 
    	
1.86
    	
Third SRA Amendment
    	
17
    
	
 
    	
1.87
    	
Third Party
    	
17
    
	
 
    	
1.88
    	
Transitional Research Plan
    	
18
    
	
 
    	
1.89
    	
US
    	
18
    

 

ii

 

	
 
    	
1.90
    	
US$
    	
18
    
	
 
    	
1.91
    	
Valid Claim
    	
18
    
	
 
    	
1.92
    	
Additional Definitions
    	
18
    
	
 
    	
 
    	
 
    
	
2.
    	
Foundation Obligations
    	
20
    
	
 
    	
2.1
    	
General Rights and Obligations
    	
20
    
	
 
    	
2.2
    	
Specific Rights and Obligations
    	
20
    
	
 
    	
2.3
    	
Designation of SRA Development Candidate
    	
21
    
	
 
    	
 
    	
 
    
	
3.
    	
Grant of Licenses
    	
21
    
	
 
    	
3.1
    	
License to Roche
    	
21
    
	
 
    	
3.2
    	
License to PTC
    	
21
    
	
 
    	
3.3
    	
Sublicense
    	
21
    
	
 
    	
3.4
    	
Rights Retained by the Parties
    	
22
    
	
 
    	
3.5
    	
Exclusivity
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Research Collaboration
    	
24
    
	
 
    	
4.1
    	
Conduct of Research Program
    	
24
    
	
 
    	
4.2
    	
Records; Reports
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Product Development
    	
26
    
	
 
    	
5.1
    	
SRA Product Development
    	
26
    
	
 
    	
5.2
    	
New Product Development
    	
30
    
	
 
    	
 
    	
 
    
	
6.
    	
Diligence
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
Governance
    	
31
    
	
 
    	
7.1
    	
Joint Steering Committee
    	
31
    
	
 
    	
7.2
    	
Acknowledgement Concerning the JSC
    	
31
    
	
 
    	
7.3
    	
Members
    	
31
    
	
 
    	
7.4
    	
Responsibilities of the JSC
    	
32
    
	
 
    	
7.5
    	
Meetings
    	
34
    
	
 
    	
7.6
    	
Minutes
    	
34
    
	
 
    	
7.7
    	
Decisions
    	
35
    
	
 
    	
7.8
    	
Information Exchange
    	
36
    
	
 
    	
7.9
    	
Joint Operational Teams
    	
36
    
	
 
    	
7.10
    	
Alliance Director
    	
37
    
	
 
    	
7.11
    	
Limitations of Authority
    	
37
    
	
 
    	
7.12
    	
Expenses
    	
38
    
	
 
    	
7.13
    	
Lifetime
    	
38
    
	
 
    	
7.14
    	
Appointment of JSC Members, JOT Members and Alliance   Directors
    	
38
    
	
 
    	
7.15
    	
Change of Control
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
Supply
    	
39
    
	
 
    	
8.1
    	
Research Supply of Product
    	
39
    
	
 
    	
8.2
    	
Clinical Supply of Product
    	
39
    
	
 
    	
8.3
    	
Commercial Supply of Product
    	
40
    

 

iii

 

	
9.
    	
Regulatory
    	
40
    
	
 
    	
9.1
    	
Responsibility
    	
40
    
	
 
    	
9.2
    	
Reporting Adverse Events
    	
40
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
Commercialization
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
Payment
    	
41
    
	
 
    	
11.1
    	
Research Recognition Payment
    	
41
    
	
 
    	
11.2
    	
Research and Development Funding
    	
41
    
	
 
    	
11.3
    	
Research and Development Event Payments
    	
42
    
	
 
    	
11.4
    	
Sales-Based Events
    	
43
    
	
 
    	
11.5
    	
Royalty Payments
    	
44
    
	
 
    	
11.6
    	
Payments to Foundation
    	
46
    
	
 
    	
11.7
    	
Diagnostic Product
    	
46
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
Accounting and reporting
    	
47
    
	
 
    	
12.1
    	
Timing of Payments
    	
47
    
	
 
    	
12.2
    	
Late Payment
    	
47
    
	
 
    	
12.3
    	
Method of Payment
    	
47
    
	
 
    	
12.4
    	
Currency Conversion
    	
47
    
	
 
    	
12.5
    	
Reporting
    	
47
    
	
 
    	
 
    	
 
    	
 
    
	
13.
    	
Taxes
    	
48
    
	
 
    	
 
    	
 
    	
 
    
	
14.
    	
Auditing
    	
48
    
	
 
    	
14.1
    	
PTC Right to Audit
    	
48
    
	
 
    	
14.2
    	
Over- or Underpayment
    	
49
    
	
 
    	
14.3
    	
Duration of Audit Rights
    	
49
    
	
 
    	
 
    	
 
    	
 
    
	
15.
    	
Intellectual Property
    	
49
    
	
 
    	
15.1
    	
Ownership of Inventions
    	
49
    
	
 
    	
15.2
    	
German Statute on Employee’s Inventions
    	
50
    
	
 
    	
15.3
    	
Prosecution of Patent Rights Claiming PTC Inventions
    	
50
    
	
 
    	
15.4
    	
Prosecution of Patent Rights Claiming Roche Inventions
    	
50
    
	
 
    	
15.5
    	
Prosecution of Patent Rights Claiming Joint Inventions
    	
51
    
	
 
    	
15.6
    	
Prosecution Costs
    	
51
    
	
 
    	
15.7
    	
CREATE Act
    	
51
    
	
 
    	
15.8
    	
Infringement
    	
51
    
	
 
    	
15.9
    	
Defense
    	
53
    
	
 
    	
15.10
    	
Common Interest Disclosures
    	
53
    
	
 
    	
15.11
    	
Hatch-Waxman
    	
54
    
	
 
    	
15.12
    	
Patent Term Extensions
    	
54
    
	
 
    	
 
    	
 
    	
 
    
	
16.
    	
Representations and Warranties
    	
55
    
	
 
    	
16.1
    	
Mutual Representations and Warranties
    	
55
    
	
 
    	
16.2
    	
Additional PTC Representations and Warranties
    	
56
    
	
 
    	
16.3
    	
Additional Roche Representation
    	
57
    

 

iv

 

	
17.
    	
Indemnification
    	
57
    
	
 
    	
17.1
    	
Indemnification by Roche
    	
57
    
	
 
    	
17.2
    	
Indemnification by PTC
    	
57
    
	
 
    	
17.3
    	
Procedure
    	
58
    
	
 
    	
 
    	
 
    	
 
    
	
18.
    	
Disclaimer
    	
58
    
	
 
    	
 
    	
 
    	
 
    
	
19.
    	
Obligation Not to Disclose Confidential Information
    	
59
    
	
 
    	
19.1
    	
Non-Use and Non-Disclosure
    	
59
    
	
 
    	
19.2
    	
Permitted Disclosure
    	
59
    
	
 
    	
19.3
    	
Disclosure to Foundation
    	
59
    
	
 
    	
19.4
    	
Press Releases and Other Disclosures
    	
59
    
	
 
    	
19.5
    	
Publications
    	
60
    
	
 
    	
19.6
    	
Commercial Considerations
    	
61
    
	
 
    	
19.7
    	
Interplay with SRA
    	
62
    
	
 
    	
 
    	
 
    	
 
    
	
20.
    	
Term and Termination
    	
62
    
	
 
    	
20.1
    	
Commencement and Term
    	
62
    
	
 
    	
20.2
    	
SRA Special Termination, SRA Reversion Notice and SRA   Buy-Out Notice
    	
62
    
	
 
    	
20.3
    	
Termination
    	
62
    
	
 
    	
20.4
    	
Consequences of Termination
    	
64
    
	
 
    	
20.5
    	
Survival
    	
68
    
	
 
    	
 
    	
 
    	
 
    
	
21.
    	
Bankruptcy
    	
68
    
	
 
    	
 
    	
 
    	
 
    
	
22.
    	
Miscellaneous
    	
68
    
	
 
    	
22.1
    	
HSR Act
    	
68
    
	
 
    	
22.2
    	
Change of Control of Roche
    	
69
    
	
 
    	
22.3
    	
Standstill
    	
69
    
	
 
    	
22.4
    	
Hub
    	
70
    
	
 
    	
22.5
    	
Governing Law
    	
70
    
	
 
    	
22.6
    	
Disputes
    	
70
    
	
 
    	
22.7
    	
Equitable Relief
    	
70
    
	
 
    	
22.8
    	
Assignment
    	
71
    
	
 
    	
22.9
    	
Independent Contractor
    	
71
    
	
 
    	
22.10
    	
Unenforceable Provisions and Severability
    	
71
    
	
 
    	
22.11
    	
Waiver
    	
71
    
	
 
    	
22.12
    	
Appendices
    	
72
    
	
 
    	
22.13
    	
Entire Understanding
    	
72
    
	
 
    	
22.14
    	
Amendments
    	
72
    
	
 
    	
22.15
    	
Invoices
    	
72
    
	
 
    	
22.16
    	
Notice
    	
72
    

 

v

 

License and Collaboration Agreement

 

WHEREAS, PTC has discovered proprietary compounds that are potentially useful for the treatment of spinal muscular atrophy and possesses proprietary technology and intellectual property rights relating thereto; and

 

WHEREAS, in cooperation with the Foundation, PTC has initiated development of these compounds; and

 

WHEREAS, Roche has expertise in the research, development, manufacture and commercialization of pharmaceutical and diagnostic products; and

 

WHEREAS, PTC and Roche desire to collaborate on the discovery, research, development and commercialization of products containing such compounds; and

 

WHEREAS, Foundation is willing to assist in such collaboration by agreeing to the Foundation Provisions of this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:

 

1.                                      Definitions

 

As used in this Agreement, the following terms, whether used in the singular or plural, shall have the following meanings:

 

1.1                               Affiliate

 

The term “Affiliate” shall mean any individual, corporation, association or other business entity that directly or indirectly controls, is controlled by, or is under common control with the Party in question or the Foundation.  As used in this definition of “Affiliate,” the term “control” shall mean the direct or indirect ownership of more than fifty percent (>50%) of the stock having the right to vote for directors thereof or the ability to otherwise control the management of the corporation or other business entity whether through the ownership of voting securities, by contract, resolution, regulation or otherwise.  Anything to the contrary in this paragraph notwithstanding, Chugai Pharmaceutical Co., Ltd, a Japanese corporation (“Chugai”), shall not be deemed an Affiliate of Roche unless Roche provides written notice to PTC of its desire to include Chugai as an Affiliate of Roche.  Notwithstanding such written notice, if Chugai does not agree to be bound by the terms and conditions of this Agreement, then Chugai shall have none of the rights and obligations of an Affiliate of Roche under this Agreement.

 

1.2                               Agreement

 

The term “Agreement” shall mean this document including any and all appendices and amendments to it as may be added and/or amended from time to time in accordance with the provisions of this Agreement.

 

 

1.3                               Agreement Term

 

The term “Agreement Term” shall mean the period of time commencing on the Effective Date and, unless this Agreement is terminated sooner as provided in Article 20, expiring on the date when no royalty or other payment obligations under this Agreement are or will become due.

 

1.4                               Alternative Splicing

 

The term “Alternative Splicing” shall mean an approach to developing therapeutics based on causing alternative splicing of a gene of interest (as a direct consequence of the therapy) to restore functionality of the related protein.

 

1.5                               AS Assay

 

The term “AS Assay” shall mean PTC’s proprietary technology for the identification of small molecules that cause Alternative Splicing of a gene of interest, including but not limited to SMN2.

 

1.6                               Business Day

 

The term “Business Day” shall mean 9:00 a.m. to 5:00 p.m. local time on a day that is not a Saturday, Sunday or a day on which banking institutions in Newark, New Jersey or in Basel, Switzerland are authorized by Law to remain closed.

 

1.7                               Calendar Quarter

 

The term “Calendar Quarter” shall mean each period of three (3) consecutive calendar months, ending March 31, June 30, September 30, and December 31.

 

1.8                               Calendar Year

 

The term “Calendar Year” shall mean the period of time beginning on January 1 and ending December 31, except for the first year which shall begin on the Effective Date and end on December 31.

 

1.9                               Change of Control

 

The term “Change of Control” shall mean, with respect to a Party: (a) the acquisition by any Third Party of beneficial ownership of fifty percent (50%) or more of the then outstanding common shares or voting power of such Party, other than (i) acquisitions by employee benefit plans sponsored or maintained by such Party, (ii) the initial public offering of a Party, or (iii) the acquisition by an institutional investor (or group of institutional investors), such as a venture capital fund, private equity fund or hedge fund, of shares of a Party for investment purposes in a transaction approved by such Party’s Board of Directors; (b) the consummation of a business combination involving such Party (but not the other Party or any of its Affiliates), unless, following such business combination, the stockholders of such Party immediately prior to such business combination beneficially own directly or indirectly more than fifty percent (50%) of the then outstanding common shares or voting power of the entity resulting from such business

 

2

 

combination.  For clarity, a transaction or series of related transactions pursuant to which a Party consolidates or merges with another entity and the holders of the outstanding voting shares of such Party immediately preceding such consolidation or merger hold more than fifty percent (50%) of the voting shares of the resulting entity (a “Reverse Merger”) shall not be considered to be a Change of Control.

 

1.10                        Clinical Study

 

The term “Clinical Study” shall mean a Phase I Study, Phase II Study, or Pivotal Study, as applicable.

 

1.11                        Combination Product

 

The term “Combination Product” shall mean a Product that, in addition to containing a Compound as an active ingredient, also contains at least one other active pharmaceutical ingredient in a finished form.

 

1.12                        Commercially Reasonable Efforts

 

The term “Commercially Reasonable Efforts” shall mean

 

(a)                                  with respect to the efforts to be expended by a Person with respect to any objective, except as otherwise provided in clause (b) below, such reasonable, diligent and good faith efforts as such Person would normally use to accomplish a similar objective under similar circumstances by the specified deadline (if any) and within the specified budget (if any); and

 

(b)                                 with respect to any objective relating to the research, development, manufacture or commercialization of a Compound or Product, the efforts and resources normally used by a company in the biopharmaceutical industry for a product which is of similar market potential at a similar stage in its development or commercialization, which level of effort is at least commensurate with the level of effort that a Party would devote to its own internally discovered and funded compounds or products that are of most closely comparable market potential at a most closely comparable stage in their development or product life, taking into account regulatory requirements of safety and efficacy, product profile, the competitiveness of the marketplace, the proprietary position of the product, and the cost of scaling up a manufacturing process (including facility costs), and the market potential of the applicable product.

 

1.13                        Compound

 

The term “Compound” shall mean a New Compound or an SRA Compound.

 

3

 

1.14                        Confidential Information

 

The term “Confidential Information” shall mean any and all information, data or know-how (including without limitation Know-How), whether technical or non-technical, oral or written, that is disclosed by one Party (or the Foundation) or its Affiliates (“Disclosing Party”) to the other Party (or the Foundation) or its Affiliates (“Receiving Party”).  Confidential Information shall not include any information, data or know-how that:

 

(i)                                     was generally available to the public at the time of disclosure, or information that becomes available to the public after disclosure by the Disclosing Party other than through fault (whether by action or inaction) of the Receiving Party,

 

(ii)                                  can be shown by cogent written records to have been already known to the Receiving Party prior to its receipt from the Disclosing Party,

 

(iii)                               is obtained by the Receiving Party at any time lawfully from a Third Party without obligations of non-use or non-disclosure,

 

(iv)                              is developed independently by the Receiving Party as evidenced by written records other than through knowledge of Confidential Information of the Disclosing Party, or

 

(v)                                 is approved in writing by the Disclosing Party for release by the Receiving Party.

 

The terms of this Agreement and the SRA shall be considered Confidential Information of both Parties and Foundation.

 

1.15                        Control

 

The term “Control” shall mean (as an adjective or as a verb including conjugations and variations such as “Controls” “Controlled” or “Controlling”) (a) with respect to Patent Rights and/or Know-How, the possession by a Party of the ability to grant a license or sublicense of such Patent Rights and/or Know-How without violating the terms of any agreement or arrangement between such Party and any other Person and (b) with respect to proprietary materials, the possession by a Party of the ability to supply such proprietary materials to the other Party as provided herein without violating the terms of any agreement or arrangement between such Party and any other Person.  Notwithstanding the foregoing, intellectual property of a Party that is licensed or otherwise acquired from any other Person after the Effective Date and would otherwise be considered to be under the Control of a Party shall not be deemed to be under the Control of such Party if the application of such definition in the context of any license grants or sublicenses under this Agreement would require the granting Party to make additional payments or royalties to any other Person in connection with such license or sublicense grants, unless the other Party agrees to pay the additional payments or royalties to the other Person.

 

4

 

1.16                        Cover

 

The term “Cover” shall mean (as an adjective or as a verb including conjugations and variations such as “Covered,” “Coverage” or “Covering”) with respect to a product, composition, technology, process or method of use that, in the absence of ownership of or a license granted under a Valid Claim, the manufacture, use, offer for sale, sale or importation of such product or composition, or the practice of such technology, process or method of use would infringe such Valid Claim (or, in the case of a Valid Claim that has not yet issued, would infringe such Valid Claim if it were to issue).  The determination of whether a product, composition, technology, process or method of use is Covered by a Valid Claim shall be made on a country-by-country basis.

 

1.17                        Derivative

 

The term “Derivative” means, with respect to a specific chemical compound (the “Parent Compound”), (a) a structural variant of such Parent Compound in which one or more atoms or functional groups of the Parent Compound are replaced with different atoms or functional groups, and wherein such variant and such Parent Compound have substantially similar core chemical structures and substantially similar biological activities, or (b) a metabolite, prodrug, solvate, ester, salt, stereoisomer, racemate, tautomer or polymorph of the Parent Compound.

 

1.18                        Development Candidate Criteria

 

The term “Development Candidate Criteria” means the criteria the JSC uses to determine whether an SRA Drug Candidate is an SRA Development Candidate and/or whether a New Compound is a New Compound Development Candidate.  The Development Candidate Criteria as of the Effective Date are attached hereto as Appendix 1.18.

 

1.19                        Effective Date

 

The term “Effective Date” shall mean the HSR Clearance Date or, if no filing is to be made under the HSR Act, then it shall mean the Execution Date.

 

1.20                        EMA

 

The term “EMA” shall mean the European Medicines Agency and any successor agency with responsibilities comparable to those of the European Medicines Agency.

 

1.21                        EU

 

The term “EU” shall mean the European Union, as it may be redefined from time to time.

 

1.22                        FBMC

 

The term “FBMC” shall mean, for a Product, the standard manufacturing cost, as defined by the manufacturing Party’s standard cost accounting practices and policies and consistently applied by such Party.  FBMC shall include direct labor, materials, product testing costs, including quality control and quality assurance bulk testing and in-process testing (e.g.,

 

5

 

adventitious virus and mycoplasma testing), and allocable overhead for manufacturing or contracting for each stage of the manufacturing process of the Product shipped.  In addition, FBMC includes failures that are considered normal yield losses that could be reasonably expected or justified in this area of technology, excess capacity and idle plant cost to the extent associated with the Product, and write off and disposal costs of expired goods (raw materials, intermediates and products).

 

1.23                        FDA

 

The term “FDA” shall mean the US Food and Drug Administration and any successor agency thereto.

 

1.24                        FDCA

 

The term “FDCA” shall mean the US Food, Drug and Cosmetics Act.

 

1.25                        Field

 

The term “Field” shall mean any and all uses.

 

1.26                        Filing

 

The term “Filing” shall mean the filing of an application by the FDA as defined in the FDCA and applicable regulations, or the equivalent application to the equivalent agency in any other country or group of countries, the official approval of which is required before any lawful commercial sale or marketing of Products.

 

1.27                        First SRA Amendment

 

The term “First SRA Amendment” shall mean Amendment No. 1 to the SRA, said First SRA Amendment having an effective date of October 12, 2007.

 

1.28                        First Commercial Sale

 

The term “First Commercial Sale” shall mean, with respect to a Product in a country in the Territory, the first bona fide arms-length sale of such Product sold to a Third Party in such country by or on behalf of a member of the Roche Group after Regulatory Approval has been obtained for such Product in such country, or if no such Regulatory Approval is required, the date upon which Product is first commercially launched in such country.

 

1.29                        Foundation Provisions

 

The term “Foundation Provisions” shall mean Sections 1.18, 1.29, 1.50, 1.69 (including Research Plan), 1.78, 1.82, 1.88 (including Transitional Research Plan), 4.1.3, 17.3, 20.5 (to the extent applicable to other Foundation Provisions), 22.5, 22.6, 22.7, 22.8, 22.9, 22.10, 22.11, 22.12, 22.13, 22.14, 22.15, 22.16 and Articles 1 (to the extent applicable to other Foundation Provisions), 2, 5, 7, 18 (last two sentences only) and 19.

 

6

 

1.30                        Fourth SRA Amendment

 

The term “Fourth SRA Amendment” shall mean Amendment No. 4 to the SRA, said Fourth SRA Amendment having an effective date of November 22, 2011.

 

1.31                        FTE

 

The term “FTE” shall mean the efforts of one or more employees of PTC equivalent to the efforts of one full-time PTC employee for one year.

 

1.32                        FTE Rate

 

The term “FTE Rate” shall mean [**] dollars ($[**]) per FTE for the period commencing on the Effective Date and ending December 31, 2012.  On January 1, 2013 and on January 1st of each subsequent Calendar Year, the foregoing rate shall be increased for the Calendar Year then commencing by the percentage increase, if any, in the Consumer Price Index (“CPI”) as of December 31 of the then most recently completed Calendar Year with respect to the level of the CPI on December 31, 2010. As used in this Section 1.32, Consumer Price Index or CPI means the Consumer Price Index — Urban Wage Earners and Clerical Workers, US City Average, All Items, 1982-84 = 100, published by the US Department of Labor, Bureau of Labor Statistics (or its successor equivalent index).

 

1.33                        Generic Competition

 

The term “Generic Competition” shall mean, with respect to a Product in a country in the Territory in a given Calendar Quarter, if, during such Calendar Quarter, one or more Generic Products shall be commercially available in such country and such Generic Products shall have a market share of [**] percent ([**]%) or more of the aggregate market in such country of such Product and such Generic Products (based on sales of units of such Product and such Generic Products, as reported by IMS International, or if such data are not available, such other reliable data source as reasonably determined by Roche and agreed by PTC).

 

1.34                        Generic Product

 

The term “Generic Product” shall mean, with respect to a Product in a country in the Territory, any pharmaceutical product sold by a Third Party not authorized by or on behalf of a member of the Roche Group that (a) contains as an active pharmaceutical ingredient the same Compound as the one contained in such Product, (b) is “a therapeutic equivalent” to such Product as such term is used in the Approved Drug Products with Therapeutic Equivalence Evaluations published by the FDA Center for Drug Evaluation and Research or any successor publication, and (c) is approved in reliance on the prior approval of such Product as determined by the applicable Regulatory Authority in such country.

 

1.35                        Handle

 

The term “Handle” shall mean, with respect to a Patent Right, preparing, filing, prosecuting (including interference and opposition proceedings) and maintaining (including interferences, reissue, re-examination and opposition proceedings) such Patent Right.

 

7

 

1.36                        HSR Act

 

The term “HSR Act” shall mean the US Hart Scott Rodino Antitrust Improvement Act.

 

1.37                        HSR Clearance Date

 

The term “HSR Clearance Date” shall mean the earlier of (a) the date on which the FTC or DOJ shall notify PTC and Roche of early termination of the applicable waiting period under the HSR Act, or (b) the day after the date on which the applicable waiting period under the HSR Act expires; provided, however, if the FTC or DOJ shall commence any investigation by means of a second request or otherwise, HSR Clearance Date shall mean the date on which any investigation opened by the FTC or DOJ shall have been terminated, without action to prevent the Parties from implementing the transactions contemplated by this Agreement with respect to the US.

 

1.38                        IFRS

 

The term “IFRS” shall mean International Financial Reporting Standards.

 

1.39                        IND

 

The term “IND” shall mean an application as defined in the FDCA and applicable regulations promulgated by the FDA, or the equivalent application to the equivalent agency in any other country or group of countries, the filing of which is necessary to commence clinical testing of a Product in humans.

 

1.40                        Initiation

 

The term “Initiation” shall mean the date that a human is first dosed with a Product in a Clinical Study approved by the respective Regulatory Authority.

 

1.41                        Insolvency Event

 

The term “Insolvency Event” shall mean circumstances under which a Party (i) has a receiver or similar officer appointed over all or a substantial part of its assets or undertaking; (ii) passes a resolution for winding-up (other than a winding-up for the purpose of, or in connection with, any solvent amalgamation or reconstruction) or a court makes an order to that effect or a court makes an order for administration (or any equivalent order in any jurisdiction); (iii) ceases to carry on business; or (iv) is unable to pay its debts as they become due in the ordinary course of business.

 

1.42                        Invention

 

The term “Invention” shall mean an invention that is conceived or reduced to practice in connection with any activity carried out pursuant to this Agreement.  Under this definition, an Invention may be made by employees of PTC solely or jointly with a Third Party (a “PTC Invention”), by employees of the Roche Group solely or jointly with a Third Party (a “Roche

 

8

 

Invention”), or jointly by employees of PTC and of a member of the Roche Group with or without a Third Party (a “Joint Invention”).

 

1.43                        Joint Know-How

 

The term “Joint Know-How” shall mean Know-How that is made jointly by the Parties or their Affiliates or their Sublicensees in connection with any activity carried out pursuant to this Agreement.

 

1.44                        Joint Patent Rights

 

The term “Joint Patent Rights” shall mean all Patent Rights Covering a Joint Invention.

 

1.45                        Know-How

 

The term “Know-How” shall mean data, knowledge and information, including without limitation materials, samples, chemical manufacturing data, toxicological data, pharmacological data, preclinical and clinical data, assays, platforms, formulations, specifications, or quality control testing data, that are necessary or useful for the discovery, manufacture, development or commercialization of a Product.

 

1.46                        Law

 

The term “Law” shall mean all laws, statutes, rules, regulations, orders, judgments, or ordinances having the effect of law of any federal, national, multinational, state, provincial, county, city or other political subdivision.

 

1.47                        Major Countries

 

The term “Major Countries” shall mean US, UK, Germany, France, Italy, Spain, and Japan.

 

1.48                        Marketing Exclusivity

 

The term “Marketing Exclusivity” shall mean, with respect to a Product in a country: (a) the exclusivity afforded to the Product for being the first drug product containing the active ingredient to receive Regulatory Approval in that country, (b) pediatric exclusivity, (c) orphan drug exclusivity, but only when all other indications of the applicable Product that have been approved by the applicable Regulatory Authority and appear in the labeling for such Product are also protected by an unexpired orphan exclusivity or other exclusivity pursuant to clause (a), (b) or (d) of this Section 1.48, or (d) other statutory and/or regulatory exclusivity.

 

1.49                        NDA

 

The term “NDA” shall mean a new drug application, including all necessary documents, data, and other information concerning a Product, required for Regulatory Approval of the Product as a pharmaceutical product by the FDA, or an equivalent application to the equivalent

 

9

 

Regulatory Authority in any other country or group of countries (e.g., the marketing authorization application (MAA) filed with the EMA).

 

1.50                        Net Sales

 

The term “Net Sales” shall mean, for a Product in a particular period, the amount calculated by subtracting from the Sales of such Product for such period:  (i) a lump sum deduction of (A) [**] percent ([**]%) of Sales, with respect to Sales in the US, (B) [**] percent ([**]%) of Sales, with respect to Sales in the Major Countries (other than the US), Canada, Brazil and Switzerland, and (C) [**] percent ([**]%) of Sales, with respect to Sales in all territories other than those set forth in clauses (A) and (B) above, in lieu of those deductions that are not accounted for within Roche on a Product-by-Product basis (e.g., freight, postage charges, transportation insurance, packing materials for dispatch of goods, custom duties); (ii) uncollectible amounts and credit card charges (including processing fees) accrued during such period on such Sales and not already taken as a gross-to-net deduction in accordance with the then currently used IFRS in the calculation of Sales of such Product for such period; and (iii) government mandated fees and taxes and other government charges accrued during such period on such Sales not already taken as a gross-to-net deduction in accordance with the then currently used IFRS in the calculation of Sales of such Product for such period, including, for example, any fees, taxes or other charges that become due in connection with any healthcare reform, change in government pricing or discounting schemes, or other action of a government or regulatory body.  Notwithstanding the foregoing, amounts received by any member of the Roche Group for the sale of Product among members of the Roche Group for resale shall not be included in the computation of Sales.  As expressly contemplated in the definition of “Worldwide Net Sales” set forth in the Second SRA Amendment, this definition of “Net Sales”, together with the definition of “Sales” set forth in Section 1.78, shall be used in lieu of the Net Sales definition contained in the SRA, solely to calculate the “net sales by Licensee” pursuant to the SRA wherein such Licensee is Roche, for the sole purposes of determining the amount of “Worldwide Net Sales” pursuant to the SRA; for clarity, Sections 1.50 and 1.78 shall not otherwise be used with respect to the SRA and the definitions of “Net Sales” and “Worldwide Net Sales” as set forth in the SRA shall remain unchanged.

 

1.51                        New Compound

 

The term “New Compound” shall mean any small molecule compound, other than an SRA Compound, that, as a direct result of its therapeutic application, results in increased levels of SMN1 mRNA and protein based on the conversion of SMN2 RNA to SMN1 mRNA, including without limitation compounds, other than SRA Compounds, first synthesized or identified by either Party in the Research Program, and any salts, polymorphs, esters, metabolites, pro-drugs, isomers and enantiomers thereof.

 

1.52                        New Compound Development Candidate

 

The term “New Compound Development Candidate” means a New Compound that the JSC formally declares meets the Development Candidate Criteria, indicating that such New Compound is suitable for progression to IND-enabling pre-clinical studies in support of future human clinical trials.

 

10

 

1.53                        New Product

 

The term “New Product” shall mean any product, including without limitation any Combination Product, containing a New Compound as a pharmaceutically active agent, regardless of its finished form, formulation or dosage.

 

1.54                        New Product Development Plan

 

The term “New Product Development Plan” shall mean the plan for the development of New Products as set forth in Section 5.2.

 

1.55                        Party

 

The term “Party” shall mean PTC or Roche, as the case may be, and “Parties” shall mean PTC and Roche collectively.  For clarity, “Party” and “Parties” do not include or otherwise refer to Foundation.

 

1.56                        Patent Rights

 

The term “Patent Rights” shall mean all rights under any patent or patent application, in any country of the Territory, including any patents issuing on such patent application, and further including any substitution, extension or supplementary protection certificate, reissue, reexamination, renewal, divisional, continuation or continuation-in-part of any of the foregoing.

 

1.57                        Person

 

The term “Person” shall mean any natural person, corporation, general partnership, limited partnership, joint venture, proprietorship or other business organization or a governmental agency or a political subdivision thereto.

 

1.58                        Phase I Study

 

The term “Phase I Study” shall mean any human clinical study of a Product that is intended as initial clinical safety testing in healthy volunteers or a limited patient population, or studies directed toward understanding the mechanisms or metabolism of the Product.

 

1.59                        Phase II Study

 

The term “Phase II Study” shall mean any human clinical study of a Product subsequent to a Phase I Study and prior to a Pivotal Study that is intended to study the safety, dosage and initial efficacy in a limited patient population, and is prospectively designed to support the continued testing of the Product in one or more further Phase II Studies or in a Pivotal Study.

 

1.60                        Pivotal Study

 

The term “Pivotal Study” shall mean a pivotal human clinical study of a Product that is prospectively designed to confirm with statistical significance in an expanded patient population the efficacy and safety of a drug in a given patient population, and the results of which are

 

11

 

intended to form the basis for Regulatory Approval. For the avoidance of doubt, a clinical trial that meets the foregoing criteria shall be deemed a Pivotal Study regardless of whether it is characterized as a “Phase 2b,” or “Phase 2b/3,” or “Phase 3” clinical trial.

 

1.61                        Product

 

The term “Product” shall mean a New Product or an SRA Product.

 

1.62                        Product Development Program

 

The term “Product Development Program” means the activities undertaken by the Parties pursuant to the SRA Development Plan to develop SRA Products and pursuant to the New Product Development Plan to develop New Products.

 

1.63                        PTC Base Patent Rights

 

The term “PTC Base Patent Rights” shall mean any and all Patent Rights in the Territory that are Controlled by PTC as of the Effective Date and either Cover a Product or relate to the discovery, manufacture, development or commercialization of a Product, said Patent Rights being exhaustively listed in Appendix 1.63 of this Agreement.

 

1.64                        PTC Know-How

 

The term “PTC Know-How” shall mean the Know-How that PTC Controls at the Effective Date and during the Agreement Term.

 

1.65                        PTC Patent Rights

 

The term “PTC Patent Rights” shall mean any and all Patent Rights that are Controlled by PTC during the Agreement Term and that either Cover a Product or relate to the discovery, manufacture, development or commercialization of a Product.  The term PTC Patent Rights shall include PTC Base Patent Rights.

 

1.66                        Quarterly R&D Fee

 

The term “Quarterly R&D Fee” shall mean the amount determined by (i) multiplying the FTE Rate by the number of FTEs contributed by PTC during the applicable Calendar Quarter or portion thereof as set forth in the then-current Research Plan, SRA Development Plan or New Product Development Plan, as applicable, it being understood that such amounts shall include, if not yet invoiced or paid, fees for PTC FTEs contributed prior to the applicable Calendar Quarter, and (ii) adding to the number in clause (i) all out-of-pocket costs incurred during the applicable Calendar Quarter as set forth in the then-current Research Plan, SRA Development Plan or New Product Development Plan, as applicable, it being understood that such amounts shall include, to the extent not yet invoiced or paid, any such amounts incurred by PTC prior to the applicable Calendar Quarter.

 

12

 

1.67                        Regulatory Approval

 

The term “Regulatory Approval” shall mean any approvals (including without limitation pricing and reimbursement approvals), licenses, registrations or authorizations by a Regulatory Authority that are necessary for the manufacture and sale of a Product in the Field in a regulatory jurisdiction in the Territory.

 

1.68                        Regulatory Authority

 

The term “Regulatory Authority” shall mean any national, supranational (e.g., the European Commission, the Council of the European Union, the European Medicines Agency), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity with responsibility for granting approvals, licenses, registrations, or authorizations necessary for the manufacturing and sale of pharmaceutical products in a country, including the FDA.

 

1.69                        Research Plan

 

The term “Research Plan” shall mean the plan of research attached as Appendix 1.69 outlining the work expected to be performed by PTC and Roche hereunder, as such plan may be updated from time to time as provided in this Agreement.  For clarity, as of the Effective Date and during the SRA Research Term, the Research Plan also constitutes the SRA Research Plan.

 

1.70                        Research Program

 

The term “Research Program” shall mean the activities undertaken by the Parties pursuant to the Research Plan, including without limitation, such activities relating to SRA DC Research during the SRA Research Term, and New Product research during the Research Term.

 

1.71                        Research Term

 

The term “Research Term” shall mean the period of time in which the Research Program shall be conducted, commencing on the Effective Date and continuing until terminated by Roche in accordance with Section 4.1.6.

 

1.72                        Roche Background Patent Rights

 

The term “Roche Background Patent Rights” shall mean any and all Patent Rights, excluding the Roche Product Patent Rights and the excluded Patent Rights identified in Appendix 1.72, that are Controlled by Roche during the Agreement Term and either Cover a Product or relate to the discovery, manufacture, development or commercialization of a Product.

 

1.73                        Roche Group

 

The term Roche Group shall mean collectively Roche, its Affiliates (including Chugai in the event Chugai is included as an Affiliate by Roche) and its Sublicensees.

 

13

 

1.74                        Roche Know-How

 

The term “Roche Know-How” shall mean all Know-How that Roche Controls during the Agreement Term.

 

1.75                        Roche Patent Rights

 

The term “Roche Patent Rights” shall mean the Roche Background Patent Rights and the Roche Product Patent Rights.

 

1.76                        Roche Product Patent Rights

 

The term “Roche Product Patent Rights” shall mean any and all Patent Rights that are Controlled by Roche during the Agreement Term and that Cover the composition of matter or the method of use of a Product.

 

1.77                        Royalty Term

 

The term “Royalty Term” shall mean, with respect to a Product and for a given country, the period of time commencing on the date of First Commercial Sale of the Product in such country and ending on the latest of the date that is (i) 10 (ten) years after the date of the First Commercial Sale of the Product in such country, (ii) the expiration of the last to expire PTC Patent Right, Roche Product Patent Right or Joint Patent Right in such country Covering the use, import, offering for sale, or sale of the Product in such country, or (iii) the duration of any applicable Marketing Exclusivity.

 

1.78                        Sales

 

The term “Sales” shall mean, for a Product in a particular period, the amount stated in Roche “Sales” line of its externally published audited financial statements with respect to such Product for such period. This amount reflects the gross invoice price at which such Product was sold or otherwise disposed of (other than for use as clinical supplies or free samples) by Roche, its Affiliates and Sublicensees to Third Parties in such period reduced by gross-to-net deductions, if not previously deducted from such invoiced amount, taken in accordance with the then currently used IFRS.

 

By way of example, the gross-to-net deductions taken in accordance with IFRS as of the Effective Date include the following:

 

(a)                         credits, reserves or allowances granted for (i) damaged, outdated, returned, rejected, withdrawn or recalled Product, (ii) wastage replacement and short-shipments; (iii) billing errors and (iv) indigent patient and similar programs (e.g., price capitation);

 

(b)                         governmental price reductions and government mandated rebates;

 

(c)                          chargebacks, including those granted to wholesalers, buying groups and retailers;

 

14

 

(d)                         customer rebates, including cash sales incentives for prompt payment, cash and volume discounts; and

 

(e)                          taxes, duties and any other governmental charges or levies imposed upon or measured by the import, export, use, manufacture or sale of a Product (excluding income or franchise taxes).

 

1.79                        Second SRA Amendment

 

The term “Second SRA Amendment” shall mean Amendment No.  2 to the SRA, said Second SRA Amendment having an effective date of May 1, 2009.

 

1.80                        SMA

 

The term “SMA” shall mean spinal muscular atrophy.

 

1.81                        SRA

 

The term “SRA” shall mean the Sponsored Research Agreement by and between the Foundation and PTC, effective June 1, 2006, as amended by the First SRA Amendment, the Second SRA Amendment, the Third SRA Amendment and the Fourth SRA Amendment (each, an “Amendment”).  A copy of the SRA, including all Amendments and appendices in existence as of the Execution Date, is attached as Appendix 1.81.

 

Each term listed under the “Definitions” column in the following table shall have the meaning ascribed pursuant to the SRA to the term listed in the corresponding row in the “Equivalent” column.  For convenience, sections of the SRA and Second SRA Amendment that, as of the Execution Date, may be useful for interpreting the meaning of such Equivalent term pursuant to the SRA are set forth in the corresponding row in the columns thereafter.  Such list of sections is not exhaustive and other sections of the SRA (including all amendments thereto) shall nevertheless be taken into account when interpreting the meaning of such Equivalent term.

 

	
 
    	
 
    	
 
    	
 
    	
Sample sections useful for
   interpretation of Equivalent
    
	
Definitions
    	
 
    	
Equivalent
    	
 
    	
SRA
    	
 
    	
Second SRA
   Amendment
    
	
SRA Buy-Out Notice
    	
 
    	
Buy-Out Notice
    	
 
    	
 
    	
 
    	
1(j), 8 (3.3(b)(v))
    
	
SRA Buy-Out Right
    	
 
    	
Buy-Out Right
    	
 
    	
 
    	
 
    	
1(j), 8 (3.3(b)(iv))
    
	
SRA Collaboration Activities
    	
 
    	
Collaboration Activities
    	
 
    	
 
    	
 
    	
1(j)
    
	
SRA Company Base IP
    	
 
    	
Company Base IP
    	
 
    	
1.4
    	
 
    	
 
    
	
SRA Company Clinical Trial
    	
 
    	
Company Clinical Trial
    	
 
    	
1.5
    	
 
    	
 
    

 

15

 

	
 
    	
 
    	
 
    	
 
    	
Sample sections useful for
   interpretation of Equivalent
    
	
Definitions
    	
 
    	
Equivalent
    	
 
    	
SRA
    	
 
    	
Second SRA
   Amendment
    
	
SRA Company Technology
    	
 
    	
Company Technology
    	
 
    	
1.8
    	
 
    	
 
    
	
SRA Controlled
    	
 
    	
Control
    	
 
    	
1.10
    	
 
    	
 
    
	
SRA Cost/Timeline Issue
    	
 
    	
Cost/Timeline Issue
    	
 
    	
 
    	
 
    	
2(g)
    
	
SRA Data
    	
 
    	
Data
    	
 
    	
1.11, 6.1(a)
    	
 
    	
1(b)
    
	
SRA DC Research
    	
 
    	
DC Research
    	
 
    	
 
    	
 
    	
1(j), 2(a)
    
	
SRA Drug Candidate
    	
 
    	
Drug Candidate
    	
 
    	
1.12
    	
 
    	
 
    
	
SRA Development
    	
 
    	
Development
    	
 
    	
 
    	
 
    	
1(j)
    
	
SRA Development Candidate
    	
 
    	
Development Candidate
    	
 
    	
 
    	
 
    	
1(j)
    
	
SRA   Development Deadline Document
    	
 
    	
Development   Deadline Document
    	
 
    	
 
    	
 
    	
1(j), 8 (3.1)
    
	
SRA Development Plan
    	
 
    	
Development Plan
    	
 
    	
 
    	
 
    	
1(j)
    
	
SRA Field
    	
 
    	
Field
    	
 
    	
1.15
    	
 
    	
 
    
	
SRA IND
    	
 
    	
IND
    	
 
    	
1.18
    	
 
    	
1(e)
    
	
SRA JSC
    	
 
    	
JSC
    	
 
    	
 
    	
 
    	
1(j), 5(a)
    
	
SRA Lead Candidate
    	
 
    	
Lead Candidate
    	
 
    	
1.21, 2.4(a)
    	
 
    	
 
    
	
SRA NDA
    	
 
    	
NDA
    	
 
    	
 
    	
 
    	
1(j)
    
	
SRA Product
    	
 
    	
Product
    	
 
    	
1.27
    	
 
    	
 
    
	
SRA Research
    	
 
    	
Research
    	
 
    	
1.30
    	
 
    	
 
    
	
SRA Research Plan
    	
 
    	
Research Plan
    	
 
    	
1.34
    	
 
    	
2
    
	
SRA Research Term
    	
 
    	
Research Term
    	
 
    	
1.36, 2.6
    	
 
    	
2
    
	
SRA Reversion Candidate
    	
 
    	
Reversion Candidate
    	
 
    	
 
    	
 
    	
1(j), 5(b)(vi), 5(c)(i)
    
	
SRA Reversion Notice
    	
 
    	
Reversion Notice
    	
 
    	
 
    	
 
    	
1(j), 3(d), 8(a) (3.2, 3.4(a)(i),   3.4(b), 3.4(c), 3.4(d)), 12 (6.1(c)(1))
    
	
SRA Reversionary License
    	
 
    	
Reversionary License
    	
 
    	
1.38
    	
 
    	
1(h), 12 (6.1(c)(2)(i))
    
	
SRA Special Termination
    	
 
    	
Special Termination
    	
 
    	
 
    	
 
    	
1(j), 3
    

 

16

 

1.82                        SRA Compound

 

The term “SRA Compound” shall mean any and all SRA Drug Candidates, SRA Reversion Candidates, SRA Development Candidates, and SRA Products. For clarity, SRA Compound includes without limitation the compounds referred to as [**].  In addition, SRA Compound shall include any small molecule compound first synthesized or identified hereunder by either Party (a) from and after the Effective Date and prior to [**] that, as a direct result of its therapeutic application, results in increased levels of SMN1 mRNA and protein based on the conversion of SMN2 RNA to SMN1 mRNA, unless PTC can establish through written documentation that such compound (i) [**] or [**] and (ii) [**], or (b) from and after [**] and that is [**] existing as of [**].  Each such additional SRA Compound shall be considered for the purposes of this Agreement to be an SRA Drug Candidate and for the purposes of the SRA to be a Drug Candidate, the SRA shall be deemed amended to the extent necessary to consider each such SRA Compound to be a Drug Candidate pursuant to the SRA, and such amendment shall survive expiration or termination of this Agreement.

 

1.83                        Sublicensee

 

The term “Sublicensee” shall mean an entity to which Roche or its Affiliates have licensed rights pursuant to this Agreement.

 

1.84                        Successful Completion of Pivotal Study

 

The term “Successful Completion of Pivotal Study” shall mean the results with respect to clinical endpoints and safety from a fully enrolled and completed (determined in accordance with the applicable protocol) Pivotal Study, as reflected in the final report from such study, support submitting an application for Regulatory Approval.

 

1.85                        Territory

 

The term “Territory” shall mean all countries of the world.

 

1.86                        Third SRA Amendment

 

The term “Third SRA Amendment” shall mean Amendment No. 3 to the SRA, said Third SRA Amendment having an effective date of January 1, 2011.

 

1.87        Third Party

 

The term “Third Party” shall mean a Person other than (i) PTC or any of its Affiliates, (ii) a member of the Roche Group, and (iii) solely with respect to the Foundation Provisions, the Foundation.

 

17

 

1.88                        Transitional Research Plan

 

The term “Transitional Research Plan” shall mean the plan of research attached as Appendix 1.88 outlining the work expected to be performed by PTC and Roche hereunder between the Effective Date and the first meeting of the JSC.  For clarity, the Transitional Research Plan also constitutes the SRA Research Plan during such time period.

 

1.89                        US

 

The term “US” shall mean the United States of America and its territories and possessions.

 

1.90                        US$

 

The term “US$” shall mean US dollars.

 

1.91                        Valid Claim

 

The term “Valid Claim” shall mean, as applicable, any claim in any (i) unexpired and issued Patent Right that has not been disclaimed, revoked or held invalid by a final nonappealable decision of a court or other government agency of competent jurisdiction, or (ii) patent application that has not lapsed, in the case of a provisional patent application, or been cancelled, withdrawn or abandoned without the possibility of revival, nor has been pending for more than [**] years from the earliest priority date claimed for such application.

 

1.92                        Additional Definitions

 

Each of the following definitions is set forth in the Section of this Agreement indicated below:

 

	
Definition
    	
 
    	
Section
    
	
Accounting   Period
    	
 
    	
12.1
    
	
Acquired Party Activity
    	
 
    	
3.5(d)
    
	
Adjusted   Gross Sales
    	
 
    	
1.50
    
	
Amendment
    	
 
    	
1.80
    
	
Bankruptcy   Code
    	
 
    	
21
    
	
Breaching   Party
    	
 
    	
20.3.1
    
	
Chairperson
    	
 
    	
7.2
    
	
Change   of Control Notice
    	
 
    	
7.15
    
	
Chugai
    	
 
    	
1.1
    
	
Consensus   Matter
    	
 
    	
7.7.3
    
	
CROs
    	
 
    	
5.1.4
    
	
Decision   Period
    	
 
    	
15.5
    
	
Disclosing   Party
    	
 
    	
1.14
    
	
DOJ
    	
 
    	
22.1
    
	
Election   Notice
    	
 
    	
7.15
    
	
Enrollees
    	
 
    	
5.1.2
    

 

18

 

	
Definition
    	
 
    	
Section
    
	
Exclusivity Period
    	
 
    	
3.5(e)
    
	
Execution Date
    	
 
    	
Preface
    
	
FTC
    	
 
    	
22.1
    
	
H-W Suit Notice
    	
 
    	
15.11
    
	
Hub
    	
 
    	
22.4
    
	
Indemnified   Party
    	
 
    	
17.3
    
	
Indemnifying   Party
    	
 
    	
17.3
    
	
Infringement   Notice
    	
 
    	
15.8
    
	
Initiating   Party
    	
 
    	
15.8
    
	
Joint   Invention
    	
 
    	
1.42
    
	
Joint   IP Team or JIPT
    	
 
    	
7.4(m)
    
	
JOT
    	
 
    	
7.4(k)
    
	
Members
    	
 
    	
7.2
    
	
JSC
    	
 
    	
7.1
    
	
Non-Breaching   Party
    	
 
    	
20.3.1
    
	
Patent   Challenge
    	
 
    	
20.3.4
    
	
Patent   Term Extensions
    	
 
    	
15.12
    
	
Patients
    	
 
    	
5.1.3
    
	
Payments
    	
 
    	
13
    
	
Peremptory   Notice Period
    	
 
    	
20.3.1
    
	
Post-Change   of Control Material Change
    	
 
    	
22.2
    
	
Pre-Approval   Sales
    	
 
    	
11.5.6
    
	
PTC
    	
 
    	
Preface
    
	
PTC   Invention
    	
 
    	
1.42
    
	
Publishing   Notice
    	
 
    	
19.5
    
	
Publishing   Party
    	
 
    	
19.5
    
	
R&D   Event
    	
 
    	
11.3
    
	
R&D   Event Payment
    	
 
    	
11.3
    
	
Receiving   Party
    	
 
    	
1.14
    
	
Reverse Merger
    	
 
    	
1.9
    
	
Roche
    	
 
    	
Preface
    
	
Roche   Basel
    	
 
    	
Preface
    
	
Roche   Indemnitee
    	
 
    	
5.1.4
    
	
Roche   Invention
    	
 
    	
1.42
    
	
Roche   Losses
    	
 
    	
5.1.4
    
	
Roche   Nutley
    	
 
    	
Preface
    
	
Settlement
    	
 
    	
15.8
    
	
SMAF Clinical Trials Advisory Committee
    	
 
    	
5.1.1
    
	
SPCs
    	
 
    	
15.12
    
	
SRA   Licensee Data
    	
 
    	
2.2.2
    
	
SRA   Licensee Technology
    	
 
    	
2.2.2
    
	
Suit   Notice
    	
 
    	
15.8
    
	
Third   Party Activity
    	
 
    	
3.5(c)
    

 

19

 

2.                                      Foundation Obligations

 

2.1                               General Rights and Obligations

 

Notwithstanding anything else in this Agreement, the rights and obligations of the Parties pursuant to this Agreement are subject to the terms of the SRA, except to the extent that such terms are expressly amended or replaced by this Agreement.  By its acknowledgement and acceptance of this Agreement, Foundation agrees to be bound by the terms and conditions of the Foundation Provisions, and each Party shall have a right to enforce against Foundation any Foundation Provision pursuant to which Foundation has an obligation to such Party or pursuant to which such Party would benefit.  Likewise, Foundation has a right to enforce, against a Party, any provision of this Agreement pursuant to which such Party has an obligation to Foundation (which obligations shall include obligations of PTC pursuant to the SRA that Roche is assuming pursuant to this Agreement; such assumption shall not be considered an amendment of the SRA and shall not limit Foundation’s rights pursuant to the SRA) or pursuant to which Foundation would benefit.  Foundation acknowledges and agrees that the JSC as described herein, once established and thereafter during the Agreement Term, shall replace in all respects the SRA JSC.  Unless Roche provides its express written consent, Roche shall not be bound to any modification or amendment made to the SRA after the Effective Date.  Roche shall be a third party beneficiary under Article 1 (limited to the extent necessary to interpret the SRA) and Sections [**] of the SRA (including all amendments and attachments thereto).

 

2.2                               Specific Rights and Obligations

 

In accordance with the Second SRA Amendment Section 10(d)(ii), Roche acknowledges and agrees to the following specific rights and obligations.

 

2.2.1                     SRA Development of an SRA Development Candidate or SRA Product

 

To the extent Roche will assume responsibility for SRA Development of an SRA Development Candidate or SRA Product in any country, Roche assumes the obligations and rights of PTC pursuant to Second SRA Amendment Section 13 in that country, which such obligations and rights are set forth more specifically in 5.1.

 

2.2.2                     Termination and Grant-back Provisions

 

Roche’s rights and licenses from PTC with respect to SRA Reversion Candidates, SRA Development Candidates and SRA Products will terminate upon an SRA Special Termination or PTC’s receipt of an SRA Reversion Notice or SRA Buy-Out Notice and Roche shall be obliged in such circumstances to grant the licenses and rights specified in Section 3 of the Second SRA Amendment and Section 6.1(c)(2) of the SRA (including licenses and rights to (A) all intellectual property that, if developed, acquired or otherwise SRA Controlled by PTC, rather than a member of the Roche Group, would be SRA Company Technology or SRA Data (“SRA Licensee Technology” and “SRA Licensee Data”, respectively) and (B) all SRA INDs, SRA NDAs or similar regulatory filings made or obtained by a member of the Roche Group with respect to the relevant SRA Reversion Candidates, SRA Development Candidates and SRA 

 

20

 

Products) and perform the activities specified therein in each case as if Roche were PTC.  PTC shall use Commercially Reasonable Efforts to keep the SRA in full force and effect and not trigger an SRA Special Termination, SRA Reversion Notice or SRA Buy-Out Notice.  For clarity, nothing in this Section 2.2.2 shall be interpreted as limiting PTC’s obligations pursuant to the SRA, including its obligations pursuant to Sections 3.2 and 6.1(c)(2) of the SRA.

 

2.3                               Designation of SRA Development Candidate

 

The Parties and the Foundation shall use good faith, diligent efforts to designate an SRA Development Candidate as soon as possible after the Effective Date and in any event prior to [**].  Each SRA Compound that progresses to IND-enabling pre-clinical studies in support of future human clinical trials, regardless of the date of such progression, shall be considered for the purposes of this Agreement to be an SRA Development Candidate and for the purposes of the SRA to be a Development Candidate.  The SRA shall be deemed amended to the extent necessary to consider such SRA Compound to be a Development Candidate pursuant to the SRA, and such amendment shall survive expiration or termination of this Agreement.

 

3.                                      Grant of Licenses

 

3.1                               License to Roche

 

Subject to Section 2.2.2, Section 3.2 and the other terms and conditions of this Agreement, PTC hereby grants to Roche and its Affiliates a royalty-bearing, exclusive (even as to PTC, but subject to the retained right of PTC to perform its obligations under the Research Program and its obligations (if any) under the Product Development Program) right and license, including the right to grant sublicenses in conformance with Section 3.3, under PTC’s interest in the PTC Patent Rights and PTC Know-How and PTC’s interest in the Joint Patent Rights and Joint Know-How to research, have researched, develop, have developed, register, have registered, use, have used, make, have made, import, have imported, export, have exported, market, have marketed, distribute, have distributed, sell and have sold Compounds and Products in the Field in the Territory.

 

3.2                               License to PTC

 

Roche hereby grants to PTC a non-exclusive, worldwide, paid-up right and license, without the right to sublicense, under the Roche Patent Rights and Roche Know-How and Roche’s interest in the Joint Patent Rights and Joint Know-How solely to enable PTC to perform its obligations under the Research Program during the Research Term and its obligations (if any) under the Product Development Program.

 

3.3                               Sublicense

 

Roche and its Affiliates shall have the right to sublicense or subcontract to its Affiliates (with the right to grant sublicenses in conformance with this Section 3.3) and to any other Person (with no further right to sublicense), and shall have the right to use any contract manufacturer, distributor, subcontractor or outsourced service for the benefit of Roche and its Affiliates.  For clarity, Roche need not obtain the permission of PTC in order to enter into a sublicense or subcontract.  Roche shall provide PTC with written notice of any such sublicense within [**] 

 

21

 

days after the execution thereof, such written notice to include (i) the identity of the Sublicensee, (ii) the Compound(s) and Product(s) that are the subject of the sublicense, (iii) whether such sublicense is exclusive, co-exclusive or non-exclusive, and (iv) the territory(-ies) covered by such sublicense.  If Roche grants a sublicense, all of the terms and conditions of this Agreement shall apply to the Sublicensee to the same extent as they apply to Roche for all purposes of this Agreement, and the sublicense shall include provisions causing such sublicense to terminate upon an SRA Special Termination or PTC’s receipt of notice of any SRA Reversion Notice or SRA Buy-Out Notice and requiring such Sublicensee to provide Roche with all rights necessary or useful for Roche to comply with Section 2.2.2; Foundation shall be a third party beneficiary of such provisions.  Roche assumes full responsibility for the performance of all obligations so imposed on such Sublicensee and will itself pay and account to PTC for all payments due under this Agreement by reason of operation of any such sublicense.

 

3.4                               Rights Retained by the Parties

 

Any rights of PTC or Roche, as the case may be, not expressly granted to the other Party pursuant to this Agreement shall be retained by such Party.  Without limiting the generality of the foregoing, no right or license is granted to Roche under the PTC Patent Rights and PTC Know-How and PTC’s interest in the Joint Patent Rights and Joint Know-How to research, have researched, develop, have developed, register, have registered, use, have used, make, have made, import, have imported, export, have exported, market, have marketed, distribute, have distributed, sell and have sold any composition that is not a Compound or Product.  Except in the context of a mutually agreed Research Plan, the exclusive license granted hereunder excludes any right of Roche or its Affiliates to access or use the AS Assay or to grant any such rights to the AS Assay to any other Person.

 

3.5                               Exclusivity.

 

(a)                                 During the Exclusivity Period (as defined in Section 3.5(e)), both Parties shall collaborate exclusively with each other pursuant to this Agreement with regard to use of Alternative Splicing to identify small molecule compounds that, as a direct result of their therapeutic application, result in increased levels of SMN1 mRNA and protein based on the conversion of SMN2 RNA to SMN1 mRNA, and neither Party nor its Affiliates shall, except pursuant to this Agreement, either alone or in collaboration with a Third Party (a) engage in discovering, researching, developing, registering, having registered, using, having used, making, having made, importing, having imported, exporting, having exported, marketing, having marketed, distributing, having distributed, selling and having sold any compound (or any product containing a compound) in the Field, which compound or product such Party or its Affiliates knows or believes to be a small molecule compound identified with Alternative Splicing that, as a direct result of its therapeutic application, results in increased levels of SMN1 mRNA and protein based on the conversion of SMN2 RNA to SMN1 mRNA, or (b) grant a license to, or otherwise assist or contract with, any Third Party, to engage in discovering, researching, developing, registering, having registered, using, having used, making, having made, 

 

22

 

importing, having imported, exporting, having exported, marketing, having marketed, distributing, having distributed, selling and having sold any compound (or any product containing a compound) in the Field, which compound or product such Party or its Affiliates knows or believes to be a small molecule compound identified with Alternative Splicing that, as a direct result of its therapeutic application, results in increased levels of SMN1 mRNA and protein based on the conversion of SMN2 RNA to SMN1 mRNA.

 

(b)                                 For purposes of clarity, the restrictions set forth in Section 3.5(a) shall not prohibit either Party from using Alternative Splicing to identify small molecule compounds that result in increased levels of SMN1 mRNA and protein based on the conversion of SMN2 RNA to SMN1 mRNA, so long as the primary goal of such program, as evidenced by laboratory notebooks or other relevant documents, is not to discover or develop compounds that, as a direct result of their therapeutic application, result in increased levels of SMN1 mRNA and protein based on the conversion of SMN2 RNA to SMN1 mRNA.

 

(c)                                  This Section 3.5 is not intended to apply to any activity otherwise prohibited by this Section 3.5 if a Party’s involvement in such prohibited activity results from such Party’s acquisition by a Third Party (either directly or through any Affiliate, whether by merger, purchase of assets or equity, or otherwise), but only if (i) such Third Party, prior to such acquisition or merger, was already engaged in such prohibited activity (the “Third Party Activity”), and (ii) no Patent Rights or Know-How of either Party, nor any Joint Patent Rights or Joint Know-How, are used in connection with such Third Party Activities.

 

(d)                                 This Section 3.5 is not intended to apply to any activity otherwise prohibited by this Section 3.5 if a Party’s involvement in such prohibited activity results from such Party’s acquisition (either directly or through any Affiliate, whether by merger, purchase of assets or equity, or otherwise) of the whole or substantially the whole of the business or assets of a Third Party, but only if (i) such Third Party, prior to such acquisition or merger, was already engaged in such prohibited activity (the “Acquired Party Activity”), and (ii) such acquiring Party shall, within [**] days after the date of such Party’s consummation of such acquisition, notify the other Party of such acquisition and comply with the other requirements of this Section 3.5(d).  After consummation of such an acquisition, the acquiring Party shall, at its option, either (x) use good faith efforts to identify a Third Party purchaser to whom such Party will divest its interest in the Acquired Party Activity and to enter into a definitive agreement with such Third Party for such divestiture as soon as reasonably practicable under the circumstances, but such divestiture must be completed no later than [**] months after the closing of such Party’s acquisition of the Acquired Party Activity, or (y) promptly discontinue such Acquired Party Activity; 

 

23

 

provided that notwithstanding which option is elected, such divesture or discontinuation must be accomplished no later than [**] months after the closing of such Party’s acquisition of the Acquired Party Activity.  During the time period after consummation of an acquisition covered by this Section 3.5(d) and until the divestiture or discontinuation of the Acquired Party Activity, the acquiring Party shall not use any Patent Rights or Know-How of either Party, or any Joint Patent Rights or Joint Know-How, in connection with such Acquired Party Activities.  So long as the acquiring Party divests of, or discontinues, the Acquired Party Activity in accordance with this Section 3.5(d), such acquisition shall not be deemed a violation of this Section 3.5.

 

(e)                                  As used in this Agreement, the term “Exclusivity Period” means the period commencing on the first day of the Research Term and ending three (3) years thereafter.

 

4.                                      Research Collaboration

 

4.1                               Conduct of Research Program

 

4.1.1                     Scope

 

Roche and PTC shall conduct research activities under this Agreement under the oversight of the JSC and a mutually agreed Research Program pursuant to the Research Plan.

 

4.1.2                     Diligent Efforts

 

Roche and PTC shall each use Commercially Reasonable Efforts to perform their respective tasks and obligations in conducting all activities ascribed to it in the then-current Research Plan, in accordance with the time parameters set forth therein.

 

4.1.3                     Transitional Research Plan

 

PTC will conduct the Research Program in accordance with the Transitional Research Plan until the time of the first JSC meeting; provided, however, that PTC shall have the right, but not the obligation, at its cost, to apply resources to the Research Program during the period of the Transitional Research Plan as long as such resources are applied in a manner consistent with the Research Plan.

 

4.1.4                     Research Plan

 

After the first JSC meeting, the Parties will conduct the Research Program in accordance with the Research Plan; provided, however, that PTC shall have, if permitted by the JSC, the right, but not the obligation, at its cost, to apply resources to the Research Program after the Transitional Research Plan as long as such resources are applied in a manner consistent with the Research Plan..  Prior to the expiration of the SRA Research Term, any changes to the Research Plan shall be considered amendments to the SRA Research Plan following approval by the JSC.  Following the SRA Research Term, unless decided otherwise by the JSC, the Research 

 

24

 

Plan will be updated annually by the JSC.  The Research Plan will set forth (i) the scope of the Research Program and the resources that will be dedicated to the activities contemplated within the scope of the Research Program, including the responsibilities of each Party (and, if as applicable, the Foundation), (ii) specific objectives for each year, which objectives will be updated or amended by the JSC as research progresses, and (iii) budgets for such activities.  The Parties shall prepare a plan for activities to be conducted during the second year of the Agreement Term no later than [**] days before the first anniversary of the Effective Date.  Any changes to the Research Plan shall be reflected in written amendments to the Research Plan.

 

4.1.5                     Duration

 

The Research Program shall commence on the Effective Date and shall continue until the end of the Research Term.

 

4.1.6                     Termination

 

The Research Term may be terminated by Roche at any time following the second anniversary of the Effective Date upon ninety (90) days advance written notice to PTC, which notice can be provided in advance of the second anniversary of the Effective Date.

 

4.1.7       Expenses

 

Roche shall bear all expenses of the Research Program, including without limitation the payment to PTC of Quarterly R&D Fees as provided in Section 11.2.

 

4.2                               Records; Reports

 

4.2.1                     Progress Reports

 

At least quarterly during the Research Term, any Party actively conducting work under the Research Program shall have the obligation to prepare and provide to the JSC a detailed written report summarizing the progress of the work performed by that Party in the course of the Research Program during the preceding Calendar Quarter, if any.  Promptly upon expiry of the Research Term, each Party shall provide a final written report summarizing its activities under the Research Program and the results thereof.  Each Party shall promptly provide Foundation with a copy of each report prepared by such Party pursuant to this Section 4.2.1.  Upon the written request of Roche and not more than [**], PTC shall permit Roche, at Roche’s expense, to have access during PTC’s Business Days to those records of PTC that may be necessary to verify the basis for any payments hereunder.

 

4.2.2                     Research Records

 

Each Party shall maintain records of the Research Program (or cause such records to be maintained), which shall be completely and accurately recorded in separate laboratory notebooks, in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes.

 

25

 

5.                                      Product Development

 

5.1                               SRA Product Development

 

Roche, at its sole cost, shall be responsible for pursuing clinical development of SRA Products, including any non-clinical studies required to support such clinical development, subject to the terms of the SRA (with Roche having responsibility for fulfilling all of PTC’s obligations thereunder with respect to clinical development of SRA Products).

 

5.1.1                     SMAF Clinical Trials Advisory Committee

 

Foundation has the right, but not the obligation, to create a committee of experts to advise Foundation/Roche/PTC, as applicable, on clinical trials and expanded access with respect to SRA Development Candidates and SRA Products (the “SMAF Clinical Trials Advisory Committee”).  Such SMAF Clinical Trials Advisory Committee shall consist of such individuals as Foundation may designate, but shall include [**].  The SMAF Clinical Trials Advisory Committee shall have, as one (1) of its principal mandates, the responsibility of balancing (i) the rapid and efficient development and commercialization of SRA Development Candidates and SRA Products for the benefit of all potential patients in the SRA Field and (ii) the appropriateness, based on available safety and efficacy information with respect to such SRA Development Candidates and SRA Products, of providing access to such SRA Development Candidates and SRA Products to individual patients via the extension protocols or expanded access programs further described in Sections 5.1.2 and 5.1.3.  Such SMAF Clinical Trials Advisory Committee may establish its own procedures for meetings and decision-making.

 

5.1.2                     Roche Clinical Trials

 

Foundation has the right, but not the obligation, to assist with patient recruitment for any SRA Company Clinical Trial involving SMA patients by (i) referring to Roche (or, at Roche’s request, referring directly to any clinical investigator at a clinical trial site for the applicable clinical trial) up to [**] SMA patients meeting the enrollment criteria for the applicable clinical trial and identified by Foundation or its designee, and/or (ii) proposing up to [**] clinical trial sites with access to appropriate patient populations for such clinical trial.  With regard to clinical trials involving any Compound or Product, Roche shall use Commercially Reasonable Efforts to enable such patients to be enrolled in such clinical trial consistent with the applicable enrollment criteria, protocol, and target patient number for such clinical trial (it being understood that such patients should be given priority over other patients who are equally qualified to participate in such clinical trial, provided that the final decision regarding such enrollment is made by the clinical investigator and/or clinical trial site personnel of the investigating institution), and to contract with such clinical trial sites for such clinical trial.  If Foundation, in its sole discretion, determines not to assist in patient recruitment for any such clinical trial, then it shall so inform Roche and Roche shall assume all responsibility for patient recruitment and selection of clinical trial sites.

 

Each time that Roche commences the drafting of a clinical trial protocol for a SRA Development Candidate or SRA Product, and at reasonable times thereafter, Roche will discuss with Foundation Roche’s plans for making such SRA Development Candidate or SRA 

 

26

 

Product available to participants in such clinical trial after the completion of such trial.  If mutually agreed by Roche and Foundation based on such discussions, or if recommended by the SMAF Clinical Trials Advisory Committee in its sole discretion, Roche will submit to the appropriate Regulatory Authority a suitable extension protocol and corresponding informed consent form providing for administration of such SRA Drug Candidate or SRA Product for at least [**] beyond the term provided for in a particular clinical trial.  Roche shall use Commercially Reasonable Efforts to obtain the applicable Regulatory Authority’s approval of such extension protocol and informed consent and subsequent approval from the institutional review boards at the locations where such clinical trial is being conducted; provided, however, that the proposed [**] period for such extension protocol may be shortened based on the request or advice of the applicable Regulatory Authority.  Upon receipt of such approvals, Roche shall provide, in accordance with the approved extension protocol, such SRA Development Candidate or SRA Product to those patients who enrolled in such clinical trial (such patients, the “Enrollees”).  For so long as Roche is continuing to develop or seek approval from a Regulatory Authority for such SRA Development Candidate or SRA Product, and subject either to mutual agreement of Roche and Foundation or to the recommendation of the SMAF Clinical Trials Advisory Committee in its sole discretion, Roche shall use Commercially Reasonably Efforts to obtain approval for an amended or new extension protocol providing for continued administration of such SRA Development Candidate or SRA Product to the Enrollees, and Roche shall provide such SRA Development Candidate or SRA Product to the Enrollees in accordance with any such approved protocol.  If Roche [**] does not concur in the decision to commence or continue any extension protocol pursuant to this Section 5.1.2, then Roche’s obligations to assist with such extension protocol and continue to supply such SRA Development Candidate or SRA Product to Enrollees shall [**] directly or indirectly, [**], and [**] of SRA Development Candidate or SRA Product to Enrollees.

 

If Roche stops developing or seeking approval from a Regulatory Authority of a SRA Development Candidate or SRA Product pursuant to the above paragraph, and either Roche and Foundation mutually agree or the SMAF Clinical Trials Advisory Committee in its sole discretion (but having considered any safety issues) recommends that the Enrollees continue to have access to such SRA Development Candidate or SRA Product for a longer period than provided for in any existing extension protocol submitted by Roche with respect to such SRA Development Candidate or SRA Product, then upon the Foundation’s request, Roche shall facilitate Foundation’s efforts to arrange for prolonged continued access to such SRA Development Candidate or SRA Product for some or all of the Enrollees by taking all reasonable actions requested by Foundation (consistent with the SMAF Clinical Trials Advisory Committee’s recommendations, if applicable), including without limitation: (i) either (1) transferring Roche’s SRA IND for such SRA Development Candidate or SRA Product to Foundation or its designee or (2) providing Foundation or its designee with a right of reference to the manufacturing-related information and safety and efficacy data in Roche’s SRA IND or Drug Master File or equivalent regulatory filing (as applicable) so that Foundation or its designee can submit its own SRA IND with respect to such continued access; (ii) providing (for the shorter of [**] months or the amount of time necessary for Foundation or its designee to establish an alternative supply of equivalent clinical grade product) such SRA Development Candidate or SRA Product to Foundation or its designee for administration to such Enrollees in accordance 

 

27

 

with any extension protocol for which Foundation or its designee has obtained approval from the FDA or the applicable Regulatory Authority; (iii) assisting Foundation or its designee with obtaining an alternative, equivalent clinical grade supply of such SRA Development Candidate or SRA Product by (1) facilitating Foundation’s or its designee’s negotiation of a supply agreement with Roche or Roche’s manufacturer of such SRA Development Candidate or SRA Product or (2) providing technology transfer and other technical assistance reasonably requested by Foundation to enable Foundation or its designee to manufacture such SRA Development Candidate or SRA Product; and (iv) providing Foundation with a non-exclusive, fully paid-up, sublicensable license under SRA Licensee Technology and SRA Licensee Data (provided, that the license granted hereunder to Foundation [**] or [**] or [**]) to perform or have performed on its behalf any and all activities necessary or reasonably useful to provide continued access to such SRA Development Candidate or SRA Product in accordance with this Section 5.1.2.  In any case in which Roche [**], does not concur in the decision to commence or continue any extension protocol pursuant to this Section 5.1.2, then Roche’s obligations to assist with such extension protocol and continue to supply such SRA Development Candidate or SRA Product to Enrollees shall [**], directly or indirectly, [**], and [**] of SRA Development Candidate or SRA Product to Enrollees.  In connection with the foregoing, Foundation, [**], shall maintain clinical trial and/or product liability insurance, as applicable, in an amount consistent with industry standards and only if available on commercially reasonable terms, and shall [**] with respect to losses arising out of or related to the activities contemplated under this Section 5.1.2.  Foundation shall provide a certificate of insurance evidencing such coverage to Roche upon request.

 

For clarity, nothing in this Section 5.1.2 shall be interpreted as limiting PTC’s obligations pursuant to the SRA, including to provide licenses to SRA Company Technology, SRA Data and SRA Company Base IP to facilitate Foundation’s efforts to arrange for prolonged continued access to such SRA Development Candidate or SRA Product for some or all of the Enrollees.

 

5.1.3                     Expanded Access Program

 

At such time as Foundation and Roche mutually agree, or the SMAF Clinical Trials Advisory Committee in its sole discretion determines, that results from clinical trials and other development activities with respect to the applicable SRA Development Candidate or SRA Product support expanded access to such SRA Development Candidate or SRA Product for patients with SMA, then Roche and Foundation shall cooperate to establish such an expanded access program in which at least [**] SMA patients identified by Foundation who do not meet the enrollment criteria for a particular clinical trial (whether or not such clinical trial is directed to SMA patients) for such SRA Development Candidate or SRA Product (such patients, the “Patients”) may gain access to such SRA Development Candidate or SRA Product.  Roche agrees that at its earliest reasonable opportunity following the commencement of such cooperation (e.g., at a meeting with the FDA), Roche will inquire about the feasibility of an expanded access protocol for such SRA Development Candidate or SRA Product for SMA 

 

28

 

purposes and will invite a designee of Foundation with appropriate medical or regulatory experience to participate in discussions with the FDA regarding the establishment and maintenance of such expanded access program.  In connection with such expanded access program, at Foundation’s request and consistent with any recommendations made by the SMAF Clinical Trials Advisory Committee, Roche will either (i) submit to the FDA a protocol that is reasonably acceptable to Foundation and calls for administering such SRA Development Candidate or SRA Product to the Patients or (ii) notify Foundation that it will not be making such a submission and facilitate the submission and approval of such a protocol by the Foundation or its designee.

 

If Roche chooses option (i) above, then it shall use Commercially Reasonable Efforts to obtain approval of such protocol and, upon receipt of such approval, it shall provide such SRA Development Candidate or SRA Product to the Patients in accordance with the approved protocol; provided, that Roche and Foundation shall engage in good faith negotiations with respect to [**].

 

If Roche chooses option (ii) above, then Roche shall facilitate Foundation’s efforts to arrange for such expanded access program for such SRA Development Candidate or SRA Product for the Patients by taking all reasonable actions requested by Foundation, in each case [**], including without limitation: either (1) allowing the expanded access program to be performed pursuant to Roche’s SRA IND (in which case Foundation or its designee shall provide Roche with all data arising from and other information with respect to such expanded access program that is necessary or reasonably useful for Roche to fulfill its obligations as the SRA IND holder) or (2) providing Foundation or its designee with a right of reference to the manufacturing-related information and safety and efficacy data in Roche’s SRA IND or Drug Master File or similar regulatory filing (as applicable) so that Foundation or its designee can file its own SRA IND with respect to such expanded access program; (ii) providing such SRA Development Candidate or SRA Product to an appropriate designee of Foundation for administration to the Patients in accordance with any expanded access protocol for which Foundation or its designee has obtained approval from the FDA [**]; and (iii) providing Foundation with a non-exclusive, fully paid-up, sublicensable license under SRA Licensee Technology and SRA Licensee Data (provided, that the license granted hereunder to Foundation [**] or [**] or [**]) to perform or have performed on its behalf any and all activities necessary or reasonably useful to provide such expanded access to such SRA Development Candidate or SRA Product in accordance with this Section 5.1.3.  In connection with the foregoing, Foundation, [**], shall maintain clinical trial and/or product liability insurance, as applicable, in an amount consistent with industry standards and only if available on commercially reasonable terms, and shall [**] with respect to such insurance, with respect to losses arising out of or related to the activities contemplated under this Section 5.1.3.  Foundation shall provide a certificate of insurance evidencing such coverage to Roche upon request.

 

For clarity, nothing in this Section 5.1.3 shall be interpreted as limiting PTC’s obligations pursuant to the SRA, including to provide licenses to SRA Company Technology, SRA Data and SRA Company Base IP to facilitate Foundation’s efforts to arrange for such 

 

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expanded access program for such SRA Development Candidate or SRA Product for the Patients.

 

5.1.4                     Indemnification by Foundation

 

In connection with the last paragraph in each of Section 5.1.2 and Section 5.1.3, Foundation hereby agrees to save, defend, indemnify, and hold harmless Roche’s and its Affiliates’ trustees, officers, employees and agents (each, a “Roche Indemnitee”) from and against any and all losses, damages, liabilities, expenses and costs, including reasonable legal expenses and attorneys’ fees (“Roche Losses”), to which a Roche Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any Third Party to the extent such Roche Losses arise directly or indirectly out of (a) [**] or [**] of any SRA Development Candidate or SRA Product by Foundation, its Affiliate(s) or licensee(s) pursuant to the last paragraph of Section 5.1.2 or 5.1.3, or (b) the breach of the SRA by Foundation or the gross negligence or willful misconduct of Foundation pursuant to the last paragraph of Section 5.1.2 or 5.1.3, except in each case to the extent such Losses result from (x) the breach of this Agreement by Roche or the gross negligence or willful misconduct of any Roche Indemnitee, or (y) the activities of Roche or its agents or employees in connection with any SRA Development Candidate or SRA Product.  The obligations of Foundation under this Section 5.1.4 are conditioned upon Roche’s delivery of written notice to Foundation of any potential Roche Losses promptly after Roche becomes aware of such potential Roche Losses.  Foundation shall have the right to assume the defense of any suit or claim related to Roche Losses if it has assumed responsibility for the suit or claim in writing.  If Foundation defends the suit or claim, Roche may participate in (but not control) the defense thereof at its sole cost and expense but Roche may not settle such suit or claim without the prior written consent of Foundation, not to be unreasonably withheld.

 

5.1.5                     Clinical Trial/CRO Agreements

 

In connection with the last paragraph in each of Section 5.1.2 and Section 5.1.3, Foundation hereby agrees that under any circumstance in which Foundation is contracting directly with clinical trial sites, clinical investigators, and contract research organizations (“CROs”), it will use as the basis for its negotiations [**], and will use Commercially Reasonable Efforts to secure terms with respect to publication, confidentiality, intellectual property (which shall be [**], as the case may be, [**]), and indemnification substantially similar to those routinely obtained by Roche with respect to such an agreement, and naming Roche as a third-party beneficiary.

 

5.2                               New Product Development

 

Roche, at its sole cost, shall be responsible for pursuing clinical development of New Products in accordance with a New Product Development Plan, and as overseen by the JSC.  At Roche’s option, PTC may assist with mutually agreed clinical and non-clinical activities in accordance with the New Product Development Plan, which shall include, without limitation, mutually agreed budgets for such activities.  At Roche’s reasonable request and at the sole expense of Roche (including for out-of-pocket and internal costs (including a reasonable allocation of overhead) incurred by the Foundation in connection therewith), the Foundation 

 

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shall use good faith efforts to assist with recruitment of SMA patients for Clinical Studies conducted in the United States under the New Product Development Plan.

 

6.                                      Diligence

 

Roche and PTC shall use Commercially Reasonable Efforts to perform their respective activities contemplated by this Agreement or as may be agreed upon in any subsequent written agreements with respect to the subject matter hereof, including but not limited to any activities under the Research Program and the Product Development Program.  Specifically, Roche agrees to use Commercially Reasonable Efforts to develop and commercialize Products in the Field as it relates to the treatment of humans having SMA and in the Territory and agrees to fulfill all diligence obligations imposed on PTC under the SRA.  Roche further agrees to fulfill the same diligence obligations with respect to New Compound Development Candidates and New Products as are required under the SRA with respect to SRA Development Candidates and SRA Products, respectively.

 

7.                                      Governance

 

7.1                               Joint Steering Committee

 

Within [**] days after the Effective Date of this Agreement, the Parties and the Foundation shall establish a joint steering committee (“JSC”) to oversee the Research Program and the Product Development Program activities under this Agreement.

 

7.2                               Acknowledgement Concerning the JSC

 

7.2.1                     Sole Governance Body for Certain Decisions

 

Each Party and the Foundation acknowledges that the JSC, in addition to its other functions as described herein, shall be the sole governance body for all research and SRA Development decisions regarding the SRA DC Research and the SRA Development of SRA Reversion Candidates, SRA Development Candidates and SRA Products that are the subject of this Agreement.

 

7.2.2                     Excepted Decisions

 

The JSC’s role as such sole governance body under Section 7.2.1 shall not prevent PTC or Roche from making decisions necessary or useful to implement decisions made by the JSC regarding research, SRA Development and SRA Collaboration Activities with respect to SRA Compounds, so long as such implementation decisions are consistent with and faithful to the intent of the JSC’s decision.

 

7.3                               Members

 

The JSC shall be composed of [**] persons (“Members”).  Roche, PTC and the Foundation each shall be entitled to appoint [**] Members with appropriate seniority and functional expertise.  Each Member shall be an employee of the appointing Party or the Foundation, as applicable, unless otherwise agreed by the other Party and the Foundation, or the 

 

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Parties, as applicable.  Each Party and the Foundation may replace any of its Members and appoint a person to fill the vacancy arising from each such replacement.  If PTC, Roche or the Foundation replaces a Member, it shall notify the other Party and the Foundation, or the Parties, as applicable, at least [**] days prior to the next scheduled meeting of the JSC.  Both Parties and the Foundation shall use Commercially Reasonable Efforts to keep an appropriate level of continuity in representation.  Members may be represented at any meeting by another person designated by the absent Member.  The JSC shall be chaired by a Roche Member (the “Chairperson”).  The Chairperson shall be responsible for calling meetings of the JSC and for leading the meetings.

 

7.4                               Responsibilities of the JSC

 

The JSC shall have the responsibility and authority to:

 

a)                                     monitor and implement the transfer of the SRA Product to Roche;

 

b)                                     oversee, monitor and approve the Research Plan;

 

c)                                      revise and approve any revisions to the Research Plan;

 

d)                                     review and oversee the execution of the Research Plan;

 

e)                                      establish timelines and criteria for decision points;

 

f)                                       review the efforts of the Parties and allocate those resources for the Research Plan (including the budget);

 

g)                                      identify appropriate resources necessary to conduct the Research Plan;

 

h)                                     decide whether to pursue options (1), (2) or (3) of Section 2(g) of the Second SRA Amendment in the event of an SRA Cost/Timeline Issue;

 

i)                                         maintain and update, at each JSC meeting prior to [**], a list that identifies and rank orders all potential and actual SRA Lead Candidates and SRA Development Candidates and denotes all SRA Development Candidates and between [**] potential or actual SRA Lead Candidates as SRA Reversion Candidates and as “Reversion Candidates” under the SRA;

 

j)                                        prior to the designation of an SRA Development Candidate, prepare the SRA Development Plan and the “Development Plan” under the SRA for such SRA Development Candidate, and review and update the SRA Development Deadline Document and the “Development Deadline Document” under the SRA as it may deem advisable, in each case as further provided in Article 3 of the SRA;

 

k)                                     establish and set expectations and mandates for each joint operational team (each, a “JOT”);

 

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l)                                         create or disband JOTs as deemed appropriate;

 

m)                                 oversee the JOTs, including without limitation the joint intellectual property team (“Joint IP Team” or “JIPT”);

 

n)                                     approve variations of Invention assignment agreements pursuant to Section 15.1;

 

o)                                     revise and approve any revisions to the Development Candidate Criteria;

 

p)                                     determine whether an SRA Drug Candidate has become an SRA Development Candidate or whether New Compound has become a New Compound Development Candidate;

 

q)                                     following the designation of an SRA Development Candidate, and at least [**] thereafter, conduct a formal review and comprehensive update of the SRA Development Plan and SRA Development Deadline Document for such SRA Development Candidate, in each case as further provided in Article 3 of the SRA;

 

r)                                        review scientific and medical literature to identify diseases, indications or medical conditions that, [**] are [**] for [**], and [**] and [**] diseases, indications or medical conditions [**];

 

s)                                       at the first JSC meeting after [**], (i) review each potential or actual SRA Lead Candidate that was not designated as an SRA Development Candidate during the SRA Research Term and either designating it as an SRA Development Candidate or determining that it does not meet the Development Candidate Criteria, and (ii) prepare a final list (which can only be subsequently changed by the written agreement of Roche, PTC and Foundation) that identifies and rank orders all potential and actual SRA Lead Candidates and SRA Development Candidates and denotes all SRA Development Candidates and between [**] potential or actual SRA Lead Candidates as SRA Reversion Candidates and as “Reversion Candidates” under the SRA;

 

t)                                        oversee the progress of the Product Development Program, including without limitation, with respect to SRA Development, pursuant to Article 3 of the SRA;

 

u)                                     monitor the development of the New Compounds and the New Products in the Field;

 

v)                                     recommend action items to each Party’s or the Foundation’s respective decision-making bodies for approval or rejection by such decision-making bodies;

 

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w)                                   attempt to resolve any disputes on an informal basis; and

 

x)                                     otherwise serve as a forum for exchanging information and discussing the progress of the collaboration between PTC, Roche and the Foundation under this Agreement, including, without limitation, Product commercialization activities.

 

The JSC shall have no responsibility and authority other than that expressly set forth in this Section.

 

7.5                               Meetings

 

The Chairperson or his/her delegate is responsible for sending invitations and agendas for all JSC meetings to all Members at least [**] days before the next scheduled meeting of the JSC, and shall include any agenda item reasonably requested by PTC or the Foundation.  The venue for the meetings shall be agreed by the JSC.  During the Research Term, the JSC shall meet at least [**]; thereafter, the JSC shall meet at least [**] per Calendar Year.  JSC meetings may be held in person or by videoconference; provided that no more than [**] such meetings in any Calendar Year may be by videoconference.  The Alliance Directors may attend the JSC meetings as permanent participants.

 

At least [**] representatives from each Party and from the Foundation must be present at each JSC meeting to achieve a quorum.  In addition, each Party and the Foundation may, at its discretion, invite a reasonable number of non-voting employees, and, with the consent of the other Party and the Foundation, or the Parties, as applicable, consultants or scientific advisors, to attend JSC meetings or the relevant portion thereof; provided that any such consultants or scientific advisors are bound by written obligations of confidentiality that are at least as stringent as those set forth in this Agreement.

 

Either Party or the Foundation may also request that a special JSC meeting be convened for the purpose of resolving a dispute(s) in connection with, or for the purpose of reviewing or making a decision pertaining to, any matter within the purview of the JSC by providing written notice to the other Party.  Such meeting shall be convened at such time as may be mutually agreed upon by the Parties, but in any event shall be held within [**] days after the date of such notice.

 

At its initial meeting, the JSC shall, among other things, review the Research Plan, including the associated budgets.

 

7.6                               Minutes

 

The Chairperson is responsible for designating a Member to record in reasonable detail and circulate draft minutes of JSC meetings to all members of the JSC for comment and review within [**] days after the relevant meeting.  The Members of the JSC shall have [**] days to provide comments.  The Member preparing the minutes shall incorporate timely received comments and distribute finalized minutes to all Members of the JSC within [**] days after the relevant meeting, for final approval at the next JSC meeting.

 

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7.7                               Decisions

 

7.7.1                     Decision Making Authority

 

The JSC shall decide matters within its responsibilities as set forth in Section 7.4.

 

7.7.2                     Consensus; Good Faith

 

The Members of the JSC shall act in good faith to cooperate with one another and seek agreement with respect to issues to be decided by the JSC.  The Parties and the Foundation shall endeavor to make decisions by consensus.  Each Party and the Foundation shall have one (1) vote on the JSC; provided, however that the Foundation [**] except to the extent the Foundation [**] under the [**] (and, for clarity, Foundation shall not be obligated to [**] without Foundation’s prior approval).  Both Parties, and, as applicable, the Foundation, must vote in the affirmative to allow the JSC to take any action that requires the vote of the JSC.  Action on any matter may be taken at a meeting by teleconference, videoconference or by written agreement.

 

7.7.3                     Escalation

 

If the JSC is unable to decide a matter, then such matter shall be referred to the Chief Executive Officer of PTC or equivalent position or his/her nominee, the Head of Roche Partnering or equivalent position or his/her nominee, and, for matters on which the Foundation is entitled to vote, the President of the Foundation or equivalent position or his/her nominee, for resolution, who together shall use reasonable and good faith efforts to reach a decision by consensus within [**] days after the date such matter is referred to them.  If PTC, Roche and the Foundation still fail to reach a decision within such [**] days, then the final decision shall be Roche’s, which shall be exercised in good faith.  Any such decision shall constitute a decision of the JSC.

 

Notwithstanding the foregoing, Roche shall not have the right to exercise its final decision-making authority unilaterally with respect to the following (each, a “Consensus Matter”):

 

a)                                     increasing PTC’s or the Foundation’s obligations or reduce PTC’s or the Foundation’s rights under this Agreement, including without limitation, amending the Research Plan and/or imposing any obligation on PTC and/or the Foundation to devote additional personnel or financial resources to a specific activity or project;

 

b)                                     determining that the R&D Events set forth in Section 11.3 have not occurred;

 

c)                                      determining that it has fulfilled any obligation under this Agreement or that PTC or the Foundation has breached any obligation under this Agreement;

 

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d)                                     making a decision that is expressly stated in this Section 7.7.2 or elsewhere in this Agreement to require the mutual agreement of the Parties or the Foundation;

 

e)                                      otherwise expanding Roche’s rights or reducing Roche’s obligations under this Agreement;

 

f)                                       designating, or determining not to designate, an SRA Development Candidate;

 

g)                                      updating or amending any SRA Development Plan or SRA Development Deadline Document; or

 

h)                                     deciding whether to pursue option (1), (2) or (3) of Section 2(g) of the Second SRA Amendment.

 

7.8                               Information Exchange

 

Roche shall disclose to PTC and the Foundation all material information in relation to Roche’s activities under this Agreement through the JSC and, where applicable, the JSC, the Foundation and PTC may ask reasonable questions in relation to such matters and offer advice in relation thereto, and Roche shall give due consideration to PTC’s and the Foundation’s input.

 

7.9                               Joint Operational Teams

 

7.9.1                     Establishment

 

The JSC shall have the right to establish JOTs, which may include, but will not be limited to the following: a Research JOT, a New Product Development JOT, an SRA Development JOT, and a Joint IP Team.  Each Party and the Foundation shall be free to change its members of each JOT, on prior written notice to the other Party and the Foundation.  Each JOT shall determine the frequency and form of its interactions, subject to the requirements set forth in this Section 7.9.

 

7.9.2                     Role of JOTs

 

The JSC shall determine the objectives and areas of responsibility for each JOT, potentially including clinical, research or development matters.  Each JOT will develop and present to the JSC for approval specific plans for achieving its respective objectives and will be responsible for performing any duties assigned to such JOT by the JSC.  Each JOT may form additional sub-groups as such JOT deems appropriate.

 

7.9.3                     Votes; Disputes

 

Each JOT shall decide by vote on any subject matter within the decision-making authority of such JOT by a reasonable process to be established by the JOT.  If a JOT is unable to reach a unanimous decision on any matter that is subject to the JOT’s decision-making authority within [**] days after the JOT first fails to reach consensus regarding such matter (or 

 

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such later date as may be mutually acceptable to the Parties and the Foundation), then such matter shall be resolved by the JSC.

 

7.9.4                     Joint IP Team

 

The JSC shall form a JIPT consisting of at least [**] from each Party’s patent or legal department.  It shall be the responsibility of the JIPT to (i) determine the need to license Third Party Patent Rights that are required or useful for the development and commercialization of Products and, subject to Section 11.5.4, the allocation of costs between the Parties in connection therewith, (ii) serve as a forum for the communication between the Parties regarding the Handling of Patent Rights, including but not limited to, with respect to any Joint Patent Right, determining which Party shall have the first right to Handle such Joint Patent Right, (iii) determine strategy for Handling Patent Rights, (iv) discuss the actual or suspected infringement that is the subject of an Infringement Notice, (v) determine the geographic scope of patent filings, including foreign filing decisions at the end of the priority year, PCT national/regional phase and European validations, and (vi) determine any matter regarding the enforcement or defense of the PTC Patent Rights, Roche Patent Rights or Joint Patent Rights.  The JIPT shall meet as required to fulfill its duties as set forth in Sections 11.5.4, 15.5 and 15.8, or as otherwise mutually agreed by the Parties, and shall participate in and report to regular meetings of the JSC as requested by the JSC.  The JIPT shall coordinate with Foundation to satisfy Foundation’s right, pursuant to Section 6.2(a) of the SRA to comment and consultation on all filing, prosecution and maintenance activities with respect to any Patent Right that claims or covers any SRA Compound, and shall promptly provide Foundation with copies of all summaries of JIPT meetings that are prepared.  If the JIPT is unable to resolve any dispute, or unanimously agree on any other matter before it, then, notwithstanding anything to the contrary in Section 7.9.3, such dispute or other matter shall be referred to the chief patent counsels of each Party or their designees to be resolved by negotiation in good faith as soon as practicable but in no event later than [**] days (or sooner if necessity so dictates) after referral.  If the chief patent counsels or their designees are unable to resolve such matter, then Roche shall have final decision-making authority except as to (a) the allocation of costs under clause (i) of this Section 7.9.4, and (b) any Consensus Matter as set forth in Section 7.7.3.  For clarity, the authority of the JIPT shall be subject to the rights of Foundation pursuant to Section 6.2(c) of the SRA.

 

7.10                        Alliance Director

 

PTC, Roche and the Foundation shall each appoint an Alliance Director.  The Alliance Directors shall be the point of contact within each Party and the Foundation with responsibility for facilitating communication and collaboration between PTC, Roche and the Foundation.  They are permanent participants of the JSC meetings and may attend JOT meetings as appropriate.  The Alliance Directors shall facilitate resolution of potential and pending issues and potential disputes to enable the JSC to reach consensus and avert escalation of such issues or potential disputes.

 

7.11                        Limitations of Authority

 

The JSC shall have no authority to amend or waive any terms of this Agreement or the SRA.

 

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7.12                        Expenses

 

Each Party and the Foundation shall be responsible for its own expenses including travel and accommodation costs incurred in connection with the JSC and any JOT.

 

7.13                        Lifetime

 

The JSC shall end upon the later to occur of (i) the conclusion of all research and development activities to be performed hereunder or (ii) the First Commercial Sale of the first Product in the second Major Country.

 

7.14                        Appointment of JSC Members, JOT Members and Alliance Directors

 

The appointment of members of the JSC, any JOT and the Alliance Directors is a right of each Party and the Foundation and not an obligation and shall not be a “deliverable” as defined in EITF Issue No. 00-21.  Each Party and the Foundation shall be free to determine not to appoint members to the JSC and any JOT and not to appoint an Alliance Director, and at any time during the Agreement Term and for any reason, either Party shall have the right to withdraw from participation in the JSC and any JOT and to remove its Alliance Director upon written notice to the other Party and the Foundation, or the Parties, as applicable, which notice shall be effective immediately upon receipt. If a Party or the Foundation (“Appointing Party”) does not appoint members of the JSC or any JOT or an Alliance Director, or withdraws from the JSC or any JOT or removes its Alliance Director, it shall not be a breach of this Agreement, nor shall there be any associated penalty due nor shall there be any impact on the consideration otherwise provided for or due to the Appointing Party under this Agreement, and unless and until such persons are again appointed: (i) the other Party and the Foundation, or the Parties, as applicable, without regard to the provisions of this Article 7 with respect to voting, quorum or dispute resolution, may discharge the roles of the JSC, any JOT and the Alliance Director for which appointments were not made or with respect to which a withdrawal or removal has occurred by the Appointing Party (including without limitation, where the Appointing Party has not made appointments to the JSC or has withdrawn from the JSC, making all decisions within the decision-making authority of the JSC, which decisions shall be binding thereafter) and (ii) where the Appointing Party has not made appointments to the JSC or has withdrawn from the JSC, the Appointing Party shall not participate in any meetings of the JSC and shall not have the right to approve the minutes of any JSC meeting. If, at any time after the Effective Date, a Party or the Foundation has not appointed or has pursuant to this Section 7.14 withdrawn from the JSC or any JOT or removed its Alliance Director, and such Party or the Foundation wishes to resume participating in the JSC or any JOT or re-appoint its Alliance Director, such Party or the Foundation shall notify the other Party and the Foundation, or the Parties, as applicable, in writing and, thereafter, such Party’s or the Foundation’s designees shall be entitled to attend any subsequent meeting of the JSC or any JOT and to participate in the activities of, and decision-making by, the JSC or any JOT, and such Party’s or Foundation’s Alliance Director shall resume his or her duties, in each case as provided in this Article 7 as if a failure to appoint or submitting the withdrawal notice had not occurred.

 

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7.15                        Change of Control

 

If there is a Change of Control of PTC, PTC shall provide prompt written notice thereof to Roche; provided that PTC may (but shall not be obligated to) notify Roche on a confidential basis of a contemplated Change of Control prior to the effective date of such Change of Control (the “Change of Control Notice”).  Within [**] days after receipt of a Change of Control Notice (the “Election Period”), Roche shall provide PTC with written notice of its election to proceed with one of the following mutually exclusive options: (i) to continue the Research Program pursuant to this Agreement and the Research Plan, (ii) to exclude PTC from participation in the JSC and any JOT and thereafter internalize at Roche all activities allocated to PTC under the Research Plan, or (iii) to terminate this Agreement in accordance with Section 20.3.2; provided that regardless of the option elected, such election shall become effective only upon or after the effective date of such Change of Control of PTC.  If Roche fails to provide a written election under the preceding sentence within the Election Period, then Roche shall be deemed to have elected to proceed under Section 7.15(i).  If Roche makes a written election pursuant to Section 7.15(ii) within the Election Period, then the Quarterly R&D Fees with respect to Research Program activities conducted by PTC after the effective date of the Change of Control shall be adjusted accordingly to reflect the change in activities.  The Parties acknowledge and agree that if Roche makes a written election within the Election Period pursuant to Section 7.15(ii) or Section 7.15(iii), PTC shall have no obligation to transfer the AS Assay to Roche, and Roche will not obtain any right or license with respect to the AS Assay or any intellectual property right therein.

 

8.                                      Supply

 

8.1                               Research Supply of Product

 

All Product for use during the Research Program shall be supplied in accordance with the Research Plan and accompanying budget.

 

8.2                               Clinical Supply of Product

 

8.2.1                     Roche Responsibility

 

Roche shall be solely and exclusively responsible at its own expense for the manufacture and supply of clinical supplies of Product.

 

8.2.2                     Technology Transfer

 

PTC shall initiate as soon as practicable and within [**] Business Days after the Effective Date a Know-How transfer (in accordance with the guidelines set forth in Appendix 8.2.2) to Roche to enable Roche to manufacture Product.  If Roche provides PTC with reasonable notice requesting PTC to provide Roche or its Affiliates with technical assistance in transferring technology required for the manufacture of a Compound at a Roche Group manufacturing facility or subcontractor, then PTC shall provide [**] of up to [**] days duration of one FTE to provide such services [**].  If additional technical assistance is required, then PTC shall provide such assistance to Roche at the FTE Rate and Roche shall reimburse PTC for 

 

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reasonable out-of-pocket expenses, such travel and lodging, incurred in providing such assistance.

 

8.3                               Commercial Supply of Product

 

Roche shall be solely and exclusively responsible at its own expense for the commercial manufacture and commercial supply of Product for sale in the Territory, either by itself or through Third Parties.

 

9.                                     Regulatory

 

9.1                               Responsibility

 

All regulatory responsibilities with respect to SRA Product are subject to the SRA.  Roche, at its sole cost, shall pursue all regulatory affairs related to Product in the Territory, including without limitation the preparation and filing of applications for Regulatory Approval, as well as any or all governmental approvals required to develop, have developed, make, have made, use, have used, manufacture, have manufactured, import, have imported, sell and have sold Products.  Roche shall be responsible for pursuing, compiling and submitting all regulatory filing documentation, and for interacting with Regulatory Authorities, for all Products in all countries in the Territory.  Roche or its Affiliates shall own and file in their discretion all regulatory filings and Regulatory Approvals for all Products in all countries of the Territory.  Roche shall supply PTC with a copy of all material communications related to Products to or from the Regulatory Authorities for all Major Countries.

 

Roche, at its sole cost, shall report to appropriate authorities in accordance with local requirements or Laws all adverse events related to use of Products in the Territory.

 

PTC shall transfer and assign to Roche any regulatory dossiers containing information necessary or useful to Roche in connection with its regulatory filings for all Products, including, but not limited to clinical trial dossiers, regulatory correspondence, Regulatory Authority meeting minutes and study reports from completed non-clinical studies. For all completed study reports, PTC shall provide necessary documentation to confirm data reliability, as required by Article 43 of the Japanese Pharmaceutical Affairs Law Enforcement Regulations and related notifications, including, but not limited to original author signatures, raw data lists, GLP and GCP compliance information. All documentation is to be provided in English.

 

9.2                               Reporting Adverse Events

 

9.2.1                     Report

 

Each Party agrees to inform the other about serious adverse events occurring or having occurred in connection with the use of Product that comes into its knowledge.  The Parties agree to handle data and information about adverse events occurring or having occurred in connection with the use of Product according to the Guidelines in the respective territory, for example, those recited in the FDCA and the similar requirements of the Canadian or European Regulatory Authorities and/or requirements of any other relevant Regulatory Authority in the Territory.

 

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9.2.2                     Clinical Safety Database

 

Adverse events related to the use of Product in the Territory shall be logged in a single database, centralized, held and owned by Roche.

 

9.2.3                     Pharmacovigilance Agreement

 

The Parties shall execute a separate pharmacovigilance agreement if required specifying the procedures and timelines for compliance with applicable Laws and regulations pertaining to safety reporting or Products and their related activities.

 

10.                               Commercialization

 

Subject to the SRA, Roche, at its own expense, shall have sole responsibility and decision-making authority for the marketing, promotion, sale and distribution of Products in the Territory.  During the Agreement Term, for so long as any member of the Roche Group is conducting commercialization activities with respect to any Product hereunder, Roche shall provide PTC and Foundation with written reports, at least [**], summarizing the progress of such commercialization activities.  In addition to such reports, at the request of PTC or Foundation from time to time following dissolution of the JSC, representatives of Roche shall meet, in person or via telephone, with representatives of PTC and Foundation at reasonable intervals for informal discussions regarding Roche’s commercialization activities with respect to all Products then being commercialized by a member of the Roche Group; provided, however, that the foregoing shall not apply with respect to PTC if PTC or any PTC Affiliate is then marketing a product for the same indication as a Product then being commercialized by a member of the Roche Group.

 

11.                               Payment

 

11.1                        Research Recognition Payment

 

Within [**] Business Days after the Effective Date and receipt of the invoice set forth in Appendix 11.1 (which shall be deemed issued to Roche on the Execution Date) from PTC, Roche shall make an unconditional, non-refundable, non-creditable payment to PTC of thirty million US dollars (US$ 30,000,000) in recognition of PTC’s research efforts prior to the Effective Date.  This Agreement, including without limitation Section 20.5 hereof, shall terminate in its entirety and shall be void and of no further force or effect if Roche fails to make the payment required by this Section 11.1 within such [**] Business Day period.

 

11.2                        Research and Development Funding.

 

(a)                                 Within [**] days after the end of each Calendar Quarter, PTC shall provide an invoice to Roche for the Quarterly R&D Fees actually incurred during such Calendar Quarter, and in prior periods with respect to amounts not yet invoiced or paid, and Roche shall pay PTC such Quarterly R&D Fees within [**] days after receipt thereof.

 

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(b)                                 Roche shall not be obligated to pay Quarterly R&D Fee amounts in excess of [**] percent ([**]%) above the amounts set forth in the then-current Research Plan as approved by the JSC, or in the then-current SRA Development Plan or New Product Development Plan, as applicable, unless such amounts have been preapproved by Roche in writing.

 

(c)                                  If the Foundation performs any work or provides or procures any services as set forth in the Research Plan, SRA Development Plan or New Product Development Plan, then the Foundation shall provide Roche with an invoice setting forth all costs incurred by the Foundation in connection with such work or services, including out-of-pocket costs, internal costs and a reasonable allocation of overhead, and providing reasonable documentation thereof, and Roche shall pay Foundation such invoiced amount within [**] days after receipt thereof.

 

11.3                        Research and Development Event Payments

 

Roche shall pay up to a total of [**] US dollars (US$ [**]) in relation to the achievements of events with respect to each Product.  The payments under this Section 11.3 (each, an “R&D Event Payment”) shall be paid by Roche according to the following schedule of research and development events (each, an “R&D Event”):

 

	
R&D Event
    	
 
    	
R&D Event Payment
    
	
(a) 
    	
[**]
    	
[**][**]
    
	
(b) 
    	
[**]
    	
[**]
    
	
(c) 
    	
[**]
    	
[**]
    
	
(d) 
    	
[**]
    	
[**]
    
	
(e) 
    	
[**]
    	
[**]
    
	
(f) 
    	
[**]
    	
[**]
    
	
(g) 
    	
[**]
    	
[**]
    
	
(h) 
    	
[**]
    	
[**]
    
	
(i) 
    	
[**]
    	
[**]
    
	
(j) 
    	
[**]
    	
[**]
    
	
TOTAL
    	
[**]
    
				

 

[**].

 

As used in the chart above, [**].

 

Each R&D Event Payment shall be non-refundable and non-creditable, and shall be paid no more than once, for the first applicable Product reaching the applicable R&D Event; provided, however, that if an R&D Event Payment is paid for a Product and such Product subsequently is withdrawn from development for any reason, then such R&D Event Payment shall be creditable against the analogous R&D Event Payment that would be due for a subsequent Product to reach such R&D Event; that is, if the subsequent Product replaces the previous Product with respect to the R&D Event Payments.  For example, if (i) [**] in accordance with the above table.

 

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If a given Product is developed and continues to be developed (and does not fail), and one or more additional Product(s) are also developed [**], then no payments with respect to all R&D Events achieved by each subsequent Product shall be made until such time [**].  For clarity, upon [**], all payments with respect to R&D Events achieved by such subsequent Product shall be due and payable.

 

The achievement of an R&D Event for a Product shall result in a simultaneous obligation to pay the R&D Event Payment for each antecedent R&D Event that has not been previously paid for such Product, unless such Product is a replacement of a Product that was withdrawn from development as set forth above.  For example, on a Product-by-Product and a country-by-country or regional basis, the achievement of an R&D Event in any of rows [**]shall result in a simultaneous obligation to pay the relevant earlier R&D Event Payment in rows [**], as applicable, that had not previously been paid.

 

Upon achievement by or on behalf of any member of the Roche Group of any of the R&D Events, Roche shall promptly (but in no event more than [**] days after achievement thereof) notify PTC and shall pay to PTC all corresponding R&D Event Payments within [**] days after (x) occurrence of the applicable R&D Event and (y) receipt of an invoice from PTC.

 

11.4                        Sales-Based Events

 

Roche shall pay to PTC up to a total of [**] US dollars (US$ [**]) based on aggregate Calendar Year Net Sales of a Product in the Territory:

 

	
Net Sales Threshold
    	
 
    	
Payment
    
	
 
    	
 
    	
 
    
	
Total Calendar Year Net Sales in the Territory of   a Product exceed US$ [**]
    	
 
    	
US$[**]
    
	
Total Calendar Year Net Sales in the Territory of   a Product exceed US$ [**]
    	
 
    	
US$[**]
    
	
Total Calendar Year Net Sales in the Territory of   a Product exceed US$ [**]
    	
 
    	
US$[**]
    
	
Total Calendar Year Net Sales in the Territory of   a Product exceed US$ [**]
    	
 
    	
US$[**]
    
	
TOTAL
    	
 
    	
US$[**]
    

 

Each of the sales-based event payments shall be paid no more than once during the Agreement Term, at first occurrence of the event for the Product in the Territory first reaching the respective Net Sales Threshold, irrespective of whether or not the previous sales-based event payment was triggered by the same or by a different Product, and shall be non-refundable and non-creditable. Upon achievement by the Roche Group of any of the foregoing sales events, Roche shall promptly (but in no event more than [**] days after achievement thereof) notify PTC, and shall pay PTC the corresponding sales event payment within [**] days after receipt of an invoice from PTC.

 

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11.5                        Royalty Payments

 

11.5.1              Royalty Term

 

Royalties shall be payable by Roche on Net Sales of Products on a Product-by Product basis until the expiry of the Royalty Term.  Thereafter, the licenses granted to Roche and its Affiliates shall be fully paid-up, royalty-free and non-exclusive with respect to such Product in such country, on a Product-by-Product and country-by-country basis.

 

The following royalty rates shall apply to the respective tiers of aggregate Calendar Year Net Sales of a Product per area of the Territory, on an incremental basis, as follows:

 

	
Tier of Calendar Year Worldwide
   Net Sales in [**] US$
    	
 
    	
Percent (%) of
   Net Sales
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    

 

For example, if Net Sales of a Product for a given Calendar Year are US$[**], then the royalties applicable on such Net Sales of such Product for that year shall be calculated as follows:

 

[**].

 

For the purpose of calculating royalties of a Product, Calendar Year Net Sales shall be subject to the adjustments set forth elsewhere in this Agreement.

 

11.5.2              Combination Product

 

If a Product is sold as part of a Combination Product in a country, the Net Sales of the Product, for the purposes of determining payments based on Net Sales, shall be determined by multiplying the Net Sales of the Combination Product in such country, during the applicable Net Sales reporting period, by the fraction, A/(A+B), where:

 

A is the average sale price of the Product by members of the Roche Group when sold separately in finished form in such country and B is the average sale price by members of the Roche Group of the other product(s) included in the Combination Product when sold separately in finished form in such country, in each case during the applicable Net Sales reporting period or, if sales of both the Product and the other product(s) did not occur in such period, then in the most recent Net Sales reporting period in which sales of both occurred.

 

If the Product is sold as part of a Combination Product and is sold separately in finished form in such country, but the other product(s) included in the Combination Product are not sold separately in finished form in such country, the Net Sales of the Product, for the 

 

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purposes of determining payments based on Net Sales, shall be determined by multiplying the Net Sales of the Combination Product in such country by the fraction C/D where:

 

C is the average sale price, in such country, of the Product contained in such Combination Product when sold separately and D is the average sale price, in such country, for the Combination Product, in each case during the applicable Net Sales reporting period.

 

If the Product is not sold separately in finished form in the country, but all of the other product(s) included in the Combination Product in such country are sold separately, the Net Sales of the Product, for the purposes of determining payments based on Net Sales, shall be determined by multiplying the Net Sales of the Combination Product in such country by the fraction (D-E)/D, where:

 

D is the average sale price, in such country, of the Combination Product, and E is the average sale price of the other product(s) included in the Combination Product in finished form in such country, in each case during the applicable Net Sales reporting period.

 

If Net Sales of the Product when included in a Combination Product cannot be determined using the methods above, Net Sales for the purposes of determining payments based on Net Sales shall be calculated by multiplying the Net Sales of the Combination Product by the fraction of F/(F+G) where:

 

F is the fair market value of the Product and G is the fair market value of all other pharmaceutical product(s) included in the Combination Product as reasonably determined in good faith by the Parties.

 

Where the preceding sentence is applicable, Roche shall in good faith propose to PTC an allocation of relative value of the Product and all other product(s) included in the Combination Product, PTC shall in good faith consider such proposal, and the Parties shall seek to reach agreement on such allocation.  If the Parties are unable to reach such agreement within [**] days after Roche provides such proposal, the issue shall be referred for binding resolution to a mutually agreeable individual (not affiliated with either Party) with expertise in the marketing and sales of similar pharmaceutical products (including experience in pricing and reimbursement), such resolution to occur within [**] days after such referral.

 

11.5.3              No Valid Claim

 

Notwithstanding the foregoing, the royalty rate applicable to a Product sold in any country in the Territory shall be reduced to [**] percent ([**]%) of the rate otherwise payable during any portion of the Royalty Term when there is no Valid Claim of the PTC Patent Rights, Roche Product Patent Rights or Joint Patent Rights Covering such Product in such country; provided that such reduction shall not apply during any portion of the Royalty Term when such Product is entitled to Marketing Exclusivity in such country and there is no Generic Competition in such country.

 

45

 

11.5.4              Third Party Payments

 

The Parties, working through the JIPT, shall determine whether any Patent Rights Controlled by a Third Party are necessary or useful for the development and commercialization of Products.  Roche and PTC shall each bear [**] percent ([**]%) of costs (including without limitation upfront payments, milestones and royalties) with respect to any license for any Third Party Patent Right that the JIPT (or Roche in its exercise of its final decision-making authority thereunder) reasonably determines is necessary for the development and commercialization of Products, and shall agree in good faith through the JIPT on the allocation of such costs with respect to any license for any Third Party Patent Right that is useful (but not necessary) for the development and commercialization of Products; provided that in no event shall PTC be required to pay any such costs except through a deduction from royalties payable by Roche to PTC hereunder, and no such royalty payable shall be reduced as a result of the allocation agreed by the JIPT in accordance with this Section 11.5.4 by more than [**] percent ([**]%) of the amount otherwise due to PTC with respect to the applicable Net Sales.

 

11.5.5              Anti-Stacking

 

In no event shall the combined effect of the applicable reductions pursuant to Sections 11.5.3 and 11.5.4 reduce the royalties payable to PTC below [**] percent ([**]%) of the amount otherwise payable to PTC pursuant to Section 11.5.1 or 11.5.2, as applicable.  If the amount of the reduction Roche is otherwise entitled to pursuant to Sections 11.5.3 and 11.5.4 is limited by the preceding sentence, Roche shall be entitled to deduct amounts from any subsequent royalty payment(s) (subject to the [**] percent ([**]%) floor in the preceding sentence) until the entire amount of the reduction to which Roche is otherwise entitled has been so deducted.

 

11.5.6              Sales Prior to Regulatory Approval

 

If any member of the Roche Group sells Product(s) to any Third Party prior to Regulatory Approval for more than nominal consideration (“Pre-Approval Sales”), then royalties shall be payable in accordance with Sections 11.5.1 through 11.5.5 with respect to Net Sales received in connection with such Pre-Approval Sales of Product(s) in the Territory by any member of the Roche Group on a country-by-country basis commencing upon the first such Pre-Approval Sale of such Product in any country in the Territory and continuing until the First Commercial Sale of such Product in such country in the Territory.

 

11.6                        Payments to Foundation

 

PTC shall be solely responsible for making all payments due to Foundation under the SRA.

 

11.7                        Diagnostic Product

 

The provisions of Sections 11.3, 11.4 and 11.5 shall not apply to a diagnostic Product.  If Roche desires to research, develop or commercialize a diagnostic Product in the Territory in the Field, then Roche shall have the right to acquire all necessary rights from PTC and the Parties 

 

46

 

shall negotiate in good faith appropriate economic terms for Roche’s development or commercialization of such diagnostic Product.

 

12.                               Accounting and reporting

 

12.1                        Timing of Payments

 

Roche shall calculate royalties on Net Sales quarterly as of March 31, June 30, September 30 and December 31 (each being the last day of an “Accounting Period”) and shall pay royalties on Net Sales within [**] days after the end of each Accounting Period in which such Net Sales occur.

 

12.2                        Late Payment

 

Any payment under this Agreement that is not paid on or before the date such payment is due shall bear interest, to the extent permitted by applicable Law, at [**] above the average one-month Euro Interbank Offered Rate (EURIBOR), as reported by Reuters from time to time, calculated on the number of days such payment is overdue.  In addition, Roche shall reimburse PTC for all costs and expenses, including without limitation attorneys’ fees and legal expenses, incurred in the collection of late payments; provided that the foregoing shall not apply with respect to payments disputed in good faith by Roche unless PTC is successful in such dispute or Roche ceases to dispute such payments.

 

12.3                        Method of Payment

 

Royalties on Net Sales and all other amounts payable by Roche hereunder shall be paid by Roche in US Dollars to account(s) designated by PTC.

 

12.4                        Currency Conversion

 

When calculating Net Sales of any royalty bearing Product that occurs in currencies other than US$, Roche shall convert the amount of such sales in currencies other than Swiss Francs into Swiss Francs and then into US$ using for internal foreign currency translation Roche’s then current standard practices actually used on a consistent basis in preparing its audited financial statements.

 

Upon converting the amount of sales into Swiss Francs, Roche shall convert into US$ (or other currency), using the daily rate (currently Reuters) at the last working day for the applicable period.

 

12.5                        Reporting

 

With each payment Roche shall provide PTC in writing for the relevant Calendar Quarter on a Product-by-Product basis the following information:

 

a)                                     Sales in Swiss Francs on a country-by-country basis;

 

b)                                     Deductions from Sales to calculate Net Sales;

 

47

 

c)                                      Net Sales in Swiss Francs on a country-by-country basis;

 

d)                                     Adjustments made pursuant to Sections 11.5.2 - 11.5.4 in Swiss Francs;

 

e)                                      Net Sales after adjustments made pursuant to Sections 11.5.2 - 11.5.4, in Swiss Francs;

 

f)                                        Total Net Sales in the Territory in Swiss Francs;

 

g)                                     Total Net Sales in the Territory in US$;

 

h)                                     Total royalty payable to PTC in US$; and

 

i)                                         Exchange rates used for the conversions of Nets Sales from Swiss Francs to US$ made under Section 12.4 above.

 

13.                               Taxes

 

The royalties, milestones, Quarterly R&D Fees and other amounts payable by Roche to PTC pursuant to this Agreement (“Payments”) shall not be reduced on account of any taxes unless required by applicable Law. PTC alone shall be responsible for paying any and all taxes (other than withholding taxes required by applicable Law to be paid by Roche) levied on account of, or measured in whole or in part by reference to, any Payments it receives. Roche shall deduct or withhold from the Payments any taxes that it is required by applicable Law to deduct or withhold.  Notwithstanding the foregoing, if PTC is entitled under any applicable tax treaty to a reduction of rate of, or the elimination of, applicable withholding tax, it may deliver to Roche or the appropriate governmental authority (with the assistance of Roche to the extent that this is reasonably required and is expressly requested in writing) the prescribed forms necessary to reduce the applicable rate of withholding or to relieve Roche of its obligation to withhold tax, and Roche shall apply the reduced rate of withholding, or dispense with withholding, as the case may be; provided that Roche has received evidence, in a form satisfactory to Roche, of PTC’s delivery of all applicable forms (and, if necessary, its receipt of appropriate governmental authorization) at least [**] Business Days prior to the time that the Payments are due.  If, in accordance with the foregoing, Roche withholds any amount, it shall pay to PTC the balance when due, make timely payment to the proper taxing authority of the withheld amount, and send to PTC proof of such payment within [**] days following that payment.

 

14.                               Auditing

 

14.1                        PTC Right to Audit

 

Roche shall keep, and shall require its and its Affiliates and Sublicensees to keep, full, true and accurate books of account containing all particulars that may be necessary for the purpose of calculating all royalties payable under this Agreement.  Such books of accounts shall be kept at their principal place of business.  At the expense of PTC, PTC has the right to engage an independent, certified public accountant reasonably acceptable to both Parties to perform, on behalf of PTC an audit of such books and records of members of the Roche Group that are deemed necessary by such independent public accountant to report on Net Sales of Product for 

 

48

 

the period or periods requested by PTC and the correctness of any report or payments made under this Agreement.

 

Upon timely request and at least [**] working days’ prior written notice from PTC, such audit shall be conducted in the countries specifically requested by PTC, during regular business hours in such a manner as to not unnecessarily interfere with Roche’s normal business activities, and shall be limited to results in the [**] Calendar Years prior to audit notification.

 

Such audit shall not be performed more frequently than [**] nor more frequently than [**] with respect to records covering any specific period of time.

 

All information, data and documents herein referred to shall be used only for the purpose of verifying royalty statements and all other amounts due hereunder, shall be treated as Roche Confidential Information subject to the obligations of this Agreement and need neither be retained more than the longer of [**] after completion of an audit hereunder, if an audit has been requested; nor more than [**] years from the end of the Calendar Year to which each shall pertain.

 

The auditors shall not interpret the Agreement.  Draft audit reports shall be provided to both PTC and Roche by the auditor for review and comment by PTC and Roche and the final audit report shall be shared by PTC and Roche.

 

14.2                        Over- or Underpayment

 

If an audit reveals an underpayment by Roche, then Roche shall pay PTC for the amount of the underpayment within [**] days after receipt of the final audit report, with interest thereon as set forth in Section 12.2.  If an audit reveals an overpayment by Roche, Roche shall have the right to credit the amount of such overpayment against the next royalty payment payable to PTC hereunder.  PTC shall pay for the audit costs, except that if an audit reveals an underpayment in excess of [**] percent ([**]%) of the aggregate amount of royalty payments owed with regard to the royalty statements subject to the audit, then Roche shall reimburse PTC for such audit costs concurrently with its payment of the amount of the underpayment.

 

14.3                        Duration of Audit Rights

 

The failure of PTC to request verification of any royalty calculation within the period during which corresponding records must be maintained under this Article 14 will be deemed to be acceptance of the royalty payments and reports.

 

15.                               Intellectual Property

 

15.1        Ownership of Inventions

 

PTC shall own all PTC Inventions, Roche shall own all Roche Inventions, and PTC and Roche shall jointly own all Joint Inventions.  The determination of inventorship for Inventions shall be in accordance with US inventorship Laws.  PTC and Roche each shall require all of its employees and contractors to assign all inventions related to Products made by them to Roche and PTC, as the case may be.  In the case of all others acting in the performance of the Research 

 

49

 

Program on behalf of such Party, such as agents or non-employees working for non-profit academic institutions, such others shall also be obligated under a written agreement or other binding obligation that meets the criteria of the preceding sentence or includes an exclusive license grant to such Party, or as such Party shall direct, unless otherwise approved by the JSC; provided, that in the case of government funded or nonprofit entities, such Party’s obligation shall be limited to using Commercially Reasonable Efforts to negotiate for at least an exclusive option to license such Invention, subject to any requirement of Law (including without limitation mandatory licenses and other rights granted to government entities).

 

15.2                        German Statute on Employee’s Inventions

 

In accordance with the German Statute on Employees’ Inventions, each Party agrees to claim the unlimited use of any Invention conceived, reduced to practice, developed, made or created in the performance of, or as a result of, the Research Program or the Product Development Program by its German employees or any other German person acting on its behalf.  The Party which is the ultimate assignee of the German employee’s or other person’s Invention under this Agreement shall pay any royalty or other compensation payable to the employee or other person, and the Parties agree that the Party which is the ultimate assignee must agree to the royalty or other compensation negotiated with the employee or other person.

 

15.3                        Prosecution of Patent Rights Claiming PTC Inventions

 

Subject to Section 7.9.4, PTC shall (i) Handle all PTC Patent Rights, (ii) consult with Roche as to the Handling of such PTC Patent Rights, and (iii) furnish to Roche copies of all documents relevant to any such Handling.  PTC shall furnish such documents and consult with Roche in sufficient time before any action by PTC is due to allow Roche to provide comments thereon, which comments PTC must consider.  At PTC’s reasonable request, Roche shall cooperate in all reasonable ways with the Handling of all PTC Patent Rights.  PTC shall not discontinue prosecution or maintenance of any PTC Patent Right (including but not limited to selection of countries for foreign filing or entry into the PCT National Stage) without at least [**] days’ prior written notice to Roche.  If PTC decides to discontinue Handling any PTC Patent Right, Roche shall have the option to assume responsibility for Handling such PTC Patent Right and, in such case, except for a change in responsibility for Handling such PTC Patent Right under this Section 15.3, no changes in ownership or licensing terms pertaining to any PTC Patent Right shall occur.  For clarity, the rights of the Parties pursuant to this Section 15.3 shall be subject to the rights of Foundation pursuant to Section 6.2(c) of the SRA.

 

15.4                        Prosecution of Patent Rights Claiming Roche Inventions

 

Subject to Section 7.9.4, Roche shall (i) Handle all Roche Patent Rights, (ii) consult with PTC as to the Handling of such Roche Patent Rights, and (iii) furnish to PTC copies of all documents relevant to any such Handling.  Roche shall furnish such documents and consult with PTC in sufficient time before any action by Roche is due to allow PTC to provide comments thereon, which comments Roche must consider.  At Roche’s expense and reasonable request, PTC shall cooperate, in all reasonable ways with the Handling of all Roche Patent Rights.  Roche shall not discontinue Handling any Roche Patent Right (including but not limited to selection of countries for foreign filing or entry into the PCT National Stage) without at least [**] days’ prior 

 

50

 

written notice to PTC.  If Roche decides to discontinue Handling any Roche Patent Right, PTC shall have the option to assume responsibility for prosecuting and maintaining such Roche Patent Right, at PTC’s sole expense, and in such case, except for a change in responsibility for Handling such Roche Patent Right under this Section 15.4, no changes in ownership or licensing terms pertaining to any Roche Patent Right shall occur.  For clarity, the rights of the Parties pursuant to this Section 15.4 shall be subject to the rights of Foundation pursuant to Section 6.2(c) of the SRA.

 

15.5                        Prosecution of Patent Rights Claiming Joint Inventions

 

On a Joint Invention-by-Joint Invention basis, the JIPT shall determine which Party shall be responsible for Handling each Joint Patent Right with respect to such Joint Invention.  Each Party shall keep the other Party informed of the status of all pending applications disclosing the Joint Patent Rights for which it has Handling responsibility, and shall consider in good faith all of the other Party’s comments regarding any aspect of such patent Handling.  Neither Party shall discontinue Handling of any Joint Patent Right (including but not limited to selection of countries for foreign filing or entry into the PCT National Stage) without at least [**] days’ prior written notice to the other Party.  If a Party decides to discontinue Handling any Joint Patent Right, then the other Party shall have the option to continue to Handle such Joint Patent Right, at such other Party’s sole expense, and in such case, except for the change in responsibility for Handling such Joint Patent Right under this Section 15.5, no changes in ownership or licensing terms pertaining to any Joint Patent Right shall occur.

 

15.6                        Prosecution Costs

 

Except as otherwise expressly provided hereunder, Roche shall bear all out-of-pocket costs and expenses of Handling PTC Patent Rights, Roche Patent Rights and Joint Patent Rights, and shall reimburse PTC for any such costs PTC incurs in connection therewith within [**] days after receipt of an invoice from PTC therefor.

 

15.7                        CREATE Act

 

It is the intention of the Parties that this Agreement is a “joint research agreement” as that phrase is defined in 35 USC §103(c)(3).

 

15.8                        Infringement

 

Each Party shall promptly provide written notice (“Infringement Notice”) to the other Party during the term of this Agreement of any (i) known infringement or suspected infringement by a Third Party of any PTC Patent Right, Roche Patent Right or Joint Patent Right, or (ii) known or suspected unauthorized use or misappropriation by a Third Party of any PTC Know-How, Roche Know-How or Joint Know-How, and shall provide the other Party with all evidence in its possession supporting such infringement or unauthorized use or misappropriation.

 

As soon as possible after receiving an Infringement Notice, the Parties will convene a meeting of the JIPT at which the JIPT may discuss in good faith all available evidence of such infringement, use or misappropriation, and the appropriate manner of addressing such infringement, use or misappropriation, including without limitation preventing or stopping 

 

51

 

infringing activities (for example, by seeking a preliminary injunction), preserving the Parties’ rights to past and future damages (for example, by sending a cease and desist letter) defending against declaratory judgment actions with respect thereto, or taking any other action, or no action, as the Parties shall determine.  The JIPT shall take into account each Party’s interest in formulating the response, if any, to infringement or threatened infringement of such PTC Patent Rights, Roche Patent Rights, or Joint Patent Rights or known or suspected unauthorized use or misappropriation of such PTC Know-How, Roche Know-How or Joint Know-How, including without limitation the relative merits of patent litigation versus the nature, scope and potential economic consequences of the infringement.  Unless otherwise determined by the JIPT, Roche shall have the right initiate a suit or action to address such infringement, use or misappropriation, and shall and shall provide written notice to PTC of its decision (“Suit Notice”) within [**] days after Roche provides or receives the Infringement Notice (“Decision Period”).

 

If Roche decides to bring a suit or take action, once Roche provides Suit Notice, Roche may immediately commence such suit or take such action.  In the event that Roche (i) does not in writing advise PTC within the Decision Period that Roche will commence suit or take action, or (ii) fails to commence suit or take action within a reasonable time after providing Suit Notice, PTC shall thereafter have the right to commence suit or take action in the Territory and shall provide written notice to Roche of any such suit commenced or action taken by PTC.

 

Upon written request, the Party bringing suit or taking action (“Initiating Party”) shall keep the other Party informed of the status of any such suit or action and shall provide the other Party with copies, to the extent the Initiating Party is lawfully permitted to do so, of all substantive documents or communications filed in such suit or action.  The Initiating Party shall have the sole and exclusive right to select counsel for any such suit or action.

 

The Initiating Party shall, except as provided below, pay all expenses of the suit or action, including without limitation the Initiating Party’s attorneys’ fees and court costs.  Any damages, settlement fees or other consideration received as a result of such suit or action shall be allocated as follows:

 

(a)                                  First, to reimburse the Initiating Party for its costs and, if any remains, to the other Party for any advisory counsel fees and costs; and

 

(b)                                 Second, the balance, if any, shall be allocated [**] percent ([**]%) to the Initiating Party, and [**] percent ([**]%) to the other Party.

 

If the Initiating Party believes it is reasonably necessary or desirable to obtain an effective remedy, upon written request the other Party agrees to be joined as a party to the suit or action but shall be under no obligation to participate except to the extent that such participation is required as the result of its being a named party to the suit or action.  At the Initiating Party’s written request, the other Party shall offer reasonable assistance to the Initiating Party in connection therewith at no charge to the Initiating Party except for reimbursement of reasonable out-of-pocket expenses incurred by the other Party in rendering such assistance.  The other Party shall have the right to participate and be represented in any such suit or action by its own counsel at its own expense.

 

52

 

The Initiating Party may settle, consent to judgment or otherwise voluntarily dispose of the suit or action (“Settlement”) without the written consent of the other Party but only if such Settlement can be achieved without adversely affecting the other Party (including without limitation any of its Patent Rights or Know-How).  If a Settlement could adversely affect the other Party, then the written consent of the other Party would be required, which consent shall not be unreasonably withheld.

 

15.9                        Defense

 

If an action for infringement is commenced against either Party, its licensees or its sub-licensees related to PTC’s conduct of the Research Program within the scope of the Research Plan or the discovery, development, manufacture, use or sale of a Product, then Roche shall defend such action at its own expense, and PTC shall assist and cooperate with Roche, at Roche’s expense, to the extent necessary in the defense of such suit.  Roche shall have the right to settle the suit or consent to an adverse judgment thereto, in its sole discretion, so long as such settlement or adverse judgment does not adversely affect the rights of PTC and its Affiliates (including without limitation any Patent Right or Know-How Controlled by any of them).  Roche shall assume full responsibility for the payment of any award for damages, or any amount due pursuant to any settlement entered into by it with such Third Party.

 

If the manufacture, use, importation, offer for sale or sale of any Product pursuant to this Agreement results in any claim, suit or proceeding alleging patent infringement or trade secret misappropriation against PTC or a member of the Roche Group, then PTC or Roche, respectively, shall promptly notify the other Party hereto.  The Parties shall cooperate with each other in connection with any such claim, suit or proceeding and shall keep each other reasonably informed of all material developments in connection with any such claim, suit or proceeding.

 

If a Third Party asserts that Patent Rights owned by or licensed to it are infringed by the development, manufacture, use, importation, offer for sale or sale of Products by a member of the Roche Group, or that its trade secrets were misappropriated in connection with such activity, then Roche shall have the exclusive right and responsibility to resolve any such claim, whether by obtaining a license from such Third Party, by defending against such Third Party’s claims or otherwise, and shall be solely responsible for the defense of any such action, any and all costs incurred in connection with such action (including, without limitation, attorneys’ and expert fees) and all liabilities incurred in connection therewith.  Notwithstanding the above, Roche shall not enter into any settlement of any such claim without the prior written consent of PTC if such settlement would require PTC to be subject to an injunction or to make any monetary payment to Roche or any Third Party, or admit any wrongful conduct by PTC or its Affiliates, or would limit or restrict the claims of or admit any invalidity and/or unenforceability of any of the Patent Rights Controlled by PTC, or have any impact on activities outside the Field.

 

15.10                 Common Interest Disclosures

 

With regard to any information or opinions disclosed pursuant to this Agreement by one Party to each other regarding intellectual property and/or technology owned by Third Parties, the Parties agree that they have a common legal interest in determining whether, and to what extent, Third Party intellectual property rights may affect the conduct of the Research Program and/or 

 

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the development and/or commercialization of Compounds and/or Products, and have a further common legal interest in defending against any actual or prospective Third Party claims based on allegations of misuse or infringement of intellectual property rights relating to the conduct of the Research Program and/or the development and/or commercialization of Compounds and/or Products.  The Parties anticipate that each of them will have legal counsel involved in such determinations.  Accordingly, the Parties agree that all such information and materials obtained by PTC and Roche from each other will be used solely for purposes of the Parties’ common legal interests with respect to the conduct of the Agreement.  All information and materials will be treated as protected by the attorney-client privilege, the work product privilege, and any other privilege or immunity that may otherwise be applicable.  By sharing any such information and materials, neither Party intends to waive or limit any privilege or immunity that may apply to the shared information and materials.  Neither Party shall have the authority to waive any privilege or immunity on behalf of the other Party without such other Party’s prior written consent, nor shall the waiver of privilege or immunity resulting from the conduct of one Party be deemed to apply against any other Party.

 

15.11                 Hatch-Waxman

 

Notwithstanding anything herein to the contrary, should a Party receive a certification for a Product pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law 98-417, known as the Hatch-Waxman Act), as amended, or its equivalent in a country other than the US, then such Party shall immediately provide the other Party with a copy of such certification.  Roche shall have [**] days after the date on which it receives or provides a copy of such certification to provide written notice to PTC (“H-W Suit Notice”) whether Roche will bring suit, at its expense, within a [**] day period after the date of such certification.  Should such [**] day period expire without Roche bringing suit or providing such H-W Suit Notice, then PTC shall be free to immediately bring suit in its name.  The provisions of Section 15.8 (except for paragraphs 1-3 thereof) shall apply with respect to any such suit.

 

15.12                 Patent Term Extensions

 

The Parties shall use Commercially Reasonable Efforts to obtain all available patent term extensions, adjustments or restorations, or supplementary protection certificates (“SPCs”, and together with patent term extensions, adjustments and restorations, “Patent Term Extensions”).  PTC shall execute such authorizations and other documents and take such other actions as may be reasonably requested by Roche to obtain such Patent Term Extensions, including designating Roche as its agent for such purpose as provided in 35 U.S.C. §156.  All filings for such Patent Term Extensions shall be made by Roche; provided, that in the event that Roche elects not to file for a Patent Term Extension, Roche shall (a) promptly inform PTC of its intention not to file and (b) grant PTC the right to file for such Patent Term Extension.  Each Party shall execute such authorizations and other documents and take such other actions as may be reasonably requested by the other Party to obtain such extensions.  The Parties shall cooperate with each other in gaining patent term restorations, extensions and/or SPCs wherever applicable to PTC Patent Rights, Roche Patent Rights and Joint Patent Rights.

 

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16.                               Representations and Warranties

 

16.1                        Mutual Representations and Warranties

 

Each Party represents and warrants to the other Party as follows:

 

16.1.1              Authorization

 

The execution, delivery and performance of this Agreement by such Party and all instruments and documents to be delivered by such Party hereunder: (i) are within the corporate power of such Party; (ii) have been duly authorized by all necessary or proper corporate action; (iii) are not in contravention of any provision of the certificate of formation or limited liability company agreement of such Party; (iv) to the knowledge of such Party, will not violate any Law or regulation or any order or decree of any court of governmental instrumentality; (v) will not violate the terms of any indenture, mortgage, deed of trust, lease, agreement, or other instrument to which such Party is a party or by which such Party or any of its property is bound, which violation would have an adverse effect on the financial condition of such Party or on the ability of such Party to perform its obligations hereunder; and (vi) do not require any filing or registration with, or the consent or approval of, any governmental body, agency, authority or any other person, which has not been made or obtained previously (other than approvals required under the HSR Act, Regulatory Approvals required for the sale of Products and filings with Regulatory Authorities required in connection with Products).

 

16.1.2              Third Party Patent Rights

 

Such Party has no knowledge as of the Effective Date of the existence of any Valid Claim of any issued patent owned by or licensed to any Third Party that could prevent Roche from making, having made, using, offering for sale, selling or importing Product in the Territory.

 

16.1.3              Inventors

 

All of such Party’s employees, officers and contractors have executed agreements requiring assignment to such Party of all Inventions made by such individuals during the course of and as a result of their association with such Party.

 

16.1.4              Grants

 

Such Party has the lawful right to grant the other Party and its Affiliates the rights and licenses described in this Agreement.

 

16.1.5              No Claims

 

As of the Effective Date, there are no claims or investigations (other than with respect to the Parties’ HSR Act filings), pending or threatened against such Party or any of its Affiliates, at Law or in equity, or before or by any governmental authority, relating to the matters contemplated under this Agreement or that would materially adversely affect such Party’s ability to perform its obligations hereunder.

 

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16.1.6              No Conflict

 

Except for obligations under the SRA, neither such Party nor any of its Affiliates is or will be under any obligation to any person, contractual or otherwise, that is conflicting with the terms of this Agreement or that would impede the fulfillment of such Party’s obligations hereunder.

 

16.1.7              No Debarment

 

Such Party has never been debarred under 21 U.S.C. §335a, disqualified under 21 C.F.R. §312.70 or §812.119, sanctioned by a Federal Health Care Program (as defined in 42 U.S.C. §1320 a-7b(f)), including without limitation the federal Medicare or a state Medicaid program, or debarred, suspended, excluded or otherwise declared ineligible from any other similar Federal or state agency or program.

 

16.2                        Additional PTC Representations and Warranties

 

16.2.1              Safety Data

 

PTC has disclosed to Roche (i) the results of all preclinical testing of Products in its Control and (ii) all information in its Control concerning side effects, injury, toxicity or sensitivity reaction and incidents or severity thereof with respect to Product.

 

16.2.2              Ownership of Patent Rights

 

PTC is the exclusive owner of all right, title and interest in, or is the exclusive licensee of, the PTC Base Patent Rights.  Appendix 1.62 contains a complete and accurate list of all patents and patent applications included in the PTC Base Patent Rights.

 

16.2.3              Validity of Patent Rights

 

As of the Effective Date, PTC is not in possession of information that could render invalid and/or unenforceable any claims that are in any of the PTC Base Patent Rights.  PTC has no knowledge of any inventorship disputes concerning any PTC Base Patent Rights.

 

16.2.4              Ownership and Validity of Know-How

 

The PTC Know-How is legitimately in the possession of PTC and has not been misappropriated from any Third Party.  PTC has taken reasonable measures to protect the confidentiality of its Know-How.

 

16.2.5              SRA

 

As of the Effective Date, the SRA is in full force and effect and neither PTC nor Foundation has been notified of any breach of the SRA or controversy concerning the performance of PTC and/or Foundation under the SRA.

 

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16.3                        Additional Roche Representation

 

Roche represents that it is the view of its professional advisors as of the Effective Date that no filing will be required under the HSR Act in connection with this Agreement.

 

17.                               Indemnification

 

17.1                        Indemnification by Roche

 

(a)                                  Roche shall indemnify, hold harmless and defend PTC and its directors, officers, employees and agents from and against any and all losses, expenses, cost of defense (including without limitation attorneys’ fees, witness fees, damages, judgments, fines and amounts paid in settlement) and any amounts PTC becomes legally obligated to pay because of any claim or claims against it to the extent that such claim or claims arise out of Research Program or Product Development Program activities, or any other activities related to the Product (e.g., product liability claims), conducted by or on behalf of any member of the Roche Group, except to the extent such losses, expenses, costs and amounts are due to the gross negligence or willful misconduct or failure to act of PTC.

 

(b)                                 Roche shall indemnify, hold harmless and defend the Foundation and its directors, officers, employees and agents from and against any and all losses, expenses, cost of defense (including without limitation attorneys’ fees, witness fees, damages, judgments, fines and amounts paid in settlement) and any amounts the Foundation becomes legally obligated to pay because of any claim or claims against it to the extent that such claim or claims arise out of Research Program or Product Development Program activities, or any other activities related to the Product (e.g., product liability claims), conducted by or on behalf of any member of the Roche Group, except to the extent such losses, expenses, costs and amounts are due to the gross negligence or willful misconduct or failure to act of the Foundation. For clarity, nothing in this Section 17.1(b) or Sections 17.2 or 17.3 shall be interpreted as limiting PTC’s obligations pursuant to the SRA, including its obligations pursuant to Section 8.1 of the SRA.

 

17.2                        Indemnification by PTC

 

PTC shall indemnify, hold harmless and defend Roche and its directors, officers, employees and agents from and against any and all losses, expenses, cost of defense (including without limitation attorneys’ fees, witness fees, damages, judgments, fines and amounts paid in settlement) and any amounts Roche becomes legally obligated to pay because of any claim or claims against it to the extent that such claim or claims arise out of activities related to the Research Program or Product Development Program activities or any other activities conducted by or on behalf of PTC relating to PTC’s obligations under this Agreement, except to the extent such losses, expenses, costs and amounts are due to the gross negligence or willful misconduct or failure to act of any member of the Roche Group.

 

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17.3                        Procedure

 

In the event of a claim by a Third Party against any Person entitled to indemnification under this Agreement (in such capacity, the “Indemnified Party”), the Indemnified Party shall promptly notify the other Party (or the Foundation) (in such capacity, the “Indemnifying Party”) in writing of the claim (it being understood that the failure by the Indemnified Party to give prompt notice of a Third Party claim as provided in this Section 17.3 shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except and only to the extent that such Indemnifying Party is actually prejudiced as a result of such failure to give prompt notice). Within [**] days after delivery of such notification, the Indemnifying Party may, upon written notice thereof to the Indemnified Party, undertake and solely manage and control, at its sole expense and with counsel reasonably satisfactory to the Indemnified Party, the defense of the claim. If the Indemnifying Party does not undertake such defense, the Indemnified Party shall control such defense.  The Party (or the Foundation, as applicable) not controlling such defense shall cooperate with the other Party (or the Foundation, as applicable) and may, at its option and expense, participate in such defense; provided that if the Indemnifying Party assumes control of such defense and the Indemnified Party in good faith concludes, based on advice from counsel, that the Indemnifying Party and the Indemnified Party have conflicting interests with respect to such action, suit, proceeding or claim, the Indemnifying Party shall be responsible for the reasonable fees and expenses of counsel to the Indemnified Party solely in connection therewith.  The Party (or the Foundation, if applicable) controlling such defense shall keep the other Party (or the Foundation, as applicable) advised of the status of such action, suit, proceeding or claim and the defense thereof and shall consider recommendations made by the other Party (or the Foundation, as applicable) with respect thereto.  The Indemnifying Party shall not be liable for any litigation costs or expenses incurred by the Indemnified Party without the Indemnifying Party’s written consent. The Indemnified Party shall not settle any such action, suit, proceeding or claim without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld, delayed or conditioned.  Without the prior written consent of the Indemnified Party, the Indemnifying Party shall not settle any such action, suit, proceeding or claim, or consent to any judgment in respect thereof, that does not include a complete and unconditional release of the Indemnified Party from all liability with respect thereto, that imposes any liability or obligation on the Indemnified Party or that acknowledges fault by the Indemnified Party.

 

18.                               Disclaimer

 

EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, PTC AND ROCHE EACH DISCLAIM ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO EACH OF THEIR RESEARCH, DEVELOPMENT AND COMMERCIALIZATION EFFORTS HEREUNDER, INCLUDING, WITHOUT LIMITATION, WHETHER THE PRODUCTS CAN BE SUCCESSFULLY DEVELOPED OR MARKETED, THE ACCURACY, PERFORMANCE, UTILITY, RELIABILITY, TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS, MERCHANTABILITY, NONINFRINGEMENT, OR FITNESS FOR ANY PARTICULAR PURPOSE WHATSOEVER OF THE PRODUCTS.  IN NO EVENT SHALL THE PARTIES OR THE FOUNDATION BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT BASED ON 

 

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CONTRACT, TORT OR ANY OTHER LEGAL THEORY.  NOTHING IN THIS ARTICLE 18 IS INTENDED TO LIMIT OR RESTRICT (I) THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY OR FOUNDATION UNDER SECTIONS 15.9, 17.1 AND 17.2, OR (II) REMEDIES AVAILABLE TO EITHER PARTY OR THE FOUNDATION WITH RESPECT TO A BREACH OF SECTION 19.1.

 

19.                               Obligation Not to Disclose Confidential Information

 

19.1                        Non-Use and Non-Disclosure

 

During the Term of this Agreement and for [**] years thereafter, a Receiving Party shall (i) treat Confidential Information provided by a Disclosing Party as it would treat its own information of a similar nature, (ii) take all reasonable precautions not to disclose such Confidential Information to Third Parties or Sublicensees without the Disclosing Party’s prior written consent, and (iii) not use such Confidential Information other than for fulfilling its obligations or exercising its rights under this Agreement or the SRA.

 

19.2                        Permitted Disclosure

 

Notwithstanding the obligation of non-use and non-disclosure set forth in Section 19.1, the Parties and the Foundation recognize the need for certain exceptions to this obligation, specifically set forth below, with respect to press releases, Patent Rights, publications, and certain commercial considerations.  In addition, a Receiving Party shall not be bound by the obligation of non-disclosure set forth in Section 19.1 to the extent it is required to disclose Confidential Information of a Disclosing Party to comply with applicable Law, provided that the Receiving Party furnishes prompt notice (in no event less than [**] days unless otherwise required by applicable Law) to the Disclosing Party to enable it to resist or minimize the scope of such disclosure.

 

19.3                        Disclosure to Foundation

 

To the extent reasonably necessary or useful to fulfill the requirements or accomplish the objectives of the SRA or this Agreement, each Party may disclose the other Party’s Confidential Information to the Foundation and the Foundation’s Confidential Information to the other Party, and the Foundation may disclose a Party’s Confidential Information to the other Party.

 

19.4                        Press Releases and Other Disclosures

 

The Parties and the Foundation will cooperate in the release of a joint press release, substantially in the form set forth in Appendix 19.4, as soon as practicable after the Effective Date.  The Parties and the Foundation also recognize that each Party or the Foundation may from time to time desire to issue additional press releases and make other public statements or disclosures regarding the subject matter of this Agreement or the SRA (if the Disclosing Party is PTC or the Foundation).  In such event, the Party desiring to issue an additional press release or make a public statement or disclosure (or the Foundation, as applicable) shall provide the other Party and the Foundation, or the Parties, as applicable, with a copy of the proposed press release, statement or disclosure for review, comment and approval at least [**] Business Days in advance (or such shorter period as would permit the publicizing Party (or the Foundation, as applicable) to comply with applicable Law), which advance approval shall not be unreasonably withheld, conditioned or delayed (except that neither Party nor the Foundation shall have any obligation to disclose Confidential Information except to the extent required or permitted pursuant to the other provisions of this Article 19).  Each reviewing Party (and the Foundation, as applicable) shall notify the publicizing Party (or the Foundation, as applicable) within such [**] Business Days period (or such shorter period) of its comments and whether it approves such disclosure.  It is agreed that each such disclosure shall only be done with such approval of each reviewing Party (and the Foundation, as applicable) 

 

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and no other public statement or disclosure concerning the existence or terms of this Agreement or the SRA shall be made, either directly or indirectly, by either Party or the Foundation, without first obtaining the written approval of the other Party and the Foundation, or the Parties, as applicable.  Notwithstanding the foregoing provisions of this Section 19.4 or the other provisions of this Article 19, (i) a Party or the Foundation may make any disclosure or public announcement if the contents of such disclosure or public announcement have previously been made public other than through a breach of this Agreement by the issuing Party (or the Foundation, as applicable); (ii) if a Party or the Foundation reasonably determines that a public disclosure shall be required by Law, including without limitation in a public filing with the US Securities and Exchange Commission, such Party (or the Foundation, as applicable) may disclose the existence and terms of this Agreement and any material developments that occur under this Agreement where so required; provided that such Party (or the Foundation, as applicable) shall, to the extent practicable and permitted by applicable Law, notify the other Party and the Foundation, or the Parties, as applicable, and allow the other Party and the Foundation, or the Parties, as applicable to comment on the proposed disclosure, which comments shall be considered by the disclosing Party (or the Foundation, as applicable) in good faith; (iii) a Party or the Foundation may disclose the terms of this Agreement under obligations of confidentiality to bona fide potential or actual advisors, consultants, investors, acquirers, lenders, investment bankers or other potential financial partners in connection with such Party’s (or the Foundation’s) proposed financing or business combination activities, including without limitation any Reverse Merger; and (iv) Roche may disclose the terms of this Agreement to bona fide potential or actual Sublicensees, as reasonably necessary in connection with a permitted sublicense under the licenses granted in this Agreement.

 

19.5                        Publications

 

During the Agreement Term, the following restrictions shall apply with respect to disclosure by any Party or the Foundation of the Confidential Information of the other Party, the Parties, or the Foundation, as applicable, relating to Compounds or Products in any publication or presentation.

 

a)                                      Both Parties and the Foundation acknowledge that it is their policy for studies and results thereof to be registered and published in accordance with their internal guidelines. Roche, in accordance with its internal policies and procedures, shall have the right to publish all studies, Clinical Studies and results thereof on the clinical trial registries that are maintained by or on behalf of Roche. PTC shall not publish any studies, Clinical Studies or results thereof on its clinical trial registry; provided however, that Roche’s clinical trial registry can be accessed via a link from PTC’s clinical trial registry.  The Foundation shall have the right to 

 

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publish results of the SRA Research as set forth in Section 5.4 of the SRA, subject to the procedures set forth in this Section 19.5, provided that such procedures do not prevent the Foundation from publishing or otherwise making available such results as contemplated by Section 5.4 of the SRA.

 

b)                                     A Party or the Foundation (the “Publishing Party”) shall provide the other Party and the Foundation, or the Parties, as applicable, with a copy of any proposed publication or presentation at least [**] days (or at least [**] days in the case of abstracts or oral presentations) prior to submission for publication by the Publishing Party or its Affiliates so as to provide the other Party and the Foundation, or the Parties, as applicable, each with an opportunity to recommend any changes it reasonably believes are necessary to continue to maintain the Confidential Information disclosed by such other Party (or the Foundation, as applicable) to the Publishing Party in accordance with the requirements of this Agreement.  The incorporation of such recommended changes shall not be unreasonably refused; and if a Party or the Foundation, as applicable, notifies (“Publishing Notice”) the Publishing Party in writing, within [**] days after receipt of the copy of the proposed publication or presentation (or at least [**] days in the case of oral presentations), that such publication or presentation in its reasonable judgment (i) contains an Invention, solely or jointly conceived and/or reduced to practice by such Party, for which such Party reasonably desires to obtain patent protection or (ii) could be expected to have a material adverse effect on the commercial value of any Confidential Information disclosed by such Party or the Foundation to the Publishing Party, the Publishing Party shall prevent such publication or delay such publication for a mutually agreeable period of time.  In the case of Inventions, a delay shall be for a period reasonably sufficient to permit the timely preparation and filing of a patent application(s) on such Invention, and in no event less than [**] days after the date of the Publishing Notice.

 

19.6                        Commercial Considerations

 

Nothing in this Agreement shall prevent either Party from disclosing Confidential Information of the other Party or the Foundation, or the Parties, as applicable (i) to Regulatory Authorities, to the extent necessary to obtain or maintain INDs or Regulatory Approvals for any Product as permitted under this Agreement; (ii) to outside consultants, scientific advisory boards, and clinical investigators to the extent necessary to research, develop or commercialize any Compound or Product in accordance with this Agreement; provided that such Party, as applicable, shall obtain confidentiality obligations from such Third Parties substantially similar to the confidentiality provisions set forth in this Article 19; and (iii) to the extent necessary to Handle, defend and enforce Roche Patent Rights, PTC Patent Rights or Joint Patent Rights, in each of the foregoing cases, to the extent applicable to such Party’s activities under this Agreement.

 

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19.7        Interplay with SRA

 

This Article 19 shall replace Article 5 of the SRA commencing on the Effective Date.  The foregoing shall not be interpreted as a waiver of any remedies available to PTC or Foundation as a result of any breach, prior to the Effective Date, by PTC or Foundation of its obligations under Article 5 of the SRA.  At the end of the Agreement Term, this Article 19 shall continue to apply to Roche for an additional [**] years.  If at the end of the Agreement Term, the SRA is still in effect, PTC and the Foundation shall thereafter be bound by Article 5 of the SRA.  If at the end of the Agreement Term the SRA is no longer in effect, this Article 19 shall apply to PTC and the Foundation for an additional [**] years.

 

20.                               Term and Termination

 

20.1                        Commencement and Term

 

This Agreement shall be binding upon the Parties as of the Execution Date to the extent permitted by the HSR Act, including without limitation the provisions of Sections 20.3.6 and 22.1, but shall not otherwise take effect until the Effective Date, and shall thereafter continue for the Agreement Term.

 

20.2                        SRA Special Termination, SRA Reversion Notice and SRA Buy-Out Notice

 

So that Roche may effectuate the granting of licenses and rights as set forth in Section 2.2.2, PTC will immediately notify Roche about any SRA Special Termination or PTC’s receipt of an SRA Reversion Notice or SRA Buy-Out Notice.

 

Notwithstanding anything in this Agreement to the contrary, PTC, following consultation with Roche, shall have the right to remedy any omission by Roche relating to Roche’s obligations under this Agreement that PTC reasonably believes is likely, should such omission continue for at least [**] days, to trigger an SRA Special Termination, SRA Reversion Notice, SRA Buy-Out Notice or Foundation’s right to terminate the SRA.

 

20.3                        Termination

 

20.3.1              Termination for Breach

 

A Party (“Non-Breaching Party”) shall have the right to terminate this Agreement in its entirety or on a country-by-country basis in the event the other Party (“Breaching Party”) is in breach of any of its material obligations under this Agreement.  The non-Breaching Party shall provide written notice to the Breaching Party, which notice shall identify the breach and the countries in which the Non-Breaching Party intends to have this Agreement terminate.  The Breaching Party shall have a period of [**] days (or [**] days in the case of a payment breach or a breach by Roche that, if not cured by Roche, is likely to trigger an SRA Special Termination, SRA Reversion Notice, SRA Buy-Out Notice or Foundation’s right to terminate the SRA) after such written notice is provided to cure such breach (“Peremptory Notice Period”).  If such breach is not cured within the Peremptory Notice Period, this Agreement shall effectively terminate in such countries.

 

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A Party shall have the right to terminate this Agreement if the other Party incurs an Insolvency Event; provided, however, in the case of any involuntary bankruptcy proceeding, such right to terminate shall only become effective if the Party that incurs the Insolvency Event consents to the involuntary bankruptcy or such proceeding is not dismissed within ninety (90) days after the filing thereof.

 

20.3.2              Termination by Roche for Change of Control of PTC

 

In the event of a Change of Control of PTC, Roche shall have the right, subject to Section 7.15, by written notice to PTC and Foundation given within the Election Period, to terminate this Agreement immediately, without prejudice to any of its other rights conferred on it by this Agreement or under applicable Law.

 

20.3.3              Termination by Roche Without a Cause

 

Roche shall have the right to terminate this Agreement at any time after the second anniversary of the Effective Date on a Product-by-Product and country-by-country basis (i) upon three (3) months’ prior written notice before First Commercial Sale of the Product or (ii) upon nine (9) months’ prior written notice after the First Commercial Sale of the Product.  The effective date of termination under this Section 20.3.3 shall be the date three (3) months or nine (9) months, as the case may be, after Roche provides such written notice to PTC.

 

20.3.4     Termination by PTC for Patent Challenge

 

If any member of the Roche Group (or Chugai with the acquiescence of Roche) challenges the validity, enforceability, patentability or scope of any claim included in any PTC Patent Right or Joint Patent Right, or supports, directly or indirectly, any such challenge (any of the foregoing, a “Patent Challenge”), PTC shall have the right to terminate this Agreement with respect to such challenged PTC Patent Right or Joint Patent Right upon thirty (30) days’ written notice to Roche with respect to the PTC Patent Right or Joint Patent Right that is subject of the Patent Challenge.  In addition, if such Patent Challenge is terminated during such thirty (30) day period, then PTC shall not have the right to terminate this Agreement in respect of such Patent Challenge; provided, however, that Roche shall reimburse PTC for all costs and expenses, including without limitation attorneys’ fees, incurred by PTC in defending such Patent Challenge, and shall pay all such reimbursement amounts within [**] days after receipt of an invoice from PTC therefor.

 

20.3.5              Termination by PTC for Post-Change of Control Material Change

 

PTC shall have the right to terminate this Agreement as set forth in Section 22.2.

 

20.3.6              Termination for Delay in Effective Date

 

Either Party may terminate this Agreement effective upon notice to the other Party if the HSR Clearance Date shall not have occurred on or prior to the date ninety (90) days after the Parties make their respective HSR Act filings pursuant to Section 22.1.  If this Agreement is terminated pursuant to this Section 20.3.6, this Agreement, including without limitation Section 20.5, shall terminate in its entirety and shall be void and of no force or effect.

 

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20.4                        Consequences of Termination

 

20.4.1              Termination by Roche for Convenience; Termination by PTC for Roche Breach, Insolvency Event, Patent Challenge or Post-Change of Control Material Change

 

If this Agreement is terminated by Roche pursuant to Section 20.3.3 (Termination Without a Cause), or by PTC pursuant to Section 20.3.1 (Termination for Breach), Section 20.3.4 (Termination for Patent Challenge) or Section 20.3.5 (Termination for Post-Change of Control Material Change), then, in addition to the consequences set forth in Section 20.3.4 with respect to Patent Challenge and the consequences set forth in Sections 20.4.3 and 20.5, and subject to Section 20.4.1.8:

 

20.4.1.1         Termination of Licenses.  The licenses granted by PTC to Roche pursuant to Section 3.1 shall terminate;

 

20.4.1.2         Regulatory Matters.  Promptly following receipt of PTC’s written notice that it intends to continue development and commercialization of Compounds and Products, Roche shall transfer and assign to PTC ownership of:

 

(i)            all regulatory filings and Regulatory Approvals in Roche’s or its Affiliates’ possession or control relating to all Compounds and Products; and

 

(ii)           any regulatory dossiers containing information necessary or useful to Roche in connection with its regulatory filings for all Products, including, but not limited to clinical trial dossiers, regulatory correspondence, Regulatory Authority meeting minutes and study reports from completed non-clinical studies. For all completed study reports, Roche shall provide necessary documentation to confirm data reliability, as required by Article 43 of the Japanese Pharmaceutical Affairs Law Enforcement Regulations and related notifications, including, but not limited to original author signatures, raw data lists, GLP and GCP compliance information. All documentation is to be provided in English.

 

20.4.1.3         Preclinical and Clinical Matters.  Promptly following receipt of PTC’s written notice that it intends to continue development and commercialization of Compounds and Products, Roche shall assign to PTC its entire right, title, and interest in and to all preclinical and clinical data, including but not limited to pharmacology and biology data, in Roche’s or its Affiliates’ possession or control relating to and to the extent necessary for PTC to continue the research, development or commercialization of Compounds and Products;

 

20.4.1.4         Manufacturing Matters.  Promptly following receipt of PTC’s written notice that it intends to continue development and commercialization of Compounds and Products, Roche shall:

 

(i)            assign each manufacturing agreement entered into by any member of the Roche Group that is specific to Compounds or Products to PTC, if 

 

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such agreement is then in effect and such assignment is permitted under such agreement or by the applicable counterparty;

 

(ii)           cooperate with PTC to transfer manufacturing documents and materials that are used (at the time of the termination) by any member of the Roche Group or Third Party contract manufacturers in the manufacture of Compounds and Products, to the extent such manufacturing documents and materials are not obtained by PTC pursuant to the assignment of agreements pursuant to Section 20.4.1.4(i);

 

(iii)          for a period of up to [**] months after the effective date of termination, subject to the then-existing obligations to Third Parties, cooperate with PTC to transfer to PTC, in a manner consistent with the guidelines set forth in Appendix 8.2.2, manufacturing technologies and all associated Know-How that are used (at the time of the termination) by any member of the Roche Group or Third Party contract manufacturers in the manufacture of Compounds and Products including, without limitation, providing, following reasonable advance request by PTC, [**] of up to [**] days duration of one Roche full-time equivalent to provide technical assistance in transferring technology required for the manufacture of a Compound at a PTC, PTC Affiliate, or subcontractor manufacturing facility; provided that PTC shall reimburse Roche for Roche’s reasonable out-of-pocket expenses to provide such requested assistance, to the extent such manufacturing technologies are not obtained by PTC pursuant to Section 20.4.1.4(i);

 

(iv)          sell the Roche Group’s then-existing inventory of Compounds and Products to PTC, at Roche’s FBMC plus [**] percent ([**]%); and

 

(v)           if this Agreement is terminated after Initiation of a Pivotal Trial of a Product, use Commercially Reasonable Efforts to manufacture or have manufactured and supply PTC’s requirements of such Product for a period of up to [**] months after the effective date of termination, at Roche’s FBMC plus [**] percent ([**]%).

 

20.4.1.5         License Grants to PTC.  Subject to the then-existing obligations to Third Parties, Roche hereby grants to PTC:

 

(a)                                  a non-exclusive, perpetual right and license under Roche’s interest in the Roche Background Patent Rights and Roche Know-How; and

 

(b)                                 an exclusive, perpetual right and license under Roche’s interest in the Roche Product Patent Rights and Roche’s interest in the Joint Patent Rights and Joint Know-How;

 

in each case ((a) and (b)), with the right to grant sublicenses, to develop, have developed, register, have registered, use, have used, make, have made, import, have imported, export, have exported, market, have marketed, distribute, have distributed, sell and have sold Compounds and Products then being developed or commercialized by Roche in the Field in the Territory.

 

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20.4.1.6         Prosecution and Enforcement.  The provisions of Sections 15.5 (Prosecution of Patent Rights Claiming Joint Inventions) and 15.8 (Infringement) shall remain in effect with respect to the Joint Patent Rights and Joint Know-How licensed to PTC under Section 20.4.1.5;

 

20.4.1.7         Assignment of Trademark.  Promptly following receipt of PTC’s written notice that it intends to continue development and commercialization of Compounds and Products, Roche shall assign to PTC Roche’s and its Affiliates’ entire right, title and interest in, to and under any trademark used by any member of the Roche Group exclusively in connection with the commercialization of a Product, it being understood that such assignment shall not include the Roche name or trademark for the Roche company itself; and

 

20.4.1.8         Remaining Products, Countries and Patent Rights.  If PTC terminates this Agreement pursuant to Section 20.3.1 with respect to a specific country(ies), or pursuant to Section 20.3.4 with respect to a specific PTC Patent Right or Joint Patent Right, or Roche terminates this Agreement pursuant to Section 20.3.3 with respect to a specific country(ies) or Product(s), then this Agreement shall remain in full force and effect for the non-terminated country(ies), Patent Right(s) and/or Product(s) (as the case may be), and all of the consequences set forth in this Section 20.4.1 shall apply solely with respect to the terminated country(ies), Patent Right(s) and/or Product(s).

 

20.4.1.9         Assumption by Foundation.  If Roche has not received written notice from PTC pursuant to Section 20.4.1.2, 20.4.1.3, 20.4.1.4, or 20.4.1.7 by [**] days after the effective date of termination of this Agreement, then Roche shall promptly notify Foundation and Foundation shall have the right, upon notice to Roche, to require Roche to provide to Foundation or its designee all items and actions that Roche would have been obligated to provide to PTC if PTC had provided such notice.

 

20.4.2              Termination by Roche for Breach by PTC

 

Upon any termination by Roche for breach by PTC, the licenses granted to Roche pursuant to Section 3.1 shall continue solely with respect to Compounds and Products, subject to Roche’s continued compliance with Roche’s payment and other obligations under Articles 11, 12, 13 and 14 and further subject to Section 2.2.2.

 

20.4.3              Other Obligations

 

20.4.3.1    Obligations Related to Ongoing Activities

 

From the date of notice of termination until the effective date of termination, Roche shall continue activities, including but not limited to preparatory activities, ongoing as of the date of notice of termination and shall be responsible for all of its uncancelable obligations.  However, Roche shall not be obliged to initiate any new activities not ongoing at the date of notice of termination.

 

66

 

In any case, after the effective date of termination, Roche shall not have any obligation to perform and/or complete any activities or to make any payments for performing or completing any activities under this Agreement.

 

Notwithstanding the foregoing, in case of termination by PTC under Section 20.3.1, 20.3.2, 20.3.4 or 20.3.5, or by Roche under Section 20.3.3, upon the request of PTC or Foundation, Roche shall complete any Clinical Studies related to the Product that are being conducted under its IND for the Product and are ongoing as of the effective date of termination; provided, however, that Roche may agree but shall have no obligation to recruit or enroll any additional patients after the date of termination.

 

20.4.3.2    Royalty and Payment Obligations

 

(a)                                  Termination of this Agreement by a Party, for any reason, shall not release Roche from any obligation to pay royalties or make any payments to PTC that are due and payable prior to the effective date of termination.

 

(b)                                 In consideration for the value added by Roche with respect to Compounds and Products and for the licenses granted in Section 20.4.1.5, PTC shall pay to Roche in the event this Agreement is terminated for any reason other than a material breach by Roche, royalties during the applicable Royalty Term on Products as follows:

 

	
Stage of Product at time of termination
    	
 
    	
Royalty on Product revenues as
   a percentage of Net Sales
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    

 

(c)                                  If PTC receives any payment from Foundation as the result of Foundation’s right to commercialize Products, then, in lieu of royalties under Section 20.4.3.2(b), PTC shall pay to Roche [**] percent ([**]%) of any such payment received from Foundation; provided, however, that Roche shall not be entitled to any payment under this Section 20.4.3.2 if Foundation’s right to commercialize Products was triggered by Roche’s breach of any of its obligations under this Agreement.

 

67

 

(d)                                 All amounts payable from PTC to Roche under this Section 20.4.3.2 shall be subject to the provisions of Sections 11.5.2, 11.5.3, 11.5.4, 11.5.5, 11.5.6 and Articles 12, 13 and 14, and any defined terms referenced therein, mutatis mutandis.

 

(e)                                  For clarity, nothing in this Section 20.4.3.2 shall modify Foundation’s rights or PTC’s obligations under the SRA or trigger any payment obligation of Foundation to Roche.

 

20.5                        Survival

 

Article 1 (Definitions), Section 2.2.2 (Termination and Grant-back Provisions), Section 3.4 (Rights Retained by the Parties), Article 12 (Accounting and Reporting), Article 13 (Taxes), Article 14 (Auditing), Section 15.1 (Ownership of Inventions), Article 17 (Indemnification), Article 18 (Disclaimer), Article 19 (Obligation Not to Disclose Confidential Information), Section 20.4 (Consequences of Termination), Section 20.5 (Survival), Article 22 (Miscellaneous) shall survive any expiration or termination of this Agreement for any reason, other than a termination pursuant to Section 20.3.6 (Termination for Delay in Effective Date).

 

21.                               Bankruptcy

 

All licenses (and to the extent applicable rights) granted under or pursuant to this Agreement by PTC to Roche are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11, US Code (the “Bankruptcy Code”) licenses of rights to “intellectual property” as defined under Section 101(60) of the Bankruptcy Code.  Unless Roche elects to terminate this Agreement, the Parties agree that Roche, as a licensee or sub-licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code, subject to the continued performance of its obligations under this Agreement.

 

22.                               Miscellaneous

 

22.1                        HSR Act

 

If in the reasonable opinion of counsel to Roche or PTC it is required that the Parties make a filing under the HSR Act, Roche and PTC will promptly following the Execution Date (i) take all actions necessary to make any filing required under the HSR Act and (ii) reply at the earliest possible date with any requests for information received from the United States Federal Trade Commission (“FTC”) or Antitrust Division of the United States Department of Justice (“DOJ”) pursuant to the HSR Act.  The Parties will, to the extent reasonably practicable, consult with one another prior to making any filings, responses to inquiries or other contacts with the FTC or DOJ concerning the transactions contemplated by this Agreement and will use Commercially Reasonable Efforts to obtain any clearances related to this Agreement that are necessary under the HSR Act.  Each Party will be responsible for its own costs in connection with such filing, except that Roche will be solely responsible for the applicable filing fees.  Roche shall provide PTC notice of achievement of the HSR Clearance Date on the HSR Clearance Date.

 

68

 

22.2                        Change of Control of Roche

 

Following a Change of Control of Roche, it is the expectation of the Parties that the research, development and commercialization of Products will continue in substantially the same manner as immediately prior to the occurrence of such Change of Control, including without limitation as reflected in the then applicable Research Plan, SRA Development Plan and New Product Development Plan. Within [**] days following the closing of a Change of Control, Roche shall provide PTC  and the Foundation written certification from Roche and Roche’s acquirer that Roche will continue to perform all of its obligations under this Agreement.  In furtherance of the foregoing, with respect to each Product the following provisions shall apply:

 

(a)                                 The Research Plan, SRA Development Plan and the New Product Development Plan in effect as of the occurrence of each Change of Control for such Product shall remain in effect for the remaining period covered by such plans, unless otherwise agreed by the Parties.

 

(b)                                 If PTC believes that a Post-Change of Control Material Change (as defined below) has occurred with respect to such Product, PTC shall provide written notice of such belief to Roche and the Foundation. Within [**] days after receipt of such notice, Roche shall respond in writing to PTC, and the Parties shall meet within [**] Business Days thereafter to discuss the issues raised in the notice from PTC and the response from Roche. The Parties shall attempt in good faith to reach consensus on whether a Post-Change of Control Material Change has occurred with respect to such Product in accordance with Section 22.6.

 

In the event that either (i) the Parties agree that a Post-Change of Control Material Change has occurred with respect to such Product, or (ii) a final judicial determination is made in accordance with Section 22.6 that a Post-Change of Control Material Change has occurred with respect to such Product, then PTC shall have the right to terminate this Agreement effective upon written notice to Roche within [**] days after the date of such agreement or determination.

 

As used in this Section 22.2, the term “Post-Change of Control Material Change” means, with respect to a Product, (A) there has been a material adverse impact on the market for such Product as a result of specific actions or omissions by Roche or its successor that do not comply, or are inconsistent, with the then applicable Research Plan, SRA Development Plan, or New Product Development Plan, or (B) specific actions or omissions by Roche or its successor have triggered the availability of a right on the part of Foundation to cause an SRA Special Termination, to obtain an SRA Reversionary License and/or to exercise the SRA Buy-Out Right, in each case pursuant to the procedures set forth in the SRA.

 

22.3                        Standstill

 

Until [**] years following an initial public offering of PTC, neither Roche nor any of its Affiliates shall make an unsolicited offer to acquire PTC or PTC securities representing in excess of [**] ownership of PTC.  Irrespective of the foregoing, if PTC either determines to pursue a sale of PTC, or becomes the subject of an unsolicited bid from a party other than Roche or a 

 

69

 

Roche Affiliate, then the standstill shall be suspended during the period in which such merger and acquisition activities or sale process are active.

 

22.4                        Hub

 

As used in this Agreement, “Hub” shall mean a license, option, joint venture, collaboration, sale, assignment or other strategic transaction, vehicle or mechanism under which Roche develops and commercializes Products and/or the majority of its products for orphan and/or rare diseases, including without limitation any transfer of or option to Roche’s rights under this Agreement to research, develop, make, have made, use, sell or import any Product in the Field, but excluding any outsourcing contract for research or development, work, distribution, co-marketing, manufacturing or other similar commercial arrangement entered into with a Third Party under which Roche remains primarily responsible for development and commercialization of Products.  The Parties shall consider in good faith the possibility of Roche and PTC creating a Hub.

 

22.5                        Governing Law

 

This Agreement shall be governed by and construed in accordance with the Laws of the state of Delaware, US, without reference to its conflict of laws principles; provided that, with respect to matters involving enforcement of intellectual property rights, the Laws of the applicable country shall apply.  The provisions of the United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement or any subject matter hereof.  For clarity, to the extent that this Agreement amends the SRA, such amended provision of the SRA shall remain subject to the governing law and dispute resolution provisions of the SRA.

 

22.6                        Disputes

 

Unless otherwise set forth in this Agreement, any dispute in connection with this Agreement shall be referred to the respective executive officers of the Parties and the Foundation designated below or their designees, for good faith negotiations attempting to resolve the dispute.  The designated executive officers are as follows:

 

	
For PTC:
    	
 
    	
Chief Executive Officer
    
	
For Roche:
    	
 
    	
Head of Partnering
    
	
For Foundation:
    	
 
    	
President
    

 

Should the good faith negotiations fail to agree within [**] days after a dispute has first arisen, either Party or the Foundation, as applicable, may seek to resolve such dispute in any court having jurisdiction over whichever of PTC, Roche or the Foundation are in dispute.

 

22.7                        Equitable Relief

 

Each Party and the Foundation acknowledges and agrees that the other Party and the Foundation, or the Parties, as applicable, may be damaged irreparably in the event any of the provisions of Section 3.5 or Article 19 are not performed in accordance with their specific terms or otherwise are breached.  Accordingly, notwithstanding Sections 7.7.3, 7.9.3 and 22.6, each 

 

70

 

Party and the Foundation agrees that the other Party or the Foundation, or either Party, as applicable, shall be entitled to seek an injunction or other equitable relief to prevent breaches of such provisions and to enforce specifically such provisions in any action instituted in any court having jurisdiction over the applicable Party(-ies) (and the Foundation, as applicable) and the matter, in addition to any other remedy to which it may be entitled, at law or in equity.

 

22.8                        Assignment

 

Neither Party may assign its rights or obligations under this Agreement absent the prior written consent of the other Party, except to any of its Affiliates or in the context of a merger, acquisition, sale or other transaction involving all or substantially all of the assets of the Party seeking to assign, in which case such Party in its sole discretion may assign its rights and obligations under this Agreement.  Foundation may assign its rights or obligations under this Agreement to any Person to whom its assigns its rights and obligations under the SRA.  Any permitted assignment shall be binding on the successors of the assigning Party.

 

22.9                        Independent Contractor

 

No employee or representative of either Party or the Foundation shall have any authority to bind or obligate the other Party or the Foundation, or either of the Parties, as applicable, for any sum or in any manner whatsoever or to create or impose any contractual or other liability on the other Party or the Foundation, or either of the Parties, as applicable, without the prior written approval of the other Party, the Foundation, the Party, as applicable,.  For all purposes, and notwithstanding any other provision of this Agreement to the contrary, PTC’s legal relationship to Roche under this Agreement shall be that of independent contractor.

 

22.10                 Unenforceable Provisions and Severability

 

If any provision of this Agreement is held unenforceable by a court or tribunal of competent jurisdiction because it is invalid or conflicts with any Law of any relevant jurisdiction, the validity of the remaining provisions shall not be affected.  In such event, the Parties and, with respect to any Foundation Provision or any other provision of this Agreement pursuant to which a Party owes an obligation to the Foundation or from which the Foundation would benefit, the Parties and the Foundation, shall negotiate a substitute provision that, to the extent possible, accomplishes the original business purpose.

 

22.11                 Waiver

 

The failure by either Party or the Foundation to require strict performance and/or observance of any obligation, term, provision or condition under this Agreement will neither constitute a waiver thereof nor affect in any way the right of the respective Party or the Foundation to require such performance and/or observance.  The waiver by either Party or the Foundation of a breach of any obligation, term, provision or condition hereunder shall not constitute a waiver of any subsequent breach thereof or of any other obligation, term, provision or condition.

 

71

 

22.12                 Appendices

 

All Appendices to this Agreement shall form an integral part to this Agreement.

 

22.13                 Entire Understanding

 

This Agreement contains the entire understanding among the Parties and the Foundation  with respect to the within subject matter and supersedes any and all prior agreements, understandings and arrangements, whether written or oral, except for the SRA.

 

22.14                 Amendments

 

No amendments of the terms and conditions of this Agreement shall be binding upon the Parties unless in writing and signed by each of the Parties; provided, however, that any amendment of any Foundation Provision or any other provision of this Agreement pursuant to which a Party owes an obligation to the Foundation or from which the Foundation would benefit shall not be binding upon the Parties or the Foundation unless also signed by the Foundation.

 

22.15                 Invoices

 

All invoices that are required or permitted hereunder shall be in writing and sent by PTC or the Foundation, as applicable, to Roche at the following address or other address as Roche may later provide in writing:

 

Hoffmann-La Roche Inc.

Accounts Payable

340 Kingsland Street

Nutley, New Jersey 07110

 

22.16                 Notice

 

All notices that are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

	
if to   PTC, to:
    	
 
    	
PTC   Therapeutics, Inc.  
    100   Corporate Court  
    South   Plainfield, New Jersey 07080  
    U.S.A.  
    Attn:   Legal Department  
    Facsimile   No.: (908) 222-1128  

With an   email copy to: legal@ptcbio.com
    

 

72

 

	
And:
    	
 
    	
WilmerHale  
    60   State Street  
    Boston,   Massachusetts 02109  
    U.S.A.  
    Attn: Steven D.   Singer, Esq.  
    Facsimile   No.: (617) 526-5000
    
	
 
    	
 
    	
 
    
	
if to   Roche, to:
    	
 
    	
F. Hoffmann-La Roche Ltd  
    Grenzacherstrasse 124  
    4070   Basel  
    Switzerland  
    Attn: Legal Department  
    Facsimile   No.: +41 61 688 13 96
    
	
 
    	
 
    	
 
    
	
And:
    	
 
    	
Hoffmann-La   Roche Inc.  
    340   Kingsland Street  
    Nutley,   New Jersey 07110  
    U.S.A.  
    Attn.   Corporate Secretary  
    Facsimile   No.: +1 973 235-3500
    
	
 
    	
 
    	
 
    
	
if to   the Foundation, to:
    	
 
    	
Spinal   Muscular Atrophy Foundation  
    888   Seventh Avenue, Suite 400  
    New   York, New York 10019  
    U.S.A.  
    Attn:   President  
    Facsimile   No: 212-247-3079
    
	
 
    	
 
    	
 
    
	
And:
    	
 
    	
Cooley   LLP  
    4401   Eastgate Mall  
    San   Diego, CA 92121  
    U.S.A.  
    Attn:   Matthew Browne, Esq.  
    Facsimile   No: 858-550-6420
    

 

or to such other address as the notice recipient may have furnished to the notice provider in writing in accordance herewith.

 

Each Party shall provide a copy of any notice sent pursuant to this Agreement to Foundation in accordance with this Section 22.16.

 

[Signature Page Follows]

 

73

 

IN WITNESS WHEREOF, the Parties and the Foundation have entered into this Agreement as of the Effective Date.

 

 

	
PTC Therapeutics, Inc.  
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Stuart Peltz
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Stuart Peltz
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
President and CEO
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
F. Hoffmann-La Roche   Ltd  
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Dan Zabrowski
    	
 
    	
By:  
    	
/s/ Stefan Arnold
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Dan Zabrowski
    	
 
    	
Name:  
    	
Stefan Arnold
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
Global Head Roche   Partnering
    	
 
    	
Title:
    	
Head Legal Phama
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Hoffmann-La Roche Inc. 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Joseph S. McCracken
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Joseph S. McCracken
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
Vice President
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Spinal Muscular Atrophy Foundation  (solely with respect to the Foundation Provisions)  
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:  
    	
/s/ Florence (Loren) Eng
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Florence (Loren) Eng
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
President
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
11/22/11
    	
 
    	
 
    

 

74

 

Appendix 1.18

 

Development Candidate Criteria

 

	
Property
    	
 
    	
Goal
    	
 
    	
Assay Description
    	
 
    	
Notes
    
	
Activity   in SMN2 RNA assay
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Activity   in SMN protein assays
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Selectivity
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Metabolism
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Pharmacokinetics
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Efficacy   [**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Efficacy   [**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Safety
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Profiling   and ancillary pharmacology
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    

 

75

 

	
Property
    	
 
    	
Goal
    	
 
    	
Assay Description
    	
 
    	
Notes
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Compound   properties
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Others
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

76

 

Appendix 1.63

 

PTC Base Patent Rights

 

[**]

 

77

 

Appendix 1.69

 

Research Plan

 

PTC and Roche Research Plan

 

Overview

 

The goal of the collaboration is to identify potential Development Candidates that increase the expression of SMN protein by correcting the alternative splicing of SMN2 pre-mRNA.  The Parties will perform medicinal chemistry, including [**].

 

Table 1:  Proposed Research Activities and indicative FTEs (to be confirmed at the first JSC):

 

	
AREA
    	
 
    	
FTE
    	
 
    	
ACTIVITIES
    
	
Medicinal   Chemistry
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Biology
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Pharmacology
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Formulation
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Bioanalytical/Metabolism
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Cheminformatics
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Alliance   Management
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Total
    	
 
    	
[**]
    	
 
    	
 
    

 

Other Potential Activities:

 

Synthetic Chemistry

 

[**]

 

Biology, Pharmacology, Metabolism and other studies

 

[**]

 

78

 

Bioanalytical and Formulation

 

[**]

 

Contract Research Organization Activities:

 

[**]

 

Figure 1

 

SMA Screening Tier (studies performed at PTC)

 

[**]

 

79

 

Appendix 1.72

 

Patent Rights Excluded from Roche Background Patent Rights

 

[**] Patent Rights, which means (a) [**], and any and all patents issuing from divisionals, continuations, or continuations-in part of any application from which [**] claims priority, as well as reissues, reexaminations, extensions, and foreign patent counterparts, including inventors certificates, of any of the foregoing, and including any related supplemental protection certificates; and (b) [**], and any and all patents issuing from divisionals, continuations, or continuations-in-part of any application from which [**] claims priority, as well as reissues, reexaminations, extensions, and foreign patent counterparts, including inventors certificates, of any of the foregoing, and including any related supplemental protection certificates.

 

[**] Patent Rights, which means any of the U.S.  patents listed below and any and all patents issuing from divisionals, continuations or continuations-in-part, and any reissues, reexaminations or extensions, of these patents or of any application from which these U.S.  patents claim priority, as well as foreign counterparts, including inventors certificates, of the foregoing, and including any related supplemental protection certificates:

 

[**]

 

[**] Patent Rights, which means any of the U.S.  patents/patent application listed below and any and all patents issuing from divisionals, continuations or continuations-in-part, and any reissues, reexaminations or extensions, of these patents or of any application from which these U.S.  patents claim priority, as well as foreign counterparts, including inventors certificates, of the foregoing, and including any related supplemental protection certificates:

 

[**]

 

[**] Patents, which means the following U.S. patent and any and all divisionals, continuations, continuations-in-part of any application from which these U.S. patents claim priority, including reissues, reexaminations or extensions of these patents and foreign counterparts and supplementary protection certificates of the foregoing:

 

[**]

 

80

 

Appendix 1.81

 

Sponsored Research Agreement

 

Incorporated by reference to Exhibit 10.15 of the Company’s Registration Statement on Form S-1

 

81

 

Appendix 1.88

 

Transitional Research Plan

 

The goal of the proposed research is to characterize potential Development Candidates that increase the expression of SMN protein by correcting the alternative splicing of SMN2 pre-mRNA. The SMA program at PTC is currently at the [**] stage. PTC will conduct research at the level outlined below from the signing of the Agreement until approval of the Research Plan by the Joint Steering Committee (JSC). PTC will [**].

 

PTC activities from Execution Date to Research Plan approval:

 

	
AREA
    	
 
    	
FTE
    	
 
    	
ACTIVITIES
    
	
Medicinal   Chemistry
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Biology
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Pharmacology
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Formulation
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Bioanalytical/Metabolism
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Total
    	
 
    	
[**]
    	
 
    	
 
    

 

82

 

Appendix 8.2.2

 

Technology Transfer Guidelines

 

Responsibility

[**]

 

Manufacturing Instructions

[**]

 

Evaluate Changes to Manufacturing Processes

[**]

 

Transfer Protocol

[**]

 

Storage / Transportation Instructions

[**]

 

Environmental Controls Cleanliness Zones

[**]

 

Hygiene Instructions / occupational health instructions

[**]

 

83

	
  

  	
  Appendix 11.1
  Invoice for Research Recognition Payment PTC Therapeutics, Inc. 100 Corporate
  Court Date Inv. # South Plainfield, NJ 07080 November 23, 2011 Roc11172011
  (908) 222-7000 www.ptcbio.com Hoffmann-La Roche Inc. Hoffmann-La Roche Inc.
  Accounts Payable Accounts Payable 340 Kingsland Street 340 Kingsland Street
  Nutley, NJ 07110 Nutley, NJ 07110 PO# Terms Ship Date Carrier FOB Per
  Contract Quantity Product Description Unit Price Amount 1 Per Contract
  Research Recognition Payment as per Section 11.1 of the License and
  Collaboration Agreement 30,000,000.00 $ Amount Due 30,000,000.00 $ Bank and
  VAT details of PTC Therapeutics, Inc: Account holder's name: PTC
  Therapeutics, Inc. Account no; [**] IBAN (for Europe) / ABA#: 021200025 Swift
  #: PNBPUS33 Bank Name: Wachovia Bank NA Bank Address: MAC N 2684-020 120
  Mountain View Blvd, Suite 200 Basking Ridge, NJ 07920 Registered office of
  bank: USA Ship To: Bill To: 

  

 

 

 

Appendix 19.4

 

Form of Press Release

 

Joint Roche Partnering-PTC-SMA Foundation Press release

 

Basel, Switzerland, South Plainfield, NJ, USA and New York, NY, USA — November 29, 2011

 

Roche signs agreement with PTC Therapeutics to advance treatment for Spinal Muscular Atrophy (SMA)
  Collaboration offers new hope for a potential treatment for the leading genetic cause of death in infants and toddlers

 

Roche (SIX: RO, ROG; OTCQX: RHHBY), PTC Therapeutics, Inc. (PTC) and the SMA Foundation, announced today a licensing agreement for PTC’s Spinal Muscular Atrophy (SMA) programme. SMA is a genetic neuromuscular disorder that causes muscle weakness. One in every 10,000 children born is affected with the disorder, which currently has no effective treatment.

 

PTC Therapeutics’ programme has been developed in partnership with the SMA Foundation, which will remain active in the collaboration. The SMA Foundation was established in 2003 by Loren Eng and Dinakar Singh to accelerate the development of a treatment for SMA.

 

SMA is caused by a missing or defective SMN1 gene, which results in reduced levels of the survival motor neuron (SMN) protein. The compounds in PTC’s research treat the underlying cause of the disorder and demonstrate increases in SMN levels in nervous system, muscles and other tissues in SMA models. SMA is a rare disorder and could be eligible for orphan status by regulatory authorities, thereby potentially reducing the time needed for a drug to reach patients.

 

Under the terms of the agreement, Roche gains an exclusive worldwide license to PTC’s SMA programme, which includes three compounds currently in preclinical development, as well as potential back-up compounds. PTC receives USD30 million as an upfront payment, up to USD460 million upon successful completion of certain development and commercialization milestones, and up to double-digit royalties on commercial sales. Development will be overseen by a joint steering committee comprised of members from Roche, PTC and the SMA Foundation.

 

“This collaboration brings us one step closer to developing a treatment for a condition that has a profound effect on the lives of many thousands of children and their parents worldwide,” said Dinakar Singh,

 

85

 

Chairman of the SMA Foundation. “We are very optimistic that, by building on the pioneering efforts of PTC Therapeutics, Roche can help us realise what we have been working so hard to achieve.”

 

Luca Santarelli, Global Head of Roche Neuroscience, said: “We found the science behind this programme very compelling, with the potential to help treat a currently incurable condition. This is the essence of Roche’s entire strategy, focused on solid science and high unmet clinical need, and these compounds bolster our rich pipeline in Central Nervous System diseases. As an established partner of Roche, we already have experience with PTC’s scientific approach. Together with the involvement of the SMA Foundation, we now have the opportunity to make a significant impact in the treatment of SMA.”

 

“Having been a partner with Roche for several years, we have every confidence that the combination of our own expertise and Roche’s considerable capabilities in clinical development, biomarkers and diagnostics will help us maximize the potential for this programme,” commented Stuart W. Peltz, Ph.D., President and CEO of PTC. “We are delighted that the SMA Foundation continues to be an active participant in the collaboration as we share a strong commitment to advancing this innovative potential treatment as rapidly as possible.”

 

Roche and PTC announced their first collaboration in September of 2009 for the development of orally bioavailable small molecules utilizing PTC’s technology called Gene Expression Modulation by Small-molecules (GEMSTM). The SMA programme has been developed by PTC utilizing a different scientific approach than GEMS, called alternative splicing.

 

About the SMA Foundation

 

Founded in 2003, the Spinal Muscular Atrophy Foundation is a nonprofit organization dedicated to accelerating progress towards a treatment for Spinal Muscular Atrophy through targeted funding of clinical research and novel drug development efforts. Since its inception, the Foundation has awarded over $100 million for SMA research. In addition, the Foundation is committed to raising awareness and generating support for increased research efforts in SMA among the leaders of industry and government. For more information, visit the SMA Foundation website at www.smafoundation.org.

 

About PTC Therapeutics, Inc.

 

PTC is a biopharmaceutical company focused on the discovery, development and commercialization of orally administered small-molecule drugs that target post-transcriptional control processes. Post-transcriptional control processes regulate the rate and timing of protein production and are of central

 

86

 

importance to proper cellular function. PTC’s internally discovered pipeline addresses multiple therapeutic areas, including rare genetic disorders, oncology and infectious diseases. PTC has developed proprietary technologies that it applies in its drug discovery activities and that have served as the basis for collaborations with leading biopharmaceutical companies such as AstraZeneca, Celgene, Genzyme, Merck, Pfizer and Roche. For more information, visit the company’s website at www.ptcbio.com.

 

About Roche

 

Headquartered in Basel, Switzerland, Roche is a leader in research-focused healthcare with combined strengths in pharmaceuticals and diagnostics. Roche is the world’s largest biotech company with truly differentiated medicines in oncology, virology, inflammation, metabolism and CNS. Roche is also the world leader in in-vitro diagnostics, tissue-based cancer diagnostics and a pioneer in diabetes management. Roche’s personalised healthcare strategy aims at providing medicines and diagnostic tools that enable tangible improvements in the health, quality of life and survival of patients. In 2010, Roche had over 80,000 employees worldwide and invested over 9 billion Swiss francs in R&D. The Group posted sales of 47.5 billion Swiss francs. Genentech, United States, is a wholly owned member of the Roche Group. Roche has a majority stake in Chugai Pharmaceutical, Japan. For more information: www.roche.com

 

For more information please contact

 

	
Roche
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sharon Valdettaro
    	
+41 61 688 9655
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sharon.valdettaro@roche.com
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
PTC   Therapeutics, Inc.
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Jane Baj (PTC)
    	
+1 (908) 912-9167
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
jbaj@ptcbio.com
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sheryl Seapy (Pure   Communications)
    	
+1 (949) 608-0841
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
sheryl@purecommunicationsinc.com
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
SMA Foundation
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sergey Paushkin,   MD, PhD
    	
+1 (646) 253-7100
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
spaushkin@smafoundation.org
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

87Exhibit 10.15

 

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Double asterisks denote omissions.

 

SPONSORED RESEARCH AGREEMENT

 

THIS SPONSORED RESEARCH AGREEMENT (the “Agreement”) is entered into as of June 1, 2006 (the “Effective Date”), by and between SPINAL MUSCULAR ATROPHY FOUNDATION (the “Foundation”), having its principal place of business located at 1776 Broadway, 22nd Floor, New York, New York, 10019, and PTC THERAPEUTICS, INC. (“PTC” or “Company”), having its principal place of business located at 100 Corporate Court, South Plainfield, New Jersey, 07080.

 

RECITALS

 

WHEREAS, Company is focused on the discovery, development, and commercialization of small-molecule drugs targeting post-transcriptional control mechanisms;

 

WHEREAS, the Foundation is dedicated to accelerating the development of a treatment or cure for spinal muscular atrophy;

 

WHEREAS, the Foundation wishes to sponsor, and Company wishes to perform, research focused on small molecule therapeutics for spinal muscular atrophy (“SMA”), and possibly to further develop and commercialize such therapeutics, subject to the terms and conditions of this Agreement, including the Research Plan attached hereto as Exhibit A;

 

WHEREAS, it is the intent of the Foundation and Company to disseminate the results of the Research (as defined below) to other investigators in the spinal muscular atrophy research community and to medical professionals treating spinal muscular atrophy patients, consistent with the overall goal of commercializing therapeutics for SMA; and

 

WHEREAS, it is the further intent of the Foundation and Company that patents and other intellectual property developed by Company as a result of the Research shall be retained by Company, but that a mechanism be provided for transfer of rights to the patents and other intellectual property developed by Company as a result of the Research and relating to a particular Research Project (as defined below) to the Foundation if Company elects not to pursue commercial development of any drug candidates identified during such Research Project.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and premises contained in this Agreement, the parties hereto agree as follows:

 

1.                                      DEFINITIONS.

 

1.1          “Additional Payments” shall mean all amounts actually paid to Company pursuant to Section 4.2.

 

1.2          “Affiliate” shall mean any corporation or other entity that controls, is controlled by, or is under common control with, a party.  A corporation or other entity shall be regarded as in control of another corporation or entity if it owns or directly or indirectly controls more than 50% of the voting securities or other ownership interest of the other corporation or entity, or if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or other entity.

 

1

 

1.3          “Available Product” shall mean a human therapeutic product that (a) has previously received final approval from the FDA for marketing in the United States and (b) is suitable for administration to patients in its currently marketed formulation for the treatment of spinal muscular atrophy.

 

1.4          “Company Base IP” shall mean any new and useful composition of matter, process, product by process, machine or manufacture, know-how, discovery, improvement, Patent, or other intellectual property (“IP”) or any new and useful improvement thereof, whether or not patentable, which (i) is discovered, conceived, developed or first reduced to practice by or on behalf of Company as of or prior to the Effective Date, (ii) is an improvement to any IP discovered, conceived, developed or first reduced to practice by or on behalf of Company as of or prior to the Effective Date, regardless of when such improvement is discovered, conceived, developed or first reduced to practice, or (iii) is discovered, conceived, developed or first reduced to practice by, or otherwise comes under the Control of, Company during the Research Term and does not constitute Data or a Research Invention.

 

1.5          “Company Clinical Trial” shall have the meaning provided in Section 3.4.

 

1.6          “Company Know-How” shall mean Information that: (a) is developed or acquired by or on behalf of Company in the course of performing the Research; and/or (b) is otherwise Controlled by Company and is directed to any Drug Target, Hit, Lead Candidate, Drug Candidate or Product first identified or synthesized in the conduct of the Research, formulations of any of the foregoing, and/or processing technology with respect thereto; provided, however, that the Company Know-How excludes the Company Patents and the Company Base IP.

 

1.7          “Company Patents” shall mean Patents that: (a) claim Information developed or acquired by or on behalf of Company in the course of performing the Research; and/or (b) are otherwise Controlled by Company and claim any Drug Target, Hit, Lead Candidate, Drug Candidate or Product first identified or synthesized in the course of the Research, formulations of any of the foregoing, and/or processing technology with respect thereto; provided, however, that the Company Patents exclude the Company Base IP and the Company Know-How.

 

1.8          “Company Technology” shall mean Company Know-How and Company Patents.

 

1.9          “Confidential Information” shall mean any confidential or proprietary information of a party, including, without limitation, information relating to any compound, product specifications, chemical structures, data, know-how, formulations, research project, work in process, future development, scientific, engineering, manufacturing, marketing, business plan, financial or personnel matter relating to such party, its present or future products, sales, suppliers, customers, employees, investors or business, whether in oral, written, graphic or electronic form, subject to the provisions of Section 5.2 hereof.  Without limiting the generality of the foregoing, the terms of this Agreement shall be deemed the Confidential Information of both parties, subject to Section 5.5.

 

1.10        “Control” shall mean, with respect to any Information, Patent or other intellectual property right, possession by a party of the ability (whether by ownership, license or

 

2

 

otherwise) to grant access, a license or a sublicense to such Information, Patent or other intellectual property right without (a) violating the rights of any Third Party or the terms of any agreement or other arrangement with any Third Party, and (b) incurring any additional cost or royalty obligation to such Third Party based on the granting of such access, license or sublicense.

 

1.11        “Data” shall have the meaning provided in Section 6.1(a).

 

1.12        “Drug Candidate” shall mean a Hit, Lead Candidate or any metabolite, prodrug, solvate (including without limitation any hydrate), ester, salt, stereoisomer, racemate, tautomer or polymorph of such Hit or Lead Candidate that is first synthesized or identified in the conduct of the Research and that exhibits desired levels of activity against the applicable Drug Target.

 

1.13        “Drug Target” shall mean a gene or other biological target described in the Research Plan or mutually agreed upon by both parties as having potential application for the identification and development of Drug Candidates for the prevention or treatment of SMA.

 

1.14        “FDA” shall mean the United States Food and Drug Administration (or its successor agency).

 

1.15        “Field” shall mean the treatment or prevention of [**].

 

1.16        “First Commercial Sale” shall mean the date of the first commercial sale in a country or region by or on behalf of Company or its Affiliate or Licensee of a Product to another party after Regulatory Approval has been obtained for such Product in such country or region.

 

1.17        “Hit” shall have the meaning provided in Section 2.4(a).

 

1.18        “IND” shall mean an Investigational New Drug Application filed with the FDA.

 

1.19        “Information” shall mean all tangible and intangible techniques, technology, practices, trade secrets, inventions (whether or not patentable), methods, knowledge, know-how, skill, experience, test data and results (including pharmacological, toxicological and clinical test data and results), analytical and quality control data, results or descriptions, software, algorithms, compositions of matter, cells, cell lines, assays, animal models and physical, biological or chemical material.

 

1.20        “IP Filing Period” shall have the meaning provided in Section 5.4.

 

1.21        “Lead Candidate” shall have the meaning provided in Section 2.4(a).

 

1.22        “Lead Optimization” shall mean shall mean a program of medicinal chemistry the intent of which is to develop a Lead Candidate into a compound or formulation suitable as the subject of an IND submission to the FDA.

 

1.23        “Licensee” shall mean a Third Party to whom Company or any of its Affiliates has granted a license or sublicense of the right to develop, make, have made, use, distribute for sale, promote, market, offer for sale, sell, have sold, import or export Drug Candidate or Product, beyond the mere right to purchase Drug Candidate or Product from Company or its Affiliates.

 

3

 

1.24        “Net Sales” shall mean the gross amounts received by Company and its Affiliates (but not their respective Licensees) following the First Commercial Sale of a Product for sales of such Product to Third Parties that are not Affiliates or Licensees of the selling party (unless such Affiliate or Licensee is the end user of such Product, in which case the amount billed therefor shall be deemed to be the amount that would be billed to a Third Party end user in an arm’s-length transaction), less the following items, as allocable to such Product (if not previously deducted from the amount invoiced): (i) bad debts actually written off which are attributable to sales of Products; (ii) trade discounts, credits or allowances; (iii) credits, refunds or allowances additionally granted upon returns, rejections or recalls; (iv) freight, shipping and insurance charges; (v) taxes, duties or other governmental tariffs (other than income taxes); (vi) any payment in respect of sales to any governmental authority in respect of any government-subsidized program, including, without limitation, Medicare and Medicaid rebates; and (vii) distribution, packing, handling and transportation charges for Products to the extent that they are included in the price or otherwise paid by the customer.

 

1.25        “Patents” shall mean (a) United States and foreign patents, re-examinations, reissues, renewals, extensions and term restorations, and foreign counterparts thereof, and (b) pending applications for United States and foreign patents, including, without limitation, provisional applications, continuations, continuations-in-part, divisional and substitute applications, including, without limitation, inventors’ certificates, and foreign counterparts thereof.

 

1.26        “Principal Scientist” shall mean Dr. Stuart Peltz.

 

1.27        “Product” shall mean a pharmaceutical product comprising or containing a Drug Candidate, including, in each case, all formulations, line extensions and modes of administration thereof.

 

1.28        “Product Revenues” shall mean Net Sales of Products by Company and its Affiliates, plus all royalties, license fees, milestone payments, annual maintenance fee or similar payment or consideration paid by a Licensee to Company or its Affiliates in consideration for the grant by Company or its Affiliate of a license to develop, make, have made, use, distribute for sale, promote, market, offer for sale, sell, have sold, import or export Drug Candidates or Products (with any of the foregoing consideration received by Company other than in the form of cash to be valued at its fair market value as of the date of receipt), minus any payments attributable to Product that are made by Company or its Affiliates in respect of a Third Party Patent License; provided, however, that “Product Revenues” shall in any event exclude any funds paid to directly support research and/or development actually being performed by Company or its Affiliates (in amounts that are commercially reasonable in light of the research and/or development services being performed), and payments for equity or debt securities of Company or its Affiliates (except to the extent such payments exceed the fair market value of such securities upon date of receipt, in which event such excess over fair market value shall be included in the calculation of Product Revenues).

 

1.29        “Regulatory Approval” shall mean any and all approvals (including pricing and reimbursement approvals), licenses, registrations or authorizations of any kind by the FDA or other applicable regulatory authority outside the U.S. necessary for the development, pre-clinical

 

4

 

and/or human clinical testing, manufacture, quality testing, supply, use, storage, importation, export, transport, pricing, marketing and/or sale of a Product for use in the Field.

 

1.30        “Research” shall mean the activities conducted pursuant to the Research Plan.

 

1.31        “Research Funds” shall mean all amounts actually paid to Company pursuant to Section 4.1.

 

1.32        “Research Invention” shall mean any new and useful composition of matter, process, product by process, machine or manufacture, know-how, discovery, improvement, or other intellectual property or any new and useful improvement thereof, whether or not patentable, discovered, conceived, developed or first reduced to practice in the conduct of the Research.

 

1.33        “Research Milestone” shall have the meaning provided in Section 2.2.

 

1.34        “Research Plan” shall mean the research plan attached hereto as Exhibit A, which is incorporated herein by this reference, as such research plan may be modified from time to time by mutual written agreement of the Foundation and Company.

 

1.35        “Research Project” shall mean any one of the constituent research projects that make up the Research, each identified by sequential lettering in the Research Plan.

 

1.36        “Research Term” shall have the meaning provided in Section 2.6.

 

1.37        “Research Tool” shall mean a Research Invention that may contribute to the identification or development of products useful in the Field, and that is none of the following: (a) Drug Candidate(s) identified by Company (or any of its corporate partners, Licensees, or sublicensees); (b) Product(s) based on or containing such Drug Candidate(s); or (c) Company Base IP.  For the avoidance of doubt, the parties do not intend the definition of Research Tool to apply, in whole or in part, to any aspect of PTC’s GEMS technology.

 

1.38        “Reversionary License” shall have the meaning provided in Section 6.1(c).

 

1.39        “SMA” shall mean spinal muscular atrophy.

 

1.40        “SMA Research Tools” shall mean any research tools of the Foundation or its Affiliates, or any Third Parties with which SMA has a relationship, which might be necessary or useful for the Research.

 

1.41        “Third Party” shall mean any entity other than the Foundation or Company or an Affiliate of the Foundation or Company.

 

1.42        “Third Party Patent License” shall have the meaning provided in Section 3.2.

 

5

 

2.                                      CONDUCT OF THE RESEARCH.

 

2.1          Objective.  Subject to the terms and conditions of this Agreement, the parties agree that, during the Research Term, Company shall perform the Research in accordance with the Research Plan, and each party shall contribute the materials and services specified therein, with the goal of identifying and developing small molecule therapeutics for use in the Field.

 

2.2          Research Plan; Contributions.  The Research Plan sets forth the activities proposed to be conducted by Company, together with an anticipated schedule for completion of such activities.  Company agrees to use commercially reasonable efforts to achieve the research milestones (the “Research Milestones”) and research goal(s) described in Exhibit B (attached hereto) on the schedule set forth therein and to incorporate feedback from the Foundation’s scientific advisors.  The parties will jointly review the research goals, activities and schedule set forth in the Research Plan and may, by mutual written agreement, amend the Research Plan from time to time during the course of the Research Term and, in connection therewith, may (i) modify the funding amounts and schedule set forth in Section 4.1, (ii) add additional Research Milestones or goals to Exhibit B, or (iii) provide for Additional Payments, as appropriate.  Each party shall contribute to the Research the materials and services specified in the Research Plan, and the Foundation shall use commercially reasonable efforts to assist Company in obtaining favorable licensing terms to SMA Research Tools necessary or useful for the Research.

 

2.3          Principal Scientist.  The Principal Scientist is considered essential to the Research being performed, and no substitution may be made without the prior written agreement of the Foundation.  If for any reason the Principal Scientist ceases to be employed by Company or otherwise becomes unavailable, or cannot continue to oversee the conduct or completion of the Research, Company will propose a successor whose appointment as Principal Scientist shall be subject to the approval of the Foundation, such approval not to be unreasonably withheld.  If the parties are unable to agree upon a successor within 90 days after the Principal Scientist ceases his involvement in the Research, this Agreement may be terminated by the Foundation pursuant to Section 7.3.

 

2.4          The Research.

 

(a)           During the Research Term, Company shall conduct each of the Research Projects in accordance with this Agreement and the Research Plan.  Company shall disclose the results of all Research activities to the Foundation in accordance with Section 2.7.  Company may select, after disclosing the applicable criteria to the Foundation, one or more compounds that have been validated in secondary assay(s) and have suitable in vitro potency, or otherwise meet the criteria set forth in the Research Plan (or otherwise mutually agreed upon by the parties) for further evaluation (each such compound being hereinafter referred to as a “Hit”), following which, as more fully described in the Research Plan, Company shall: (i) assess each Hit (and, as the parties deem appropriate consistent with the Research Plan, any analog, derivative or formulation thereof) with the goal of identifying one or more compounds that have suitable properties for administration to humans (each such compound being hereinafter referred to as a “Lead Candidate”); and (ii) evaluate and, if appropriate based on such evaluation, optimize each Lead Candidate for therapeutic administration to humans.

 

6

 

(b)           The parties shall mutually agree upon a strategy for medicinal chemistry follow-up on Lead Candidates and further pharmacology studies, formulation development, safety and toxicity studies, dosing studies or other preclinical work at Company, or at Company’s option, through external collaboration or licensing with a Third Party.  As promptly as practicable after identification of one or more Lead Candidates, Company shall provide the Foundation with total cost estimates for continued Lead Optimization and development of such Lead Candidates, and the Foundation may elect to fund, in the form of cash payments to Company, some, all or none of this work upon reasonable advance notice to Company.  In addition, the Foundation may act to secure funding from Third Parties, and/or assist Company to obtain alternative sources of external funding, and in each case such funding would be administered through and governed by this Agreement as specified in a written agreement with any such Third Party, such Agreement to specify the impact of such alternative sources of funding on the payment obligations of the Company under Section 4.3.

 

(c)           Company shall disclose the results of all Research activities regarding Hits and Lead Candidates to the Foundation in accordance with Section 2.7, and the parties shall consult with each other with the objective of identifying at least one Drug Candidate suitable for progression to the preparation and filing of an IND in the Field and, contingent on the effectiveness of such IND, progressing such Drug Candidate into human clinical trials in the most expeditious manner.

 

2.5          Performance Standards.  Company shall conduct the Research in good scientific manner, and in compliance in all material respects with the requirements of applicable laws and regulations and with applicable good laboratory practices, to attempt to achieve its objectives efficiently and expeditiously.  Company shall maintain (either as its own internal resources, or via subcontract) laboratories, offices and all other facilities reasonably necessary to carry out the activities to be performed by it pursuant to the Research Plan.  In conformity with standard pharmaceutical and biotechnology industry practices and the terms and conditions of this Agreement, Company shall prepare and maintain, or shall cause to be prepared and maintained, complete and accurate written records, accounts, notes, reports and data with respect to activities conducted pursuant to the Research Plan.  Upon reasonable advance notice, Company agrees to make its employees and non-employee consultants reasonably available at their respective places of employment to consult with the Foundation on issues or questions arising during the Research Term.

 

2.6          Research Term.  The initial phase of the Research is expected to require one year to reach the primary overall objective of Lead Candidate identification.  The parties may, from time to time, on a Research Project-by-Research Project basis, extend or modify the Research Term by mutual written agreement (the initial one-year period and any extensions or modifications together shall hereinafter referred to as the “Research Term”).

 

2.7          Communication; Research Reports.  On a regular basis during the Research Term (but no less frequently than [**]), the parties shall conduct meetings, either in person or by telephone or video conference, to discuss the progress of the Research and strategies for achieving the objectives of the Research in an expeditious manner.  Company shall keep the Foundation fully informed as to all results and discoveries (including, without limitation, assay development and all Hits and potential Lead Candidates and Drug Candidates) made in the

 

7

 

course of performing activities under the Research Program at these meetings.  In furtherance of the foregoing, on a [**] basis, Company shall prepare, and deliver to the Foundation no later than [**] days after the conclusion of [**] during the Research Term, a reasonably detailed written summary report of the results and progress of the Research during [**] (each, a “Research Report”).  In addition, the Foundation may, at its option, during the Research Term, schedule up to [**] formal program review meetings with Company personnel and those of Foundation’s Third Party advisors who (i) have agreed to confidentiality restrictions substantially similar to those contained in this Agreement, and (ii) are reasonably acceptable to Company.  Such meetings will be held at the times and locations mutually agreed upon by the parties.  The purpose of such meetings will be to review the progress of the Research relative to the Research Plan.

 

2.8          Subcontracts.  Company may perform some of its obligations under the Research Plan through one or more subcontractors, provided that (a) none of the rights of either party hereunder are diminished or otherwise adversely affected as a result of such subcontracting, and (b) Company will at all times be responsible for the performance and, except as otherwise agreed by the parties in writing, payment of such subcontractor; provided, however, that the Company may use payments received by it pursuant to Section 4.1 to pay for such subcontractor(s).  In determining whether any Company obligations under the Research Plan will be performed in-house or by a Third Party subcontractor, Company shall take into consideration Company’s then-current capabilities and the relative efficiency of utilizing such internal capabilities versus Third Party services.

 

2.9          Additional Screening.  The Foundation may request that Company test up to [**] compounds identified by other Foundation partners (“Third Party Compounds”) on a blinded basis.  Company agrees to test such Third Party Compounds on behalf of the Foundation and to disclose the results of such screening to the Foundation, provided that the relevant assay is already being run by the Company on its own Compounds.  Such testing shall be performed pursuant to a separate materials transfer agreement to be negotiated in good faith by the parties prior to provision of any compounds or related information, which agreement shall contain reasonable and customary terms to protect the parties’ respective intellectual property rights.  Without limiting the generality of the foregoing, each such materials transfer agreement shall provide that in no event shall any Third Party Compound become the property of the Company, nor shall any Third Party Compound become subject to royalty or other reach-through payment obligations to Company or its affiliates as a result of such screening by Company.

 

3.                                      DEVELOPMENT OF PRODUCTS.

 

3.1          Clinical Development Strategy.  As soon as Company reasonably believes that it has identified a Drug Candidate for which it proposes to file an IND in the Field, Company will notify the Foundation in writing, and the parties will promptly discuss in good faith how to proceed with the clinical development of such Drug Candidate, taking into consideration the interests of SMA patients, the intellectual property and regulatory landscape and the commercial potential of the Drug Candidate.  The parties agree to consider in good faith collaborating with the NIH in preclinical or clinical development activities regarding such Drug Candidate.  Should Company elect to proceed with clinical development of the Drug Candidate, it may do so directly.  In the alternative, at its discretion, the Company may decide to enter into a

 

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collaboration with one or more Third Parties for clinical development and/or commercialization of the Drug Candidate through licensing or other arrangement; provided, however, that if the Foundation has funded (or caused to be funded) [**], then until [**], any such collaborations shall be subject to the Foundation’s approval (which shall not be unreasonably withheld).  If Company wishes to pursue clinical development of a Drug Candidate, the Company will consult with the SMA Foundation on the clinical trial network that will be used.  Although the parties currently expect to use the clinical trial network established by the Foundation, the clinical trial network to be used shall be determined in good faith by Company in its reasonable judgment.  For any Drug Candidate for which it files an IND, Company agrees to consider in good faith whether to obtain, (a) “Orphan Product” designation from the FDA, and (b) research funding from the FDA’s Office of Rare Diseases to support human clinical trials conducted for such Drug Candidate.  The parties acknowledge that if the Drug Candidate is [**], or [**] due to [**] and [**], investment by Company in further development of such Drug Candidate may not be in the best interests of Company’s stockholders, and therefore shall not be required under this Agreement, and the failure to engage in such further development shall not be the basis of a Reversionary License under Section 6.1(c).  In such case, the parties may elect to enter into an additional sponsored research agreement under which the Foundation would provide funding for further development efforts by Company, but neither party shall have any obligation to enter into such additional agreement.

 

3.2          Conduct of Clinical Development.  Except as set forth in Section 3.1 above or as otherwise agreed by the parties in writing, Company shall be responsible for clinical development of any Drug Candidate for which Company files an IND.  Company shall use commercially reasonable efforts to develop and commercialize (whether directly, through an Affiliate, or in collaboration with one or more Third Parties, through licensing or some combination of the foregoing) at least one Product.  The parties anticipate that an IND will be submitted within [**] years of commencement of IND-enabling toxicology studies for a Lead Candidate, but the parties acknowledge that [**], and therefore [**], to be a [**].  Notwithstanding the preceding provisions of this Section 3.2, in no event shall Company have any obligation (i) to pursue clinical development or commercialization of any Drug Candidate which is [**], or which [**] the [**] due to its [**] and [**], or (ii) in the absence of complete funding by (or arranged by) the Foundation, to pursue clinical development or commercialization of any Drug Candidate which is not, [**].  In addition, Company shall not be obligated to pursue clinical development or commercialization of a Drug Candidate if the pharmaceutical preparation, composition of matter, method of manufacture and/or method of use of such Drug Candidate is covered by Patents of a Third Party, unless a license under such Third Party Patents is available to Company (or its Affiliate or Licensee, as applicable) on commercially reasonable terms (a “Third Party Patent License”).

 

3.3          Disclosure Regarding Company Efforts.  Company will keep the Foundation appropriately informed about clinical trial progress and commercialization efforts with respect to Products, and in any event, Company shall provide the Foundation with [**] written reports summarizing any significant development or commercialization events that have occurred during the applicable [**]-month period, provided that such reports may be incorporated into any Research Reports then being prepared and delivered under Section 2.7.

 

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4.                                      PAYMENTS.

 

4.1          Research Funding by the Foundation.  For the conduct of the Research, and subject to the completion of the applicable Research Milestones described in Exhibit B (attached hereto), the Foundation shall pay a total of US$[**] to Company on the schedule specified below:

 

(a)           within [**] days after the Effective Date, the Foundation will pay to Company US$[**];

 

(b)           within [**] days after the Foundation’s receipt of notice from Company of the achievement of Milestone 1 in Exhibit B attached hereto, the Foundation will pay Company US$[**];

 

(c)           within [**] days after the Foundation’s receipt of notice from Company of the achievement of Milestone 2 in Exhibit B attached hereto, the Foundation will pay Company US$[**]; and

 

(d)           within [**] days after the Foundation’s receipt of notice from Company of the achievement of Milestone 3 in Exhibit B attached hereto, the Foundation will pay Company US$[**].

 

The Foundation may delay any payment until such time as the milestones in the Research Plan are met (or as may otherwise be mutually agreed in writing).  For purposes of clarification, the foregoing payments shall be non-refundable, and each of the foregoing payments shall be payable only once.  The Foundation acknowledges that the foregoing payments represent only a portion of the total cost of performing the Research.  Notwithstanding the foregoing,, except as agreed pursuant to Section 4.2, the Foundation will not be obligated to pay any additional amounts in connection with the Research.

 

4.2          Additional Payments.  In addition to the amounts specified in Section 4.1, upon mutual written agreement of the parties, the Foundation may make, or cause to be made, additional research funding payments to Company in connection with any modification of the Research Plan.

 

4.3          Milestone Donation by Company.  Within [**] days after the end of the first fiscal quarter in which Company has received an aggregate of US$[**] in Product Revenues, Company shall make a payment to the Foundation (or, at the Foundation’s option, one or more other non-profit organizations or academic or research institutions designated by the Foundation in writing) in the applicable amount set forth below pursuant to clause (a), (b) or (c), whichever one (and only one) of the following applies:

 

(a)           [**];

 

(b)           [**]; or

 

(c)           [**].

 

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In addition to the foregoing milestone payments, and provided that the Foundation provided funding for Lead Optimization of Products hereunder at the level set forth in the first paragraph of 4.3(c), within [**] days after the end of the first calendar year during which Company has received an annual aggregate in that year of US$[**] in Product Revenues, Company shall make a payment to the Foundation equal to 100% of the sum of the Research Funds and the Additional Payments.  For the avoidance of doubt, such additional payment shall be a one-time payment only, regardless of any additional Product Revenues.

 

If [**] in good faith believes that making the applicable payment(s) specified in this Section 4.3 on the schedule set forth above will prevent Company from achieving a reasonable profit margin on commercial sales of Products, [**] may reduce any such payments due in the applicable calendar or fiscal quarter by [**]%, or such other reduction as the parties shall in good faith agree, with any reduction carried forward on a quarter-by-quarter basis (subject to the same reductions in each subsequent quarter) until paid in full.

 

4.4          Reporting of Product Revenues.  From and after such time as Company first receives any Product Revenues and until such time as Company has paid in full the amount due under Section 4.3 (if any), Company shall deliver to the Foundation (or a Third Party designated in writing by the Foundation) quarterly written reports of Product Revenues received by Company and its Affiliates, which reports shall indicate the total Product Revenues received.  Company shall keep, and shall cause its Affiliates to keep, complete and accurate records pertaining to the receipt of Product Revenues in sufficient detail to permit the Foundation to confirm the accuracy of such reports.

 

4.5          Exchange Rate; Manner and Place of Payment.  All payments hereunder shall be payable in U.S. dollars.  When conversion of payments from any foreign currency is required for purposes of calculating Product Revenues, such conversion shall be at the exchange rate used by Company (or, where applicable, a Licensee) throughout its accounting system (which shall, in any event, be commercially reasonable) during the quarter for which such report is due.  All payments owed under this Agreement shall be made by check, or by wire transfer in immediately available funds to a bank and account designated in writing by the party entitled to receive payment, unless otherwise specified in writing by such party.

 

4.6          Taxes.  Each party will pay any and all taxes levied on account of any payments made to it under this Agreement out of the amounts it is to receive hereunder.  If any taxes are required to be withheld by the party making payment, such party will (a) deduct such taxes from the payment made by it, (b) timely pay the taxes to the proper taxing authority, (c) send proof of payment to the other party and certify its receipt by the taxing authority within [**] days following such payment, and (d) be deemed to have paid such amount to the other party hereunder.

 

4.7          Audits.  The Foundation shall have the right to cause an independent, certified public accountant reasonably acceptable to Company to audit the records of Company and its Affiliates to confirm the accuracy of Company’s reports of Product Revenues for a period covering not more than the preceding [**] years.  Such audits may be exercised during normal business hours upon reasonable prior written notice to Company and no more than [**] per year.  Prompt adjustments shall be made by the parties to reflect the results of such audit.  The 

 

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Foundation shall bear the full cost of such audit unless such audit discloses an underreporting of Product Revenues by Company of more than [**]% during any calendar year, in which case, Company shall bear the full cost of such audit.

 

5.                                      CONFIDENTIALITY.

 

5.1          Confidentiality.  Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the parties, the parties agree that, during the Research Term and for a period of [**] years thereafter, each party (the “Receiving Party”) will maintain in confidence all Confidential Information disclosed to it by the other party (the “Disclosing Party”), provided that, with regard to Confidential Information which is trade secret information, such obligation shall extend thereafter until such information is no longer a trade secret of the Disclosing Party.  The Receiving Party may use the Confidential Information of the Disclosing Party only to the extent required to accomplish the purposes of this Agreement.  The Receiving Party shall use at least the same standard of care as it uses to protect proprietary or confidential information of its own to ensure that its employees, agents, consultants and other representatives do not disclose or make any unauthorized use of the Disclosing Party’s Confidential Information.  Each party will promptly notify the other upon discovery of any unauthorized use or disclosure of the other party’s Confidential Information.

 

5.2          Exceptions.  The obligations of confidentiality contained in Section 5.1 will not apply to the extent that it can be established by the Receiving Party by competent proof that such Confidential Information: (a) was already known to the Receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the Disclosing Party; (b) was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party; (c) became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the Receiving Party in breach of this Agreement; (d) is independently discovered or developed by the Receiving Party without the use of Confidential Information of the Disclosing Party; or (e) was disclosed to the Receiving Party, other than under an obligation of confidentiality, by a Third Party who had no obligation to the Disclosing Party not to disclose such information to others.

 

5.3          Authorized Disclosure.  Notwithstanding any other provision of this Agreement, disclosure of Confidential Information shall not be precluded if such disclosure is in response to a valid order of a court or other governmental body of competent jurisdiction of the United States or any political subdivision thereof or is otherwise required by law or regulation; provided, however, that the Receiving Party shall, to the extent practicable, first have given notice to the Disclosing Party and shall have made a reasonable effort to obtain a protective order requiring that the Confidential Information so disclosed be used only for the purposes for which the order was issued or the law or regulation required or to seek other confidential treatment of such information.

 

5.4          Publication.  The parties acknowledge and agree that the SMA research community and medical professionals treating SMA patients will benefit from disclosure of the Data as soon as practicable.  Accordingly, should the Foundation wish to publish any Confidential Information contained in a Research Report, it shall provide Company with [**] days’ advance notice of such publication (the “IP Filing Period”) to allow Company to file 

 

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patent applications covering the Company Technology disclosed in such Research Report; provided, however, that at Company’s reasonable request, the IP Filing Period shall be extended for an additional [**] days if necessary for the filing of appropriate patent applications covering Company Technology disclosed in or apparent from such Research Report.  During the IP Filing Period, the Foundation shall maintain as confidential the Data and the Research Report provided to Foundation by Company.  Notwithstanding the foregoing, in no event shall Foundation disclose the structures of any chemical compound being researched or developed by Company in any publication or other public forum without the prior written consent of Company.  Except as expressly set forth in this Agreement, the Foundation shall not have the right to use the Data to develop, commercialize, market or sublicense any commercial offering of any product or service based on the Data.  The Company shall provide in each [**] Research Report a summary section which is suitable for immediate public disclosure and the Foundation may release copies of such portions of each Research Report and supporting Data to any Third Party investigator who requests such material from the Foundation in writing; provided, however, that said Third Party investigator first executes Company’s non-disclosure agreement (it being understood that such non-disclosure agreement will not prohibit said Third Party investigator from applying his or her knowledge of the Data to further SMA research and/or to treatment of SMA patients, but will prohibit him or her from transferring such Data except as incidental and necessary to treating SMA patients).  The Foundation will treat all other Data in each Research Report as Company Confidential information.  To the extent that any journal or other forum in which the Foundation proposes to publish or disseminate the Data requires the authorship or participation of one or more Company employees or contractors who participated in the Research or in the development of a Drug Candidate or Product, Company shall use commercially reasonable efforts to cause such individuals to cooperate with the Foundation in making such publication and, as necessary or appropriate, to be named as authors (or co-authors) of such publication.  Any publication or presentation of Data in any Research Report shall acknowledge each party’s contribution thereto in accordance with customary scientific practice.

 

5.5          Publicity; Regulatory Disclosures.  It is understood that the parties intend to issue a joint press release announcing the execution of this Agreement, and the parties agree that each party may desire or be required to issue subsequent press releases or make disclosures in regulatory filings relating to this Agreement or activities hereunder.  The parties agree to consult with each other reasonably and in good faith with respect to the text and timing of such press releases or other disclosures prior to the issuance thereof, provided that a party may not unreasonably withhold consent to such releases or disclosures, and that either party may issue such press releases or disclosures as it determines, based on advice of counsel, are reasonably necessary to comply with laws or regulations or for appropriate market disclosure.  In addition, following the initial joint press release announcing this Agreement, either party shall be free to disclose, without the other party’s prior written consent, the existence of this Agreement, the identity of the other party and those terms of the Agreement which have already been publicly disclosed in accordance with this Section 5.5.

 

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6.                                      OWNERSHIP AND USE OF DATA AND INTELLECTUAL PROPERTY.

 

6.1          Ownership; Reversionary License.

 

(a)           Data.  Company shall solely own all data generated as a result of the Research (the “Data”).

 

(b)           Company Technology.  Company shall solely own all Company Technology.

 

(c)           Reversionary Licenses to Data and Company Technology.  With respect to Research Projects in which [**], in the event that:

 

(i)            Company elects not to continue the Research or subsequent development of at least one Drug Candidate or Product relating to any Research Project in the Field; or

 

(ii)           Company fails to use commercially reasonable efforts to conduct development and commercialization of at least one commercially viable Drug Candidate arising in the Field, and is unable to remedy such failure to comply within [**] days after notice thereof from the Foundation; or

 

(iii)         Company is otherwise in material breach of this Agreement with respect to such Research Project and is unable to remedy such breach within [**] days after notice of such breach from the Foundation;

 

then, in any such case, Company shall, and it hereby does, grant to the Foundation an exclusive worldwide license, including the right to grant sublicenses, under any Company Technology resulting from such Research Project that relates to a pharmaceutical preparation, composition of matter, method of manufacture and/or method of use of such Drug Candidate Lead Candidates, Drug Candidates and Products in the Field, solely for the purpose of researching, developing, making, having made, using, selling, having sold, offering for sale and importing Drug Targets, Lead Candidates, Drug Candidates and Products in the Field (each such license with respect to a particular Research Project being referred to herein as a “Reversionary License”), and use of such Data by the Foundation or its sublicensee(s) as reasonably necessary or appropriate to exploit such Reversionary License shall not represent a violation of Section 5.1 above; provided, however, that in the case of Research Project B such license shall not be granted if (x) the Company project team, with the concurrence of the Foundation or its advisors, determines that the compounds identified in the conduct of Research Project B are not more active than the [**] in the applicable assay(s), or are more active but [**] for [**], and Company does not pursue development and commercialization of such compounds; or (y) the Foundation chooses not to [**] of Research Project B [**]; and provided, further, that the Reversionary License with respect to a particular Research Project shall not become effective (I) if the parties mutually agree, after good faith discussions based on [**] of such Research Project, that such Research Project [**], (II) Company [**] in such Research Project that [**], or (III) Company [**] in such Research Project that [**] but the [**] of the research for such Research Project.  If the Reversionary License covers a Product which, as of the date of effectiveness of the Reversionary 

 

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License, has [**], and the Reversionary License was granted pursuant to Section 6.1(a)(i), then Foundation [**] a [**] of such Product in the [**] such Product [**] in [**].  In any [**] in the [**], the Reversionary License [**].

 

(d)           Research Tools.  The parties acknowledge that the SMA research and clinical communities will benefit from the availability of Research Tools.  Company agrees to use commercially reasonable efforts to make Research Tools Controlled by it available to members of the spinal muscular atrophy research and clinical communities (excluding for-profit entities engaged in pharmaceutical research and development) for research or educational purposes on commercially reasonable terms as promptly as practicable following request by the Foundation or such person (it being understood that neither Company nor its corporate partners shall charge reach-through royalties with respect to drugs discovered by such persons using Research Tools, so long as such drugs themselves are not covered by Company Technology); provided, however, that Company shall not have any obligation to provide such access before the publication of patent applications containing claims (adequately supported by written description) that cover the relevant Research Tool.  Notwithstanding the foregoing, if Company believes in good faith that [**], then Company shall so notify the Foundation in writing, and the parties shall discuss in good faith how to proceed.

 

6.2          Patent Filings.  (a) Company shall file, prosecute and maintain all Patents on the Company Technology at its sole expense.  Notwithstanding the foregoing, if Company is obligated to make the Reversionary License to the Foundation as described in Section 6.1(c) above, then the Foundation shall have the right, itself or through its designee, to file, prosecute and maintain Patents licensed under the Reversionary License at its sole expense; provided, however, that if [**], and [**], and further provided, that the Company shall have reasonable rights of comment and consultation on all such prosecution and maintenance activities, (b) Each of Company and Foundation shall execute all papers and instruments, and require its employees and contractors to execute all papers and instruments, so as to enable the other party to exercise the rights set forth in Section 6.2(a).

 

6.3          SMA Research Tools.  Foundation shall use commercially reasonable efforts to assist Company in obtaining favorable licensing terms for access to SMA Research Tools necessary or useful for the conduct of the Research.

 

6.4          No Other License.  Other than any license granted pursuant to Section 6.1(c), no license is granted or implied with respect to any Company Technology or Data for any use.

 

7.                                      TERM; TERMINATION.

 

7.1          Term.  The term of this Agreement shall commence on the Effective Date and shall continue until expiration of the Research Term, unless this Agreement is earlier terminated in accordance with this Article 7.

 

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7.2          Termination for Cause.  Each party shall have the right to terminate this Agreement upon 60 days’ prior written notice to the other upon the occurrence of any of the following:

 

(a)           Upon or after the bankruptcy, insolvency, dissolution or winding up of the other party (other than a dissolution or winding up for the purpose of reorganization); or

 

(b)           Upon or after the breach of any material provision of this Agreement by the other party if the breaching party has not cured such breach within the 60-day period following written notice of termination by the non-breaching party.

 

7.3          Termination Upon Principal Scientist’s Unavailability.  The Foundation may terminate this Agreement upon 30 days’ prior written notice to Company in the event the Foundation and Company are unable to agree upon a suitable replacement for the Principal Scientist pursuant to Section 2.3; provided, however, that termination in accordance with this Section 7.3 will not trigger the grant of any Reversionary License under Section 6.1.  In the event of a termination of this Agreement pursuant to this Section 7.3, and notwithstanding any other provision of this Agreement to the contrary (including but not limited to Section 7.4), only the provisions of Sections 6.1(a), 6.1(b), 6.2(b), this Section 7.3, the first sentence of Section 6.2(a), and Articles 1, 5, 8, and 9 will survive such termination.

 

7.4          Consequences of Expiration or Termination.  Expiration or termination of this Agreement will not relieve the parties of any obligation accruing prior to such expiration or termination (including, without limitation, any accrued obligation of the Foundation to make payments pursuant to Section(s) 4.1 and/or 4.2).  Except as otherwise provided in Section 7.3, and notwithstanding any other provision of this Agreement to the contrary, the provisions of Sections 4.3, 4.4, 4.5, 4.6, 4.7, 7.4, and 7.5, and Articles 1, 5, 6 (to the extent applicable), 8 and 9 will survive expiration or termination of this Agreement.

 

7.5          Rights in Bankruptcy.  All rights and licenses granted under or pursuant to this Agreement by Company are, and will otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of right to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code.  The parties agree that the Foundation, to the extent it receives a Reversionary License pursuant to Section 6.1(c), as licensee of such rights under this Agreement, will retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code.  The parties further agree that, in the event of the commencement of a bankruptcy proceeding-by or against Company under the U.S. Bankruptcy Code, the Foundation will be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, and same, if not already in the Foundation’s possession, will be promptly delivered to the Foundation (a) upon any such commencement of a bankruptcy proceeding upon its written request therefor, unless Company elects to continue to perform all of its obligations under this Agreement, or (b) if not delivered under clause (a) above, following the rejection of this Agreement by or on behalf of Company upon written request therefor by the Foundation.

 

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8.                                      INDEMNIFICATION.

 

8.1          Indemnification by Company.  Company hereby agrees to save, defend, indemnify and hold harmless the Foundation, its trustees, officers, employees and agents (each, a “Foundation Indemnitee”) from and against any and all losses, damages, liabilities, expenses and costs, including reasonable legal expenses and attorneys’ fees (“Losses”), to which a Foundation Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any Third Party to the extent such Losses arise directly or indirectly out of (a) the development, manufacture, handling, storage, sale or other disposition of any Drug Candidate or Product by Company, its Affiliate(s) or Licensee(s), or (b) the breach of this Agreement by Company or the gross negligence or willful misconduct of Company, except in each case to the extent such Losses result from (x) the breach of this Agreement by the Foundation or the gross negligence or willful misconduct of any Foundation Indemnitee, or (y) the activities of the Foundation or its agents or employees in connection with any Research Project or related Drug Candidate or Product after the Foundation has received a Reversionary License in connection with such Research Project under Section 6.1(c) (“Reversionary License Activities”).

 

8.2          Conditions to Indemnification.  The obligations of Company under Section 8.1 are conditioned upon the Foundation’s delivery of written notice to Company of any potential Losses promptly after the Foundation becomes aware of such potential Losses.  Company shall have the right to assume the defense of any suit or claim related to the Losses if it has assumed responsibility for the suit or claim in writing.  If Company defends the suit or claim, the Foundation may participate in (but not control) the defense thereof at its sole cost and expense.

 

8.3          Settlements.  Neither party may settle a claim or action related to any Losses subject to indemnification under Section 8.1 without the consent of the other party, if such settlement would impose any monetary obligation on the other party or require the other party to submit to an injunction or otherwise limit the other party, its Affiliates, trustees, employees, agents, officers or directors.

 

8.4          Insurance.  During any period when Company, its Affiliate or any Licensee is clinically developing or commercializing any Drug Candidate or Product and for [**] years thereafter, Company, at its own expense, shall maintain clinical trial and/or product liability insurance, as applicable, in an amount consistent with industry standards and only if available on commercially reasonable terms, and shall name the Foundation as an additional insured with respect to such insurance, with respect to losses arising out of or related to the activities contemplated under this Agreement.  Company shall provide a certificate of insurance evidencing such coverage to the Foundation upon request.

 

8.5          Liability of the Foundation.  The Foundation assumes any and all risk of personal injury and property damage attributable to the practice by the Foundation, its trustees, officers, employees or agents, or its designee or sublicensee of any license granted by Company to the Foundation hereunder, the breach of this Agreement by the Foundation or any Foundation Indemnitee, or the gross negligence or willful misconduct of any Foundation Indemnitee.  Furthermore, the Foundation assumes any and all risk of Losses (as defined above) in connection with any Reversionary License Activities.

 

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9.                                      MISCELLANEOUS.

 

9.1          Assignment.  Except as expressly provided hereunder, neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by either party without the prior written consent of the other party (which consent shall not be unreasonably withheld).  Notwithstanding the foregoing, the Foundation shall have the right to assign or transfer any or all of its rights or obligations under this Agreement to a Third Party that is a non-profit organization upon written notice to Company, provided that the Foundation shall remain liable for any payment obligations accruing hereunder to the extent that such Third Party does not comply with such obligations.  Company shall have the right to assign or transfer any or all of its rights or obligations under this Agreement to a Third Party in connection with the transfer or sale of all or substantially all of the portion of Company’s business to which this Agreement relates, or in the event of Company’s merger or consolidation or change in control or similar transaction or the creation of a special purpose corporation or research and development limited partnership or a joint venture.  The rights and obligations of the parties under this Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties.  Any assignment not in accordance with this Agreement shall be void.

 

9.2          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 the Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected party, including, without limitation, fire, floods, earthquakes, natural disasters, embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or the other party.

 

9.3          Governing Law.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to its choice of law provisions; provided, however, that with respect to intellectual property filings, such filings will be governed by the federal laws of the United States, or, if outside the United States, by the applicable intellectual property laws of the relevant jurisdiction(s).

 

9.4          Waiver.  Except as specifically provided for herein, the waiver from time to time by either party of any right or failure to exercise any remedy shall not operate or be construed as a continuing waiver of the same right or remedy or of any other of such party’s rights or remedies provided under this Agreement.

 

9.5          Severability.  In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

9.6          Independent Contractors.  It is expressly agreed that Company and the Foundation shall be independent contractors and that the relationship between the two parties shall not constitute a partnership, joint venture or agency of any kind.  Neither party shall have the authority to make any statements, representations or commitments of any kind, or to take any 

 

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action, which shall be binding on the other party, without the prior written consent of the other party.

 

9.7          Notices.  All notices and other communications provided for hereunder shall be in writing and shall be mailed by first-class, registered or certified mail, postage paid, or delivered personally, by overnight delivery service or by facsimile, with confirmation of receipt, addressed as follows:

 

	
If to the Foundation:
    	
Spinal Muscular Atrophy   Foundation
   1776 Broadway, 22nd Floor
   New York, NY 10019
   Fax:  (212) 247-3079
   Attention:  Ms. Cynthia Joyce,   Executive Director
    
	
 
    	
 
    
	
With a copy to:
    	
Cooley Godward LLP
   4401 Eastgate Mall
   San Diego, CA 92121
   Fax:  (858) 550-6420
   Attention:  Jane K. Adams, Esq.
    
	
 
    	
 
    
	
If to Company:
    	
PTC Therapeutics, Inc.
   100 Corporate Court
   South Plainfield, NJ 07080-2449
   Fax:  908-222-7231
   Attention:  Mark Boulding, Senior Vice   President and
   General Counsel
    
	
 
    	
 
    
	
With an email copy to: legal@ptcbio.com
    

 

Either party may by like notice specify or change an address to which notices and communications shall thereafter be sent.  Notices sent by facsimile shall be effective upon confirmation of receipt, notices sent by mail or overnight delivery service shall be effective upon receipt, and notices given personally shall be effective when delivered.

 

9.8          Entire Agreement; Amendment.  This Agreement (including the Exhibits hereto, as such Exhibits may be amended from time to time by mutual written agreement of the parties) sets forth all of the agreements and understandings between the parties hereto with respect to the subject matter hereof, and supersedes and terminates all prior agreements and understandings between the parties with respect to the subject matter hereof.  There are no other agreements or understandings with respect to the subject matter hereof, either oral or written, between the parties.  Except as expressly set forth in this Agreement, no subsequent amendment, modification or addition to this Agreement shall be binding upon the parties hereto unless reduced to writing and signed by the respective authorized officers of the parties.

 

9.9          Headings; Section References.  The captions contained in this Agreement are not a part of this Agreement, but are merely guides or labels to assist in locating and reading the 

 

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several Articles and Sections hereof.  Section references herein are to the corresponding Sections of this Agreement unless otherwise indicated.

 

9.10        Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

 

	
SPINAL   MUSCULAR ATROPHY FOUNDATION
    	
 
    	
PTC   THERAPEUTICS INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Loren A. Eng
    	
 
    	
By:
    	
/s/   Stuart Peltz
    
	
 
    	
 
    	
 
    
	
Printed   Name:
    	
Loren   A. Eng
    	
 
    	
Printed   Name:
    	
Stuart Peltz
    
	
 
    	
 
    	
 
    
	
Title:
    	
President
    	
 
    	
Title:
    	
President   and CEO
    
									

 

[SIGNATURE PAGE TO SPONSORED RESEARCH AGREEMENT]

 

 

EXHIBIT A

 

RESEARCH PLAN

 

PTC proposes to collaborate with the SMA foundation in order to identify new therapeutics for the treatment of spinal muscular atrophy (SMA).  PTC will utilize its expertise, its platform technologies, and compounds to identify new drugs to treat SMA.  Three programs for the discovery and development of drugs to treat SMA are contemplated:

 

[**].

 

Overview of SMA

 

Spinal muscular atrophy (SMA) is a common autosomal recessive neurodegenerative disease characterized by degeneration of motor neurons of the anterior horn of the spinal cord resulting in muscle weakness and atrophy.  SMA can be subdivided into three clinical groups on the basis of age of onset and severity of the symptoms.  The acute type I form is characterized by severe, generalized muscle weakness and hypotonia that is seen either at birth or within the first 3 months of life.  Death from respiratory failure usually occurs within the first 2 years.  Type II children are able to sit, although they cannot stand or walk unaided.  They suffer significant respiratory morbidity and earlier mortality.  Type III patients have proximal muscle weakness, starting after age of 2.  They generally have a milder course, with the potential for normal life expectancy.

 

SMA results from reduced expression of survival motor neuron protein (SMN).  The SMN gene is duplicated as an inverted repeat on human chromosome 5.  The telomeric copy of SMN (SMN1) is deleted or mutated in over 98% of SMA patients.  These patients retain at least one copy of the centromeric SMN gene called SMN2.  The SMN2 gene has a mutation such that SMN2-derived transcripts are alternatively spliced and encode a truncated protein lacking exon 7 (SMNDExon7).  The number of SMN2 copies strongly correlates with severity of SMA.

 

 

The quantity of a particular protein synthesized in a given time depends on both the cellular concentration of its mRNA and how efficiently the mRNA is used by cellular

 

 

translational apparatus.  Multiple cellular mechanisms that affect mRNA availability or utilization are major regulators of protein production and are known as post-transcriptional control processes.  PTC targets these processes in its drug discovery efforts.  The mRNA sequences that are often found the non-coding regions, known as “untranslated regions” or UTRs.  The region before the protein coding region is known as the 5’-UTR, while the region following the protein coding region is known as the 3’-UTR.  The largest number of known post-transcriptional control determinants map to the 5’- and 3’-untranslated regions of an mRNA.  Post-transcriptional regulation occurs through interaction of cellular factors with sequence elements including secondary structures, protein-binding sites, upstream open reading frames, internal ribosome entry sites, and poly(A) tail.

 

Examination of the 5’ and 3’ untranslated regions of SMN2 mRNA reveals a number of sequence elements that strongly suggest that the SMN2 mRNA is post-transcriptionally regulated.  The 5’ UTR of SMN2 contains a regulatory element known as an upstream open reading frame (uORF).  Several lines of evidence strongly suggest that uORFs in the 5’ UTRs of mRNAs regulate gene expression by modulating efficiency of translation and mRNA stability.  The SMN2 5’ UTR also contains 63% of C and G nucleotides suggesting a high degree of secondary structure, which can be an excellent platform for binding of proteins that regulate ribosome scanning and, therefore, translation efficiency.  The 3’ UTR of SMN2 is 559 nucleotides in length and contains several conserved elements that serve as protein binding sites that are involved in regulating translation efficiency and mRNA stability.

 

The GEMS technology platform

 

The GEMS technology platform (Gene Expression Modulation by Small-molecules) targets the post-transcriptional control mechanisms in order to identify small molecules that alter gene expression to increase or decrease protein levels.  Compounds identified by the GEMS technology modulate the post-transcriptional control mechanisms of gene expression that act through the 5’- 3’-untranslated regions of mRNA.  The GEMS technology can be applied to the SMN2 gene to identify small molecules that increase the expression of the SMN2 gene.

 

Overview of program [**]

 

Confidential Materials omitted and filed separately with the Securities and Exchange Commission. A total of four pages were omitted. [**]

 

ii

 

Exhibit B

 

RESEARCH MILESTONES

 

Milestone 1:  [**]

 

Milestone 2:  [**].

 

Milestone 3:  [**].

 

Goal:  A set of compounds characterized from all three Research Projects.

 

iii

 

Final

 

AMENDMENT No. 1 TO SPONSORED RESEARCH AGREEMENT

 

This first amendment (“First Amendment”) to the Sponsored Research Agreement is entered into as of the 12th day of October, 2007 (the “Amendment Effective Date”), by and between Spinal Muscular Atrophy Foundation (the “Foundation”) and PTC Therapeutics, Inc. (“PTC”), with reference to the following facts and circumstances.

 

WHEREAS Foundation and PTC are parties to that certain Sponsored Research Agreement dated as of June 1, 2006 (the “Agreement”);

 

WHEREAS PTC has achieved all the initial milestones set forth in Exhibit B to the Agreement, and Foundation has made the payments associated with such milestones under the Agreement;

 

WHEREAS, the Parties desire to extend the Agreement to allow additional funding by Foundation in connection with continued research focused on small molecule therapeutics for SMA;

 

NOW THEREFORE, in consideration of the premises and mutual covenants contained in this First Amendment, the Parties agree as follows:

 

1.                                      Definitions. Except as expressly set forth herein, all capitalized terms used herein and not otherwise defined shall be as defined in the Agreement

 

2.                                      Additional Research. The Parties agree to the modification of the Research Plan attached as Exhibit A-1 to allow for PTC to perform early structure-activity relationship work on Hits identified under each of the three Research Projects (the “Additional Research”). The goal of such research will be the presentation by PTC of a list characterized Lead Candidates for further discussions with Foundation with respect to prioritization and potential funding of Lead Optimization by Foundation. The expected duration of such research is [**] months. The Foundation shall have the exclusive option (the “Option”) to continue funding development of all Lead Candidates presented by the company at the end of the Amendment Term (as defined below) through the identification of a Drug Candidate suitable for an IND filing, subject to the following terms and conditions: (a) the Foundation may exercise the Option by providing written notice to PTC of its intent to so fund development within [**]days following the date on which the Final Report (as defined below) is transmitted to Foundation; (b) following such written notice, the Parties shall negotiate in good faith for a period of no longer than [**] days the budget and terms and conditions of such proposed funding, and (c) if the Parties are unable to reach agreement within such [**] day period, then Foundation’s rights under the Option shall expire. Notwithstanding the foregoing, in no case shall the Option preclude PTC from entering into partnering arrangements or other agreements with commercial partners with respect to the Research Projects, so long as PTC is in compliance with the other terms of the Agreement and this Amendment.

 

PTC shall conduct such Additional Research in accordance with the terms of the Agreement as amended herein, including but not limited to PTC’s obligations under Section 2.5 of the Agreement (captioned “Performance Standards”). In connection with such Additional Research,

 

 

the Research Term shall be extended, without interruption, until the date which is eight (8) months following the Amendment Effective Date (the “Amendment Term”).

 

3.                                      Research Reports. In lieu of the Research Reports that would otherwise be due from PTC under Section 2.7 of the Agreement during the Research Term, PTC shall make the following reports: (a) [**] months following the Amendment Effective Date, a summary report showing progress with respect to the Additional Research and identifying any limiting factors or other considerations that may affect completion of the Additional Research (the “Mid-Stage Report”), and (b) within [**] days of completion of the Additional Research, a final report containing the recommendations by PTC for selection of compounds for further research and potential Lead Optimization (the “Final Report”). In addition, PTC will make itself available for Research Team conference calls following its internal research update meetings, which are expected to occur every [**] weeks, for informal discussion of the program.

 

4.                                      Additional Payments by Foundation. Foundation shall pay PTC a total of [**] US dollars ($[**]) in partial support for the Additional Research as follows: (a) [**] US dollars ($[**]) within [**] days of the Amendment Effective Date; (b) [**] US dollars ($[**]) within [**] days of the receiving the Mid-Stage Report; and (c) [**] US dollars ($[**]) within [**] days of the receiving the Final Report.

 

5.                                      Foundation Negotiation Rights. During the Research Term and any subsequent extension of the collaboration and for the [**] month period thereafter, before entering into any written agreement with any third party under which PTC is obligated to conduct screening of its library for small molecules that modulate the expression of Drug Targets in exchange for funding, PTC shall first conduct good faith negotiations with Foundation with respect to provision of such funding by Foundation. Notwithstanding the foregoing, PTC’s obligations under this First Amendment Section 5 shall neither prohibit nor in any way limit (a) PTC’s ability to fulfill contractual commitments to third parties in effect as of the Amendment Effective Date, (b) PTC’s ability to enter into license agreements or otherwise collaborate with third parties with respect to compounds or programs directed against SMA developed by such third parties; nor (c) PTC’s ability to enter into any agreements or arrangements with respect to modulation of genes relevant to SMA via nonsense suppression.

 

6.                                      Coordination of Funding. During the Research Term and any subsequent extension of the collaboration and for the [**] month period thereafter, should PTC require additional funds for the conduct of any Research Project, the Foundation will be consulted prior to any fundraising efforts for such Research Project. Should PTC identify an opportunity for agreement with any third party or parties with respect to additional or continued funding specifically directed to Research Projects, it will provide reasonable advance notice to Foundation, and the parties will negotiate in good faith (involving such third party or parties as appropriate) to develop a structure that supports such additional funding, based on the following principles: (a) entities co-funding a Research Project should share information on the Research with each other, subject to appropriate confidentiality provisions, (b) governance with respect to co-funded Research Projects should be via a joint steering committee including representatives of Foundation, PTC, and any third parties, (c) within the steering committee for a particular co-funded Research Project, role in decision-making with respect to matters within the sole purview of funding

 

2

 

entities (including but not limited to strategic discussions as outlined in section 2.4 of the Agreement) should be [**], and (d) entities that have provided funding to a co-funded Research Project should have an opportunity (subject to compliance with the terms of their respective funding agreements) to continue their support of such Research Project. For clarity, PTC’s obligations under this First Amendment Section 6 shall in no way limit PTC’s ability to engage in general fund-raising activities and to enter into agreements relating thereto.

 

7.                                      No Conflicts. Each Party represents and covenants that (a) it has the authority and right, to enter into this First Amendment and to perform its obligations with respect to the Additional Research, and (b) during the Research Term and any subsequent extension of the collaboration and for the [**] month period thereafter, it will not enter into any agreement with any third party that would conflict with the performance of its obligations hereunder, or with Foundation’s potential funding of Lead Optimization on terms mutually acceptable to the parties.

 

8.                                      Notices. The address of the Foundation for the purposes of section 9.7 of the Agreement shall be as follows:

 

Spinal Muscular Atrophy Foundation
 888 Seventh Avenue
 Suite 400
 New York, NY 10019
 Fax: 212-347-2079
 Attention: Ms. Cynthia Joyce, Executive Director

 

With a copy to Cooley Godward LLP as currently provided in the Agreement.

 

9.                                      No Other Modifications.  In all other respects, the terms and conditions of the Agreement shall remain unchanged and in full force and effect. In the event of any conflict between the terms of this First Amendment and the terms of the Agreement, the terms of this First Amendment shall govern.

 

3

 

IN WITNESS WHEREOF, the Parties have executed this First Amendment by their duly authorized officers as of the date set forth above.

 

	
PTC   THERAPEUTICS, INC.
    	
 
    	
SPINAL   MUSCULAR ATROPHY
    
	
 
    	
 
    	
FOUNDATION
    
	
 
    	
 
    	
 
    
	
/s/   Mark E. Boulding
    	
 
    	
/s/   Loren Eng
    
	
By:  Mark   E. Boulding
    	
 
    	
By:
    	
Loren   Eng
    
	
Title: Senior Vice President and General Counsel
    	
 
    	
Title:
    	
SMA   Foundation, President
    

 

4

 

EXHIBIT A-1

 

RESEARCH PLAN FOR ADDITIONAL RESEARCH

 

The research goal of this modification to the Research Plan is to complete hit characterization of the active compounds from Project A, Project B, and Project C (the “Projects”), to perform in vitro pharmaceutical profiling of leads from these Projects, to delineate clearly a screening tier to meet the development candidate goal for these Projects, and to identify directions for the full optimization process.

 

Confidential Materials omitted and filed separately with the Securities and Exchange Commission. A total of one page was omitted. [**]

 

5

 

Execution Version

 

AMENDMENT No. 2 TO SPONSORED RESEARCH AGREEMENT

 

This second amendment (“Second Amendment”) to the Sponsored Research Agreement is entered into as of the 1st day of May, 2009 (the “Second Amendment Effective Date”), by and between Spinal Muscular Atrophy Foundation (the “Foundation”) and PTC Therapeutics, Inc. (the “Company”), with reference to the following facts and circumstances.

 

WHEREAS Foundation and Company are parties to that certain Sponsored Research Agreement dated as of June 1st, 2006, as amended by the First Amendment on October 12th, 2007 (the “Agreement”);

 

WHEREAS, the parties desire to further amend the Agreement to allow additional funding by Foundation in connection with continued research focused on small molecule therapeutics for SMA;

 

NOW THEREFORE, in consideration of the premises and mutual covenants contained in this Second Amendment, the parties agree as follows:

 

1.                                      Definitions.

 

(a)                                 Section 1.5 of the Agreement (“Company Clinical Trial”) shall, as of the Second Amendment Effective Date, be amended and restated as follows: “‘Company Clinical Trial’ means any human clinical trial of a Development Candidate or Product conducted by or on behalf of Company or its Affiliates or Licensees pursuant to an effective IND submitted by or on behalf of Company or its Affiliates or Licensees.”

 

(b)                                 Section 1.11 of the Agreement (“Data”) shall, as of the Second Amendment Effective Date, be amended and restated as follows:  “‘Data’ means all data generated as a result of the Research or as a result of Company’s or its Affiliate’s or Licensee’s research, Development, or commercialization of Drug Candidates or Products.”

 

(c)                                  Section 1.15 of the Agreement (“Field”) shall, as of the Second Amendment Effective Date, be amended and restated as follows:  “‘Field’ means the treatment, mitigation or prevention of [**].”

 

(d)                                 Section 1.16 of the Agreement (“First Commercial Sale”) shall, as of the Second Amendment Effective Date, be amended and restated as follows:  “‘First Commercial Sale’ means the date of the first commercial sale in a country or region by or on behalf of Company or its Affiliate or Licensee of a Product to a Third Party end user in an arm’s-length transaction after an NDA has been approved for such Product in such country or region.”

 

(e)                                  Section 1.18 of the Agreement (“IND”) shall, as of the Second Amendment Effective Date, be amended and restated as follows: “‘IND’ means an investigational new drug application submitted for action to the FDA or any other similar application submitted for action to an appropriate Regulatory Agency in a country or group of countries other than the United States.”

 

 

(f)                                   Section 1.23 of the Agreement (“Licensee”) shall, as of the Second Amendment Effective Date, be amended and restated as follows:  “‘Licensee’ means any Third Party to which Company grants rights with respect to any Lead Candidate, Reversion Candidate, Development Candidate or Product in accordance with Second Amendment Section 10.”

 

(g)                                  Section 1.24 of the Agreement (“Net Sales”) shall, as of the Second Amendment Effective Date, be amended and restated as follows: “‘Net Sales’ means gross amounts received by Company and its Affiliates from Third Parties other than Affiliates or Licensees for sales of a Product to Third Parties other than Affiliates or Licensees (unless such Affiliate or Licensee is the end user of such Product, in which case the amount billed therefor shall be deemed to be the amount that would be billed to a Third Party end user in an arm’s-length transaction), less the following deductions, without duplication: (a) actual bad debts actually written off which are attributable to sales of such Product; (b) any rebates, quantity, trade and cash discounts, and other usual and customary discounts to customers granted and taken in the ordinary course of business;  (c) retroactive price reductions, allowances, chargebacks, rebates, adjustments and amounts repaid or credited by reason of rejections or returns of such Product (including returns of such Product by reason of a product recall or damaged or defective goods); (d) freight, shipping and insurance charges; (e) distribution, packing, handling and transportation charges for Products to the extent that they are included in the price or otherwise paid by the customer; (f) compulsory payments and rebates, actually paid or deducted; (g) customs duties and other governmental charges, as well as sales, use, excise, inventory, value added, and other taxes (except income taxes), related to the sale of such Product; (h) payments, discounts, rebates, fees, reimbursements or similar payments granted to managed health care organizations or federal, state or local governments, their agencies, purchasers or reimbursers or any government subsidized programs, wholesalers or other distributors, buying groups, health insurance carriers, other institutions, or discount programs; and (i) any write-offs from quantities of such Product donated by Company to Third Parties for charitable or humanitarian purposes, to the extent included in gross sales. The foregoing adjustments shall be consistent with customary accounting practices within Company (or its respective Affiliates) and in accordance with U.S. Generally Accepted Accounting Principles or with a similar internationally-accepted accounting standard, consistently applied.”

 

(h)                                 Section 1.38 of the Agreement (“Reversionary License”) shall, as of the Second Amendment Effective Date, be amended and restated as follows: “‘Reversionary License’ shall have the meaning set forth in Section 6.1(c)(2)(i) of the Agreement.”

 

(i)                                     Section 1.42 of the Agreement (“Third Party Patent License”) shall, as of the Second Amendment Effective Date, be amended and restated as follows: “‘Third Party Patent License’ shall have the meaning provided in Section 3.4(c).”

 

(j)                                    The following defined terms shall apply as of the Second Amendment Effective Date:

 

“AAA” shall have the meaning set forth in Second Amendment Section 17(b).

 

“Appointing Party” shall have the meaning set forth in Second Amendment Section 5(h).

 

2

 

“Baseball Arbitration” shall have the meaning set forth in Second Amendment Section 17(a).

 

“Benchmark Trigger” shall have the meaning set forth in Section 3.3(b) of the Agreement.

 

“Buy-Out Notice” shall have the meaning set forth in Section 3.3(b)(v) of the Agreement.

 

“Buy-Out Right” shall have the meaning set forth in Section 3.3(b)(iv) of the Agreement.

 

“Chief Executive Officer” means (a) the person holding the title of Chief Executive Officer of a party at the time in question or (b) if there is no person holding the title of Chief Executive Officer of a party at the time in question, then the person holding the title of Chairman of the Board of Directors of such party at such time.

 

“Collaboration Activities” means direct efforts by Company or its agents to pursue any proposal related to a license, option, joint venture, collaboration, sale or other strategic transaction (other than a PTC Corporate Change) involving the DC Research or any Lead Candidate, Reversion Candidate, Development Candidate or Product, but excluding [**] entered into with a Third Party under which Company remains primarily responsible for Development and commercialization of Lead Candidates, Reversion Candidates, Development Candidates and Products.  For clarity, activities routinely performed by Company’s business development team to promote Company’s general drug discovery and development capabilities (including discovery research in the Field) shall not constitute Collaboration Activities.

 

“Commercially Reasonable Efforts” means:

 

(a) with respect to the efforts to be expended by a party with respect to any objective, except as otherwise provided in clause (b) below, such reasonable, diligent and good faith efforts as such party [**]; and

 

(b) [**].

 

“Company Indemnitee” shall have the meaning set forth in Second Amendment Section 13(d).

 

“Company Losses” shall have the meaning set forth in Second Amendment Section 13(d).

 

“Corrective Plan” shall have the meaning set forth in Second Amendment Section 2(g)(1).

 

“Cost/Timeline Issue” shall have the meaning set forth in Second Amendment Section 2(g).

 

“DC Research” shall have the meaning set forth in Second Amendment Section 2(a).

 

3

 

“DC Timeline Goal” shall have the meaning set forth in Second Amendment Section 2(a).

 

“Development” means, with respect to a Drug Candidate, Development Candidate, or Product, all non-clinical (including preclinical) research/development, clinical research/development, and related activities directed to obtaining Regulatory Approval of such Drug Candidate, Development Candidate, or Product, including but not limited to clinical trials, toxicology studies, drug metabolism and pharmacokinetics (DMPK) studies, statistical analysis and report writing, clinical trial design and operations, preparing and submitting INDs and applications for Regulatory Approval, activities related to development and optimization of a commercial-grade manufacturing process and formulation for such Drug Candidate, Development Candidate, or Product, safety reporting, data management and all regulatory affairs and project management related to the foregoing. When used as a verb, “Develop” means to engage in Development.

 

“Development Candidate” or “DC” means, on a Research Project-specific basis, a Drug Candidate that the JSC formally declares meets criteria established by the JSC indicating such Drug Candidate is suitable for progression to IND-enabling pre-clinical studies in support of future human clinical trials.

 

“Development Deadline Document” shall have the meaning set forth in Section 3.1 of the Agreement.

 

“Development Election Notice” shall have the meaning set forth in Second Amendment Section 3(d).

 

“Development Plan” shall have the meaning set forth in Section 3.1 of the Agreement.

 

“Enrollees” shall have the meaning set forth in Second Amendment Section 13(b)(2).

 

“JSC” shall have the meaning set forth in Second Amendment Section 5(a).

 

“GLP Research” shall have the meaning set forth in Second Amendment Section 3(a).

 

“GLP Toxicology Studies” shall have the meaning set forth in Section 3.2 of the Agreement.

 

“Licensee Data” shall have the meaning set forth in Second Amendment Section 10(d)(ii).

 

“Licensee Technology” shall have the meaning set forth in Second Amendment Section 10(d)(ii).

 

“M&A Approval Request” shall have the meaning set forth in Second Amendment Section 9(a).

 

“M&A Certification” shall have the meaning set forth in Second Amendment Section 9(b)(4).

 

4

 

“M&A Notice” shall have the meaning set forth in Second Amendment Section 9(b).

 

“NDA” means a new drug application approved by the FDA or any other similar application approved by the appropriate Regulatory Agency in a country or group of countries other than the United States.”

 

“Non-DC Research” shall have the meaning set forth in Second Amendment Section 18(a).

 

“Option Period” means the period commencing upon the end of the [**] day period set forth in Second Amendment Section 3(d) and ending [**] years later; provided, however that such period shall be extended for [**] if Foundation pays Company [**] US dollars ($[**]) and for a [**] if Foundation makes a [**] US dollar ($[**]) payment to Company.

 

“Partnering Notice” shall have the meaning set forth in Second Amendment Section 10(d).

 

“Patients” shall have the meaning set forth in Second Amendment Section 13(c)(1).

 

“[**]” shall have the meaning set forth in Section 4.3(a) of the Agreement.

 

“Phase 1 Clinical Trial” means any human clinical study of a Product that is intended as initial clinical safety testing in healthy volunteers or a limited patient population, or studies directed toward understanding the mechanisms or metabolism of the Product.

 

“Phase 2 Clinical Trial” means any human clinical study of a Product subsequent to a Phase 1 Clinical Trial and prior to a Pivotal Clinical Trial that is intended to study the safety, dosage and initial efficacy in a limited patient population, and is prospectively designed to support the continued testing of the Product in one or more further Phase 2 Clinical Trials or in a Pivotal Clinical Trial.

 

“Pivotal Clinical Trial” means a pivotal human clinical study of a Product that is prospectively designed to confirm with statistical significance in an expanded patient population the efficacy and safety of a drug in a given patient population, and the results of which are intended to form the basis for Regulatory Approval. For the avoidance of doubt, a clinical trial that meets the foregoing criteria shall be deemed a Pivotal Clinical Trial regardless of whether it is characterized as a “Phase 2b,” or “Phase 2b/3,” or “Phase 3” clinical trial.

 

“Proof-of-Concept” means, with respect to a particular Development Candidate, (a) the initiation of a Pivotal Clinical Trial for the treatment, mitigation or prevention of SMA or, with the written consent of the Foundation, any other disease, indication or medical condition or (b) if sooner, the submission of an application for Regulatory Approval for the use of such Development Candidate to treat, mitigate or prevent SMA or, with the written consent of the Foundation, any other disease, indication or medical condition.

 

“Proposals” shall have the meaning set forth in Second Amendment Section 17(d).

 

5

 

“[**]” shall have the meaning set forth in Section 3.4(a) of the Agreement.

 

“PTC Corporate Change” means (a) a merger, consolidation, amalgamation, share exchange, business combination, issuance of securities (other than Company’s initial public offering registered on Form S-1 (or any successor form) under the Securities Act of 1933, as amended, and the rules promulgated thereunder), acquisition of securities, reorganization, recapitalization, tender offer, exchange offer or other similar transaction as a result of which either (i) Company’s stockholders immediately prior to such transaction in the aggregate cease to own at least 50% of the voting shares of the entity surviving or resulting from such transaction (or the ultimate parent entity thereof) (where voting refers to being entitled to vote for the election of directors or similar management body of the applicable entity) or (ii) in which a Third Party or “group” (as defined in the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder) (excluding a “group” consisting of existing stockholders of Company as of the date of this Agreement) directly or indirectly acquires beneficial or record ownership of securities representing 50% or more of Company’s voting shares or (b) a sale, lease, exchange, transfer, license, acquisition or disposition of at least 50% of the assets of Company and its subsidiaries, taken as a whole, in a single transaction or a series of related transactions.  For purposes of clarity, a “reverse merger,” in which in a transaction or series of related transactions, Company consolidates or merges with another entity and the holders of the outstanding voting shares of Company immediately preceding such consolidation or merger hold more than fifty percent (50%) of the voting shares of the resulting entity, shall not be considered to be a PTC Corporate Change.

 

“PTC License Income” means all royalties, license fees, milestone payments, annual maintenance fees or similar payments or consideration paid by a Licensee to Company or its Affiliates in consideration for the grant by Company or its Affiliate of a license to develop, make, have made, use, distribute for sale, promote, market, offer for sale, sell, have sold, import or export Drug Candidates or Products or for the practice of such license (with any of the foregoing consideration received by Company other than in the form of cash to be valued at its fair market value as of the date of receipt), provided that PTC License Income shall exclude the proceeds of any debt or equity issuance (except to the extent such payments exceed the fair market value of such securities upon date of receipt, in which event such excess over fair market value shall be included in the calculation of PTC License Income), research and development funding (except to the extent such funding is not reimbursement for the Company’s commercially reasonable out-of-pocket, personnel and indirect expenses incurred after the grant of such license to such Licensee and pursuant to a research or development plan approved by such Licensee, in which event such excess shall be included in the calculation of PTC License Income), and any merger or acquisition consideration.

 

“Publishing Party” shall have the meaning set forth in Section 5.4(a) of the Agreement.

 

“Regulatory Agency” means, with respect to the United States, the FDA, and, in the case of a country other than the United States, such other appropriate regulatory agency or authority with similar responsibilities.

 

“Repayment Amount” shall have the meaning set forth in Section 4.3(a) of the Agreement.

 

6

 

“Research Cap” shall have the meaning set forth in Second Amendment Section 2(d).

 

“Research Compound” shall have the meaning set forth in Second Amendment Section 18(c).

 

“Research Report” means (a) with respect to any report made prior to the Second Amendment Effective Date, a report defined as such in Section 2.7 of the Agreement or a report made pursuant to First Amendment Section 3, or (b) with respect to any report made on or after the Second Amendment Effective Date, a report described in Second Amendment Section 4(b).

 

“Reversion Candidate” means (a) each Development Candidate and (b) each Lead Candidate designated as such pursuant to Second Amendment Section 5(b)(vi) or 5(c)(i).

 

“Reversion Notice” means a notice identified as such in Section 3.2, 3.4(a)(i), 3.4(b), 3.4(c), 3.4(d), or 6.1(c)(1) of the Agreement or Second Amendment Section 3(d).

 

“Reversion Products” shall have the meaning set forth in Section 6.1(c)(2)(i) of the Agreement.

 

“Reviewing Party” shall have the meaning set forth in Section 5.4(a) of the Agreement.

 

“Sales Threshold” shall have the meaning set forth in Section 4.3(b) of the Agreement.

 

“Second Amendment Term” means the period from the Second Amendment Effective Date until the end of the Research Term.

 

“Secondary Research Project” shall have the meaning set forth in Second Amendment Section 2(a).

 

“SMAF Clinical Trials Advisory Committee” shall have the meaning set forth in Second Amendment Section 13(a).

 

“SMAF Funding Amount” shall have the meaning set forth in Section 4.3(a) of the Agreement.

 

“Special Termination” shall have the meaning set forth in Second Amendment Section 3.

 

“Term” shall have the meaning set forth in Section 7.1 of the Agreement.

 

“Worldwide Net Sales” means the sum of (i) Net Sales and (ii) net sales by Licensees, with such net sales being calculated according to the definition of “Net Sales,” but substituting “Licensee” for “Company” as the context requires; provided, however, that if pursuant to a written license agreement with Licensee, Company has agreed to a commercially reasonable definition of net sales by such Licensee that is reported to Company by Licensee on a quarterly basis, such reported net sales may be used in the calculation of “Worldwide Net Sales.”

 

(k)                                 Except as expressly set forth herein, all capitalized terms used herein and not otherwise defined shall be as defined in the Agreement. For clarity, all definitions of terms that 

 

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reference Agreement Sections refer to those Agreement Sections as amended by this Second Amendment.

 

2.                                      Continuing Research.

 

(a)                                 The parties agree to the modification of the Research Plan and related budget attached as Exhibit SA-1 to allow for Company to perform continued research activities (the “DC Research”) with respect to [**] Research Projects previously funded under the Agreement and the First Amendment. The goal of such research will be the presentation by Company of one (1) Development Candidate from one (1) Research Project for further discussion with Foundation with respect to potential funding of development of such Development Candidate by Foundation, and continuation of one (1) backup program with respect to the other Research Project (the “Secondary Research Project”). The expected duration of the DC Research is [**] months from the Second Amendment Effective Date (the “DC Timeline Goal”).

 

(b)                                 Company shall conduct such DC Research (i) in accordance with Exhibit SA-1, subject to amendment by the JSC as provided in this Second Amendment, and (ii) in accordance with the terms of the Agreement as amended herein, including but not limited to Company’s obligations under Section 2.5 of the Agreement (captioned “Performance Standards”).

 

(c)                                  In connection with such DC Research, the Research Term shall be extended, without interruption, until the earliest of (i) the date upon which the JSC first designates a Development Candidate, (ii) the date which is [**] years following the Second Amendment Effective Date or (iii) the effective date of any termination of the Research Term pursuant to Second Amendment Section 3.

 

(d)                                 The parties will fund the overall total cost of the DC Research based on the Research Plan and related budget attached as Exhibit SA-1, with Foundation contributing approximately [**]% and Company contributing approximately [**]% of such overall total cost of the DC Research as more explicitly specified in such budget, such overall total cost not to exceed $[**] (the “Research Cap”) and the Foundation’s share of such total cost not to exceed $[**].  During the Research Term, Company will invoice Foundation on a quarterly basis for Foundation’s share of the costs incurred in connection with the Research Plan for the preceding calendar quarter, payable within [**] days of receipt by Foundation, subject to Second Amendment Sections 2(d)(i) and 2(d)(ii). Such invoices shall include: (A) an accounting, in reasonable detail sufficient to evaluate performance of the Research Plan by Company, of Company’s activities over the applicable period, (B) a breakout of FTEs and other resources allocated to each Research Project and (C) an itemization in reasonable detail of the categories of out-of-pocket costs incurred by Company that are included in such invoice.  When invoicing Foundation or developing or presenting any budget related to the Research Plan, Company will in all cases apply the FTE rates specified in Exhibit SA-1 to the applicable category of FTE, and no additions or changes to the FTE categories or rates specified in Exhibit SA-1 shall be made by Company absent prior written consent of Foundation. Company will promptly respond to all requests by Foundation for additional information regarding such out-of-pocket costs.  Company’s commitment, between [**] and [**], of [**] dollars ($[**])  in funding towards the DC Research shall be available to Company in the form of an invoice credit against Company’s share of the cost of the DC Research until expended and shall count towards the Research Cap.  

 

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Promptly after the Second Amendment Effective Date, Company will provide Foundation with an invoice for [**] percent ([**]%) of the amount that Company spent between [**] and the Second Amendment Effective Date to perform the DC Research.  Such invoice shall include the information specified in (A), (B) and (C) within this Second Amendment Section 2(d) and shall be payable within [**] days of receipt by Foundation.  The entire amount paid by Foundation pursuant to such invoice shall count towards the Research Cap and towards Foundation’s share of the Research Cap.

 

(i) Subject to Second Amendment Section 2(d)(ii), Foundation shall not be responsible for its share of any DC Research costs that exceed the budget for any calendar quarter unless:

 

(1) such costs exceed the budget for such calendar quarter by less than [**] dollars ($[**]) or [**] percent ([**]%) (whichever is less);

 

(2) such costs exceed the budget for such calendar quarter by more than [**] dollars ($[**]) or [**] percent ([**]%) (whichever is less) but less than [**] percent ([**]%) and Company provided written notice to Foundation prior to incurring such budget overrun; or

 

(3) such costs exceed the budget for such calendar quarter by more than [**] percent ([**]%) and Foundation approved such budget overrun in writing before it was incurred.

 

(ii) If at any time during the Second Amendment Term, the total cost incurred in the performance of the DC Research during the period from the Second Amendment Effective Date until the end of the most recent calendar quarter exceeds the cumulative budget for such period by [**] dollars ($[**]) or more, then Second Amendment Section 2(d)(i) shall not apply to any subsequent cost overruns and Foundation shall not be responsible for its share of any additional costs that exceed the applicable budget for any subsequent quarter unless Foundation approved such budget overrun in writing before it was incurred.

 

(e)                                  Foundation may provide its share of the budget under the Research Plan via other sources of funding, subject to prior agreement of the parties and the existing terms of the Agreement.  One hundred percent (100%) of all funds, if any, received by Company during the Second Amendment Term from the Department of Defense directed to the DC Research or the Development of a Development Candidate as a result of the advocacy of the Foundation will count toward the Foundation’s share of the costs incurred in connection with the Research Plan; provided, however, that [**] in the [**] pursuant to [**] of the Agreement.  At Foundation’s request, Company shall promptly complete all paperwork required or reasonably useful to secure receipt by Company of such funds from the Department of Defense.

 

(f)                                   Company may provide its share of the budget via government grants or grants from nonprofit organizations; provided however, that, except for mandatory licenses and similar or related rights granted to government entities, Company’s acceptance of such grants shall not have any effect on Foundation’s rights pursuant to this Agreement; further provided, however, that with respect to any nonprofit organizations that have as a specific aspect of their general 

 

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mission the funding of research on SMA, Company shall first seek Foundation’s written consent and the parties shall negotiate in good faith any required amendments to this Agreement or separate agreements to accommodate grants from such organizations, with the guiding principle that this Agreement remain the primary document governing the conduct of the DC Research by the parties.  Company shall use Commercially Reasonable Efforts to obtain additional funding for the Secondary Research Project from government grants or grants from nonprofit organizations (subject to the provisions set forth in the preceding sentence with respect to funding from any nonprofit organizations that have as a specific aspect of their general mission the funding of research on SMA); provided however, that, except for mandatory licenses and similar or related rights granted to government entities, Company’s acceptance of such grants shall not have any effect on Foundation’s rights pursuant to this Agreement.  If Company obtains such funding in an amount that exceeds Company’s share of the budget for the Secondary Research Project, Company shall notify Foundation in writing and the JSC shall revise the Research Plan and related budget to reflect the additional work to be performed on the Secondary Research Project with such funds, (i) which additional work shall be under the purview of the JSC and the compounds resulting from such work shall remain Drug Candidates, Reversion Candidates, or Development Candidates, as the case may be, and (ii) which revised budget shall not require the Foundation to contribute any money to pay for or reimburse Company for research performed with respect to any aspect of the revised Research Plan for which Company has received such grant funds.

 

(g)                                  If (i) it becomes evident to either party at any time, based on budget forecasts or progress in the Research Plan, that a [**] may [**] for [**], or that the [**], or (ii) the [**] is [**] (each of the foregoing, a “Cost/Timeline Issue”), then either party may, on written notice to the other, call a special meeting of the JSC to address such Cost/Timeline Issue. At such meeting, representatives of each party shall present information in their control with respect to the reasons for such Cost/Timeline Issue, and (if applicable) each party’s plan or recommendation for addressing such Cost/Timeline Issue. The JSC shall review and address such Cost/Timeline Issue, and shall determine which of the following actions the parties shall pursue:

 

(1)                                 develop, approve, and follow an amendment to the Research Plan (such amendment, the “Corrective Plan”) to address the Cost/Timeline Issue, which may (subject to the written consent of the affected party in such party’s sole discretion) require either party to [**] the DC Research, or provide that the [**] in which case (x) the [**] shall be [**] and/or, if the [**] is more than [**] years after the Second Amendment Effective Date, then the Research Term shall be deemed amended to extend until the earliest of (i) the date upon which the JSC first designates a Development Candidate, (ii) the [**], or (iii) the effective date of any termination of the Research Term pursuant to Second Amendment Section 3, and (y) in addition to their other obligations under the Agreement, the parties shall duly perform their respective obligations pursuant to such Corrective Plan; provided, however, that after the adoption of a Corrective Plan, failure to achieve the [**] or [**] shall not be deemed, by itself, to be a breach of this Agreement, but shall entitle either party to terminate the Research Term pursuant to Second Amendment Section 3;

 

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(2)                                 restructure the Research Plan and related budget in a manner that resolves the Cost/Timeline Issue; provided, however, that such restructuring shall not obligate either party to [**] of the [**] or be deemed to [**]; or

 

(3)                                 determine that continuation of the DC Research would be futile, in which case the JSC shall recommend to the parties that they terminate the DC Research; provided further, that following such recommendation either party shall have the right to terminate the Research Term pursuant to Second Amendment Section 3.

 

(h)                                 If the members of the JSC fail to unanimously agree upon one of the three actions described in Second Amendment Section 2(g) (1), (2) and (3), then the matter shall be referred to the parties’ Chief Executive Officers, and if the parties’ Chief Executive Officers do not agree upon one of such three actions within [**] days after matter referral, then either party shall have the right to terminate the Research Term pursuant to Second Amendment Section 3.  If the affected party does not approve the Corrective Plan within [**] days after it is first formally proposed, then either party shall have the right to terminate the Research Term pursuant to Second Amendment Section 3.

 

3.                                      Special Termination. In addition to the rights to terminate this Agreement as provided in Article 7 of the Agreement, either party shall have the rights to terminate the Research Term as provided in Second Amendment Section 2(g)(1), 2(g)(3) or 2(h) (any such termination of the Research Term, a “Special Termination”). Upon written notice from one party to the other party consistent with the provisions of Second Amendment Section 2(g)(1), 2(g)(3) or 2(h) and specifically identifying the circumstances giving rise to a right of Special Termination, a Special Termination shall go into effect and neither party shall have any rights or obligations with respect to the other party pursuant to this Agreement except as specifically set forth in this Second Amendment Section 3. Upon the effectiveness of a Special Termination:

 

(a)                                 subject to Second Amendment Section 3(b), Foundation shall automatically have a worldwide, fully-paid up and royalty-free, nonexclusive, nontransferable (except in connection with the assignment of this Agreement pursuant to Section 9.1 of the Agreement), sublicensable (solely as set forth in this Second Amendment Section 3(a)) right (i) under the Company Technology, Licensee Technology, Data, Licensee Data and Company Base IP, to make, have made and import Reversion Candidates and to use Reversion Candidates for its own internal purposes and for pre-clinical research activities ([**] any pre-clinical research performed under good laboratory practice guidelines (such pre-clinical research, “GLP Research”)) in the Field, (ii) to access or reference any filings made by Company or its agents with Regulatory Authorities with respect to any Reversion Candidate, (iii) to receive within [**] months of the effectiveness of the Special Termination copies of all Data and Licensee Data and all reports and other information that were (or should have been) accessible to Foundation prior to the Special Termination via the shared electronic collaboration space described in Second Amendment Section 4(a), (iv) to receive within [**] months of the effectiveness of the Special Termination reasonable quantities of existing stock of materials (other than (1) materials that are [**] or (2) materials that [**]) in Company’s possession or under its control and (xx) that are specific to, or were used or were contemplated to be used in, the DC Research, and are not commercially available from Third Parties, (yy) that are reasonably necessary for continued research or 

 

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preclinical testing of Reversion Candidates or were used in, or were contemplated to be used, in the DC Research, and (zz) the transfer of which would not infringe any Third Party intellectual property rights (and no non-infringing alternative is identified after a reasonable inquiry), trigger a breach of any contractual obligations of Company with respect to a Third Party (other than a Licensee), or [**] trigger any contractual obligation to make payments to a Third Party (other than a Licensee); provided, however, that any subsequent transfers of such materials by Foundation to Third Parties shall be subject to the terms of a materials transfer agreement reasonably acceptable to Company, and (v) to gain access [**] to reasonable quantities of Company’s existing stock of Reversion Candidates for its own internal purposes and for pre-clinical research activities ([**] any GLP Research) in the Field; such right to be sublicensable by Foundation to (1) a contract research organization or non-academic Foundation collaborator only upon prior written notice to Company or (2) an academic or governmental Foundation collaborator only with the prior written consent of Company, such consent not to be unreasonably withheld or delayed and only to be withheld based on objective criteria determined by the JSC within [**] months after the Second Amendment Effective Date.  At Foundation’s request and expense, Company shall provide Foundation with reasonable assistance to facilitate Foundation’s practice of the foregoing right, including disclosure of Company Know-How, provision of technical assistance and facilitation of Foundation’s efforts to obtain supply of Reversion Candidates from the Third Party who supplied such Reversion Candidate to Company prior to the Special Termination;

 

(b)                                 each party shall keep the other party reasonably informed with respect to the results of any non-clinical, pre-clinical research ([**] GLP Research) and clinical testing performed upon any Reversion Candidate by or on behalf such party following a Special Termination (which clinical testing and GLP Research, if in the Field, shall only be performed after the obligations set forth in Second Amendment Section 3(c) have been satisfied);

 

(c)                                  neither party may perform upon, any Reversion Candidate, any clinical testing in the Field or any GLP Research in the Field without first providing written notice to the other party and [**];

 

(d)                                 if either party provides the other party with notice and [**] pursuant to Section 3(c) of this Second Amendment but the parties do not, within [**] months after such notice, [**] with respect to the [**], then Company may within the next [**] days provide written notice (a “Development Election Notice”) to Foundation stating that Company intends to pursue continued Development and commercialization of one or more Reversion Candidates in the Field using Commercially Reasonable Efforts and identifying the Reversion Candidate of greatest interest to Company; such Reversion Candidate shall be deemed to be a Development Candidate selected by the JSC as of the date of the Development Election Notice.  If Company provides a Development Election Notice within such [**] day period, then, notwithstanding any other provision of this Second Amendment Section 3, the parties shall have all rights and obligations under this Agreement that apply to periods after the end of the Research Term and the JSC shall resume functioning as specified in Second Amendment Section 5(a).  If Company does not provide a Development Election Notice within such [**] day period, then upon Foundation’s written notice to Company (such notice, a “Reversion Notice”) within the Option Period, 

 

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Foundation shall have a Reversionary License and all other rights set forth in Section 6.1(c)(2) of the Agreement;

 

(e)                                  notwithstanding any other provision of the Agreement to the contrary (except for Second Amendment Section 3(d)), only the provisions of Sections 4.7, 6.1(a), 6.1(b), 6.1(c)(2), 6.1(c)(4), 6.2, 7.5 of the Agreement, and Articles 1, 5, 8, and 9 of the Agreement, Sections 5 and 6 of the First Amendment (provided, that the [**] month periods referenced in Sections 5 and 6 of the First Amendment shall terminate [**] months after the effectiveness of the Special Termination), and Sections 1, 3, 4(b)(ii), and 18(a) of this Second Amendment will survive such Special Termination; provided, however, that in the event Foundation subsequently obtains a Reversionary License pursuant to Second Amendment Section 3(d), then all provisions of this Agreement will continue to apply except to the extent terminated pursuant to Section 6.1(c)(2)(vi) of the Agreement; and

 

(f)                                   except as explicitly set forth in Second Amendment Section 3(a) with respect to certain optional costs payable by Foundation, Foundation shall not have any obligations to pay for any research-associated costs incurred after the effective date of the Special Termination.

 

4.                                      Research Reports and Access to Information. In lieu of the Research Reports and other information and communications that would otherwise be due from Company under Sections 2.4 and 2.7 of the Agreement during the Research Term, or pursuant to Section 3 of the First Amendment, Company shall make the following reports and information available:

 

(a)                                 Information. Promptly after the Second Amendment Effective Date, Company will establish a shared electronic collaboration space that enables designated representatives of Foundation to access and provide information on the progress of the DC Research. For clarity, the persons listed on Exhibit SA-5 of this Second Amendment are, as of the Second Amendment Effective Date, designated representatives of Foundation for such purpose.  Foundation may remove any such designated representative at any time upon written notice to Company.  Foundation may also appoint new designated representatives subject to the conditions specified in Second Amendment Section 18(f).  Such information shall include agendas and minutes of team meetings, presentations, correspondence between the parties, and data and reports from the DC Research, as well as monthly FTE reports (which reports shall be posted no later than [**] days after the end of the applicable month and shall list the number of hours that each person (identified by name and general job description (e.g., “chemist”)) worked on the DC Research during such month). Company shall post data from the ongoing conduct of the DC Research to such electronic collaboration space on a regular and continuing basis; provided, that (i) the frequency of such posting may be adjusted by consent of the JSC, and (ii) in the absence of any such consent, Company shall post such data at the same time and in the same format as made available to Company’s internal project leadership team (a sample of which format is appended as Exhibit SA-2). Company shall have the right to limit access to sensitive data (by way of example, but not limited to, non-public chemical structures) to a mutually-agreeable list of representatives of Foundation.  Such list, as of the Second Amendment Effective Date, is set forth on Exhibit SA-6.  Foundation may remove any such representative from such list at any time upon written notice to Company.  Foundation may also add new representatives to such list subject to the conditions specified in Second Amendment Section 18(f).

 

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(b)                                 Reports. (i) Within [**] days of the end of each [**] or at least [**] prior to any [**] meeting of the JSC (whichever comes first), or such other regular times as the parties may otherwise agree, Company shall provide to Foundation with a reasonably detailed written summary report of the results (including Company’s analysis thereof) and progress of the DC Research during such [**] and expectations for DC Research to be conducted during the immediately subsequent [**], and (ii) within [**] days of completion of the DC Research or termination of the DC Research on account of a Special Termination or pursuant to Article 7 of the Agreement, Company shall provide to Foundation a final report summarizing the status and accomplishments of the DC Research and containing the recommendations by Company with respect to selection of a Development Candidate with respect to one Research Project and for further research towards a potential Development Candidate with respect to the other Research Project. Company will promptly provide all information reasonably requested by Foundation regarding the DC Research described in any report provided pursuant to this Section 4(b) of this Second Amendment.

 

(c)                                  Availability for Communications. In addition to the foregoing and to Company’s obligations under Section 2.5 of the Agreement, Company will make appropriate representatives of the scientific team conducting the DC Research available for conference calls and meetings with appropriate representatives of Foundation at reasonable times and places for informal discussion of the progress of the DC Research. In further addition, the Foundation may, at its option, during the Term, schedule up to [**] formal program review meetings with Company personnel and those of Foundation’s Third Party advisors who (i) have been designated by Foundation in compliance with Second Amendment Section 18(f), and (ii) are reasonably acceptable to Company.  Such meetings will be held at the times and locations mutually agreed upon by the parties.  The purpose of such meetings will be to review the progress of the Research relative to the Research Plan.

 

5.                                      Governance. The parties agree to the following provisions with respect to governance of their collaboration:

 

(a)                                 Joint Steering Committee. The parties will establish a joint steering committee (“JSC”) consisting of equal representation from Foundation and Company within [**] days after the Second Amendment Effective Date. The parties acknowledge and agree that the individuals listed on Exhibit SA-8 have been approved, as of the Second Amendment Effective Date, to serve as the Foundation’s representatives to the JSC and there is no need for the parties to perform the procedures set forth in Second Amendment Section 18(f) with respect to their appointment to the JSC. The JSC shall be comprised of at least [**] representatives of each party, each with appropriate decision-making authority to enable the JSC to fulfill its obligations under this Agreement, and which in the case of Foundation may be Third Party advisors of Foundation, provided they are appointed pursuant to the conditions specified in Second Amendment Section 18(f). Changes in the designation of JSC members by each party may occur at any time during the Term upon written notification by a party to the other party. The JSC, as its first order of business, shall select a chairperson from one party and a secretary from the other party, to alternate on an annual basis. Subject to the confidentiality provisions of the Agreement and any appropriate agreements with respect to intellectual property or conflicts of interest, the JSC may invite other representatives of the parties with special skills or knowledge (and who, in 

 

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the case of Foundation, may be Third Party advisors of Foundation) to attend JSC meetings where appropriate. Each party shall disclose to the other its proposed agenda items in advance of each JSC meeting, and the chairperson shall distribute a draft agenda reflecting such proposed agenda items reasonably in advance of each meeting. The JSC shall adopt such other procedural rules as are necessary or convenient for its work. Each party shall be responsible for all travel and other costs for its representatives to attend meetings of, and otherwise participate on, the JSC.  The JSC shall continue to function until the earliest of:  (i) the effective date of a Special Termination, (ii) the Company’s receipt of a Reversion Notice or a Buy-Out Notice or (iii) the end of the Term.  If the JSC stopped functioning on account of a Special Termination and the Company subsequently provides a Development Election Notice pursuant to Second Amendment Section 3(d), then the JSC shall resume functioning promptly upon the Foundation’s receipt of such Development Election Notice.  Such reconvened JSC shall have the duties specified in Second Amendment Section 2(c) and, regardless of whether Proof-of-Concept has been achieved as of the date of the Development Election Notice, it shall meet and make decisions in accordance with the provisions of Second Amendment Section 5(e) (and not Second Amendment Section 5(d)).

 

(b)                                 Duties of the JSC during the Research Term. During the Research Term, the JSC shall be responsible for:

 

(i)                                     monitoring the parties’ activities under the Research Plan and the Agreement;

 

(ii)                                  reviewing and approving amendments to the Research Plan (and related budget), and at least once each calendar year formally reviewing and updating the Research Plan (and related budget) on a comprehensive basis;

 

(iii)                               in connection with the review and approval of the Research Plan (and related budget) and any amendments thereto, identifying appropriate resources necessary to conduct the DC Research and adjusting, as necessary to further the purpose of the DC Research, the budget for the Research Plan;

 

(iv)                              establishing timelines and criteria for continuation/discontinuation decision points under the DC Research;

 

(v)                                 establishing and revising minimum activity and safety criteria for Lead Candidates from each Research Project within the DC Research (which criteria may be different for the [**] Research Projects within the DC Research);

 

(vi)                              maintaining and updating at each JSC meeting during the Research Term, one list for each of the [**] Research Projects within the DC Research that identifies and rank orders all potential and actual Lead Candidates and Development Candidates from such Research Project and denotes all Development Candidates and between [**] and [**] potential or actual Lead Candidates from such Research Project as “Reversion Candidates”;

 

(vii)                           deciding whether to pursue (1), (2) or (3) of Section 2(g) of this Second Amendment in the event of a Cost/Timeline Issue;

 

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(viii)        establishing criteria for, and designating, Development Candidate(s);

 

(ix)          providing a forum for discussion/presentation regarding, and serving as the sole governance body for decision-making regarding, research, Development, commercialization, and Collaboration Activities with respect to Drug Candidates, Reversion Candidates, Development Candidate(s) and Product(s); for clarity the JSC’s role as such sole governance body shall not prevent the Company or its Licensee from making decisions necessary or useful to implement decisions made by the JSC regarding research, Development, commercialization, and Collaboration Activities with respect to Drug Candidates, Reversion Candidates, Development Candidate(s) and Product(s), so long as such implementation decisions are consistent with and faithful to the intent of the JSC’s decision;

 

(x)           prior to the designation of a Development Candidate, preparing the Development Plan for such Development Candidate and reviewing and updating the Development Deadline Document as it may deem advisable, in each case as further provided in Article 3 of the Agreement;

 

(xi)          serving in the role specified in Second Amendment Section 10 with respect to transactions arising in connection with Collaboration Activities;

 

(xii)         establishing policies and procedures governing scientific publications and presentations, and if the JSC deems it advisable, establishing a publication committee to administer such policies and procedures, as further provided in Section 5.4(a) of the Agreement;

 

(xiii)        except for those rights and obligations specified in Section 4 of this Second Amendment, serving in lieu of the parties with respect any rights or obligations to review, communicate, inform, meet or discuss otherwise provided for in Sections 2.2, 2.4, and 2.7 of the Agreement;

 

(xiv)        developing the criteria specified in Second Amendment Sections 3(a) and 18(f) within [**] months of the Second Amendment Effective Date;

 

(xv)         reviewing scientific and medical literature to identify diseases, indications or medical conditions that, [**] or [**], are [**] for [**] and [**] diseases, indications or medical conditions [**];

 

(xvi)        performing those other tasks specifically allocated to it in this Agreement that are applicable during the Research Term; and

 

(xvii)       otherwise serving as a forum for exchanging information and discussing the progress of the collaboration between Company and Foundation pursuant to the Agreement.

 

(c)           Duties of the JSC Following the Research Term. Following the Research Term, the JSC shall be responsible for:

 

(i)            at the first JSC meeting after the end of the Research Term, (1) reviewing each potential or actual Lead Candidate that was not designated as a Development Candidate

 

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during the Research Term and either designating it as a Development Candidate or determining that it does not meet the criteria for designation as a Development Candidate and (2) preparing a final list (which can only be subsequently changed by the written agreement of the parties) for each of the [**] Research Projects within the DC Research that identifies and rank orders all potential and actual Lead Candidates and Development Candidates from such Research Project and denotes all Development Candidates and between [**] and [**] potential or actual Lead Candidates from such Research Project as “Reversion Candidates”;

 

(ii)           following the designation of a Development Candidate, and at least [**] thereafter, conducting a formal review and comprehensive update of the Development Plan and Development Deadline Document for such Development Candidate, in each case as further provided in Article 3 of the Agreement;

 

(iii)          monitoring Company’s and its Affiliates and Licensees activities with respect to the Development Plan and Development Deadline Document;

 

(iv)          providing a forum for discussion/presentation regarding, and serving as the sole governance body for decision-making regarding, Development, commercialization, and Collaboration Activities with respect to Reversion Candidates, Development Candidate(s) and Product(s); for clarity the JSC’s role as such sole governance body shall not prevent the Company or its Licensee from making decisions necessary or useful to implement decisions made by the JSC regarding Development, commercialization, and Collaboration Activities with respect to Reversion Candidates, Development Candidate(s) and Product(s), so long as such implementation decisions are consistent with and faithful to the intent of the JSC’s decision;

 

(v)           serving in the role specified in Second Amendment Section 10 with respect to transactions arising in connection with Collaboration Activities;

 

(vi)          establishing policies and procedures governing scientific publications and presentations, and if the JSC deems it advisable, establishing a publication committee to administer such policies and procedures, as further provided in Section 5.4(a) of the Agreement;

 

(vii)         except for those rights and obligations specified in Section 4 of this Second Amendment, serving in lieu of the parties with respect any rights or obligations to review, communicate, inform, meet or discuss otherwise provided for in Sections 2.2, 2.4, and 2.7 of the Agreement;

 

(viii)        reviewing scientific and medical literature to identify diseases, indications or medical conditions that, [**] or [**], are [**] for [**] and [**] diseases, indications or medical conditions [**];

 

(ix) performing those other tasks specifically allocated to it in this Agreement that are applicable after the Research Term; and

 

(x)           otherwise serving as a forum for exchanging information and discussing the progress of the collaboration between Company and Foundation pursuant to the Agreement.

 

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(d)           Meetings and Decision-Making by the JSC — Before Proof-of-Concept. During the Research Term and through achievement of Proof-of-Concept, the JSC shall meet periodically as needed, but in no event less than [**], in person (with locations to alternate between the parties) or by teleconference or other electronic means as mutually agreed, to discuss matters within its jurisdiction. In addition, the JSC may agree to hold special meetings at any time on reasonable notice given by the chairperson or the secretary to the other members of the JSC. Unless waived by a party in writing, at least [**] JSC representatives of each party must participate in a meeting of the JSC in order for there to be a quorum at such meeting. The members of the JSC shall seek to make all determinations to be made by them unanimously following full discussion thereof (with each party’s representatives having, collectively, one (1) vote). If the JSC is unable to reach a unanimous decision on any matter within its jurisdiction, the parties’ respective Chief Executive Officers shall meet in person to attempt to resolve the matter in good faith. If the parties’ respective Chief Executive Officers are unable to reach agreement on a matter referred to them pursuant to the foregoing sentence within [**] days after the matter referral, then either party may by written notice to the other submit the matter to Baseball Arbitration as provided in Section 17 of this Second Amendment; provided, however, that the following matters shall not be subject to such referral to Baseball Arbitration, and any disputes arising in the JSC with respect to them may only be resolved by mutual agreement of the parties: (i) [**]; (ii) any [**] described in Second Amendment Section [**]; (iii) any changes to the [**] that would require [**] than contemplated in the [**]; and (iv) deciding whether to pursue ([**] of this Second Amendment in the event of a [**].

 

(e)           Meetings and Decision-Making by the JSC — Following Proof-of-Concept. Following achievement of Proof-of-Concept, the JSC shall meet periodically as needed, but in no event less than [**] during each calendar year, in person (with locations to alternate between the parties) or by teleconference or other electronic means as mutually agreed, to discuss matters within its jurisdiction. In addition, the JSC may agree to hold special meetings at any time on reasonable notice given by the chairperson or secretary to the other members of the JSC. Unless waived by a party in writing, at least [**] JSC representatives of each party must participate in a meeting of the JSC in order for there to be a quorum at such meeting. The members of the JSC shall seek to make all determinations to be made by them unanimously following full discussion thereof (with each party’s representatives having, collectively, one (1) vote). If the JSC is unable to reach a unanimous decision on any matter within its jurisdiction, the parties’ respective Chief Executive Officers shall attempt to resolve the matter in good faith. If the parties’ respective Chief Executive Officers are unable to reach agreement on a matter referred to them pursuant to the foregoing sentence within [**] days after the matter referral, then [**] shall have the deciding vote on the matter; provided, however, that the following matters shall not be subject to such [**] final determination, and any disputes arising in the JSC with respect to them may only be resolved as set forth below: (i) any [**], and (ii) the [**] with respect to [**] in connection with [**] set forth in, and subject to, Second Amendment Section [**].

 

(f)            Meeting Minutes. The secretary (or if absent, such acting secretary as the chairperson shall designate) shall be responsible for preparing the minutes of the JSC meeting. Such JSC meeting minutes shall provide a description in reasonable detail of the discussions held at the meeting, and a list of any actions, decisions or determinations made by the JSC. Unless otherwise agreed by the JSC, the secretary shall distribute draft minutes of each meeting within

 

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[**] days after the meeting for review and comment, and final minutes shall be approved by both parties within [**] days after the meeting.

 

(g)           Joint Teams. Within [**] days after the Second Amendment Effective Date, the JSC shall establish a Joint Team with appropriate representation from the parties, which in the case of the Foundation may be Third Party advisors of Foundation appointed pursuant to the conditions specified in Second Amendment Section 18(f), to assist the JSC in the execution of the Research Plan.  The parties acknowledge and agree that the individuals listed on Exhibit SA-8 have been approved, as of the Second Amendment Effective Date, to serve as the Foundation’s representative to the Joint Team and there is no need for the parties to perform the procedures set forth in Second Amendment Section 18(f) with respect to their appointment to the Joint Team. The JSC shall have the authority to establish one or more additional Joint Teams with appropriate representation from the parties to assist the JSC in the performance of its duties. The JSC may establish such procedural rules and meeting schedules for such Joint Teams as it deems appropriate; provided, that unless otherwise agreed by the JSC each Joint Team shall meet at least [**], and shall report on its activities to the JSC at regularly-scheduled JSC [**] meetings.  The JSC may change the composition of any Joint Team at any time upon notice to the parties.

 

(h)           Appointment of JSC Members and Joint Team Members.  The appointment of members of the JSC and any Joint Team is a right of each party and not an obligation and shall not be a “deliverable” as defined in EITF Issue No. 00-21.  Each party shall be free to determine not to appoint members to the JSC and any Joint Team, and at any time during the Term and for any reason, either party shall have the right to withdraw from participation in the JSC and any Joint Team upon written notice to the other party, which notice shall be effective immediately upon receipt. If a party (“Appointing Party”) does not appoint members of the JSC or any Joint Team, or withdraws from the JSC or any Joint Team, it shall not be a breach of this Agreement, nor shall there be any associated penalty due nor shall there be any impact on the consideration otherwise provided for or due to the Appointing Party under this Agreement, and unless and until such persons are again appointed: (i) the other party, without regard to the provisions of this Second Amendment Section 5 with respect to voting, quorum or dispute resolution, may discharge the roles of the JSC and any Joint Team for which appointments were not made or with respect to which a withdrawal or removal has occurred by the Appointing Party (including designating a chairperson and secretary of the JSC and making all decisions within the decision-making authority of the JSC, which decisions shall be binding thereafter on both parties) and (ii) where the Appointing Party has not made appointments to the JSC or has withdrawn from the JSC, the Appointing Party shall not participate in any meetings of the JSC and shall not have the right to approve the minutes of any JSC meeting. If, at any time following the Second Amendment Effective Date, a party has not appointed or has pursuant to this Second Amendment Section 5(h) withdrawn from the JSC or any Joint Team, and such party wishes to resume participating in the JSC or any Joint Team, such party shall notify the other party in writing and, thereafter, such notifying party’s designees shall be entitled to attend any subsequent meeting of the JSC or any Joint Team and to participate in the activities of, and decision-making by, the JSC or any Joint Team, in each case as provided in this Second Amendment Section 5 as if a failure to appoint or submitting the withdrawal notice had not occurred.

 

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6.             Information Concerning other SMA Efforts. The parties acknowledge that a goal of Foundation in funding the DC Research is to identify and advance the compound most likely to advance rapidly to human clinical trials directed towards the treatment, mitigation or prevention of SMA, and that therefore the parties may have an interest in negotiating funding of other research and development efforts conducted by Company instead of, or in addition to, the Research Projects. In furtherance of this objective, Company will make available to Foundation on a confidential basis regular reports with respect to progress and summary data with respect to Company’s other internal efforts directed towards the approval of a compound for the treatment, mitigation or prevention of SMA. In addition, Company will make available to Foundation general product profiles showing, on a comparative basis, the status of potential Development Candidates from the DC Research against other potential therapeutic agents being pursued by Company in the treatment, mitigation or prevention of SMA (whether internal or in collaboration with Third Parties) in the format provided in Exhibit SA-3 to this Second Amendment; provided, however, that such obligation shall not require Company to breach any condition of any agreement in effect as of the Second Amendment Effective Date. Company will use Commercially Reasonable Efforts to ensure that it is able to share the information specified in this Second Amendment Section 6 with respect to any Third Party agreements entered in to following the Second Amendment Effective Date, and may only enter into such Third Party Agreements if it notifies Foundation reasonably in advance of entering in to such agreements to allow further discussions and potential negotiations with such Third Party with respect to such sharing of information.  If, based on information made available pursuant to this Second Amendment Section 6, either party is of the opinion that a change in funding or approach may be advisable, then such party may propose to the JSC, and the JSC shall conduct, an evaluation of the merits of such proposed change that includes a report and recommendation thereon to the parties.

 

7.             Foundation Access to Company Meetings Following Declaration of a Development Candidate. Following the JSC’s determination that a particular compound is a Development Candidate and through the earlier of Regulatory Approval, abandonment of Development of such Development Candidate, or the granting of a Reversionary License to Foundation, Company shall invite a representative of Foundation (to be designated by Foundation) to observe regularly scheduled monthly meetings of the Company team charged with Development of such Development Candidate, subject to the terms of Second Amendment Section 18(f); provided, however, that failure of Foundation to designate such representative or failure of such representative to attend such meetings shall not constitute a breach of this Agreement. Company may request that Foundation representative recuse themselves from such meetings (or portions of such meetings) (a) that do not relate specifically to a Development Candidate, (b) to prevent the breach of an applicable legal or regulatory obligation of confidentiality or privacy or avoid a conflict of interest, (c) to protect the attorney-client privilege, and/or (d) to preserve intellectual property rights.

 

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8.             Development of Products.

 

(a)           Article 3 of the Agreement (captioned “Development of Products”) shall, as of the Second Amendment Effective Date, be amended and restated as follows:

 

“3.           DEVELOPMENT OF PRODUCTS.

 

“3.1        Development Plan and Development Deadline Document. Upon selection of a Development Candidate, the JSC will meet to prepare a plan for the Development of such Development Candidate (such plan, the “Development Plan” for such Development Candidate”) and to conduct a formal review of and prepare a comprehensive update to Exhibit SA-4A to the Second Amendment (the “Development Deadline Document”) that reflects anticipated activities directed towards Development and commercialization of such Development Candidate through Regulatory Approval in the United States, in each case taking into consideration available information concerning such Development Candidate, the interests of SMA patients, the intellectual property and regulatory landscape and the commercial potential of the Development Candidate.  The parties acknowledge and agree that Exhibit SA-4A takes into account many delays in Development and receipt of Regulatory Approval that, while possible, are not anticipated as of the Second Amendment Effective Date to be likely; Company’s expectations, as of the Second Amendment Effective Date, of the activities required to obtain Regulatory Approval and its goal timelines for completing such activities are set forth in Exhibit SA-4B.  When preparing the Development Plan and updating the Development Deadline Document for each Development Candidate, the JSC shall consider whether to obtain, (a) “Orphan Product” designation from the FDA, and (b) research funding from the FDA’s Office of Rare Diseases or other government agencies to support human clinical trials conducted for such Development Candidate, in each case taking into consideration the protection of intellectual property rights and confidential information.  The Development Plan shall set forth, in at least the level of detail included in the Company’s or its Licensee’s plans for developing other preclinical or clinical (whichever reflects the status of the Development Candidate at such time) pharmaceutical products, both major and minor Development activities planned to be conducted with respect to such Development Candidate by or on behalf of Company or its Affiliates or Licensees, the anticipated timeline for performing such activities, the goals of such activities and the anticipated timeline for achieving such goals.  The Development Deadlines Document shall set forth the deadline by which each major Development activity must be performed by on behalf of Company or its Affiliates or Licensees if the Company wishes to avoid granting the Foundation the right to obtain a Reversionary License pursuant to Section 3.3 of the Agreement.  No change can be made to any Development Plan or Development Deadline Document without the approval of the JSC unless such change is approved by the parties’ respective Chief Executive Officers pursuant to Second Amendment Section 5(d) or 5(e), is implemented by Baseball Arbitration

 

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in accordance with Second Amendment Sections 5(d) and 17, or is approved by the Foundation in accordance with Second Amendment Section 9(b)(1).

 

“3.2        Diligence. Prior to selection of a Development Candidate, Company shall (i) perform the activities set forth in the Research Plan in a timely and complete manner, (ii) use Commercially Reasonable Efforts to achieve the goals of the DC Research within the time and budget allotted therefor in the Research Plan, and (iii) also have the research and Development obligations set forth in Section 2.5 of the Agreement.  Following selection of a Development Candidate, Company shall use Commercially Reasonable Efforts to Develop and commercialize (whether directly, through an Affiliate, or in collaboration with one or more Third Parties, through licensing or some combination of the foregoing, all in compliance with the other applicable terms of this Agreement), for the treatment, mitigation or prevention of SMA or any other disease, indication or medical condition approved in writing by Foundation, at least one Product from such Development Candidate.  In the event that the Development of a Development Candidate [**] toxicology studies governed by good laboratory practices (“GLP Toxicology Studies”) that causes Company to [**] that [**] is [**], then Company shall promptly notify Foundation in writing and Company shall spend up to [**] dollars ($[**]) Developing a Reversion Candidate through the start of GLP Toxicology Studies, provided that such Development does not [**] to [**] that such [**].  Upon the initiation of GLP Toxicology Studies for such Reversion Candidate, it shall be deemed a Development Candidate and Company shall have the diligence obligations set forth in the second sentence of this Section 3.2 of the Agreement.  In the event that the Development of a Development Candidate [**] of [**] that [**] to [**] that such [**], then Company shall promptly notify Foundation in writing and Company shall, within [**] days of such notice, notify Foundation that Company has decided to do one of the following:  (a) Develop one or more potential or actual Reversion Candidates or Lead Candidates at its own expense and in accordance with the terms and conditions of this Agreement, (b) Develop one or more potential or actual Reversion Candidates or Lead Candidates if Foundation is willing to pay for [**] percent ([**]%) of the costs of such Development for a [**] month period while the parties negotiate in good faith a separate agreement governing the further Development of such potential or actual Reversion Candidates or Lead Candidate(s); provided, that in the event the parties are unable to reach such separate agreement following good faith negotiations, then Company shall have [**] days following the end of such [**] month period to notify the Foundation of its decision to elect either option (a) or (c), or (c) stop all Development work on potential and actual Reversion Candidates or Lead Candidates and Development Candidates.  If Company chooses option (a), then Company shall use Commercially Reasonable Efforts to Develop such Reversion Candidates and/or Lead Candidates through the start of GLP Toxicology Studies; upon the initiation of GLP Toxicology Studies for any such Reversion Candidate or Lead Candidate, it shall be deemed a Development Candidate and Company shall have the diligence obligations set forth in the second sentence of this Section 3.2 of the

 

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Agreement.  If Company chooses option (c), then upon written notice (a “Reversion Notice”) to Company, Foundation shall have the Reversionary License and other rights set forth in Section 6.1(c)(2) of the Agreement.

 

“3.3        Development Benchmarks. Following designation of a Development Candidate, and in addition to Company’s general diligence obligation set forth in Section 3.2 of the Agreement, Company shall use Commercially Reasonable Efforts to perform the activities set forth in the Development Plan in accordance with the timeline specified therein and to complete each activity set forth in the Development Deadline Document prior to the applicable deadline specified therein, as such Development Plan or Development Deadline Document may be amended consistent with the terms of this Agreement, with respect to Development of a Product based on such Development Candidate; provided, however, that:

 

“(a)         the JSC shall conduct a formal review of and comprehensive update to such Development Plan and Development Deadline Document on an annual basis to reflect, on a good faith basis, information from the DC Research, ongoing clinical or supportive non-clinical trials, or other factors that may impact the activities, timelines, milestones and goals set forth such Development Plan or the deadlines set forth in such Development Deadline Document;

 

“(b)         a failure of Company, despite Commercially Reasonable Efforts, to meet any deadline set forth in a particular Development Deadline Document (as amended by the JSC) with respect to the relevant Development Candidate (each, a “Benchmark Trigger”) shall not create a breach of the Agreement, but shall instead trigger the availability of a right on the part of Foundation to obtain a Reversionary License in accordance with the following terms:

 

“(i)          if Foundation believes a Benchmark Trigger has occurred, it shall provide written notice to Company setting forth in reasonable detail those aspects of the Development Deadline Document that have created such Benchmark Trigger.

 

“(ii)         Company shall have [**] days to respond to a notice of Benchmark Trigger, which response shall either be (1) to cure the Benchmark Trigger (if it is capable of being cured), or (2) to propose a corrective plan to address the Benchmark Trigger, which shall take the form of a proposed amendment to the Development Deadline Document.

 

“(iii)        if Company proposes a corrective plan to address the Benchmark Trigger, Foundation shall have [**] days to accept or reject such corrective plan. The parties may extend such [**] day period by mutual consent to engage in good faith negotiations

 

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directed towards arriving at a mutually-agreeable form of such corrective plan with respect to such Benchmark Trigger.

 

“(iv)        if Company fails to respond to a Benchmark Trigger notice or cure the applicable Benchmark Trigger within [**] days of such Benchmark Trigger Notice, or, following the acceptance of a corrective plan for a Benchmark Trigger by Foundation fails to use Commercially Reasonable Efforts to execute such corrective plan, or following a PTC Corporate Change the entity primarily responsible for Company’s obligations under this Agreement fails to provide an M&A Certification as more fully set forth in Second Amendment Section 9(b)(4), then immediately as of such occurrence Foundation shall have the right to obtain the Reversionary License and other rights set forth in Section 6.1(c)(2) of the Agreement (a “Buy-Out Right”).

 

“(v)         Foundation may exercise its Buy-Out Right by providing written notice (a “Buy-Out Notice”) to Company and the first installment payment described in Section 6.1(c)(3)(iii)(A) of the Agreement, such Buy-Out Notice to be effective upon the occurrence of both (A) receipt by Company and (B) availability of funds with respect to such first installment payment (provided that such funds shall be deemed to be available on the [**] business day after the Company’s receipt of such initial payment if the Company does not deposit such payment within [**] after such receipt). Upon the effectiveness of such Buy-Out Notice, the terms of Section 6.1(c)(2) of the Agreement shall apply.

 

“(vi)        notwithstanding the foregoing, if Foundation fails to exercise a Buy-Out Right within [**] years of the date of the accrual of such Buy-Out Right, and other than with respect to the circumstances giving rise to such Buy-Out Right Company is in compliance with the terms of this Agreement, then such Buy-Out Right shall lapse and no longer be exercisable by Foundation.  For clarity, the foregoing operates on a Buy-Out Right by Buy-Out Right basis, with Foundation having a full [**] year period to exercise each Buy-Out Right.

 

“3.4        Decisions to Discontinue Development or Commercialization.

 

(a)           At the request of Company, the JSC shall determine, based on a comparison of test data for a particular Development Candidate (both alone and in combination with another treatment) and for the applicable Available Product and through the application of objective criteria previously established by the JSC (or by a mutually agreed independent technical expert if the JSC is not able to agree upon such objective criteria within [**] days after either party provides written notice to the other that

 

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it intends to arrange for a technical expert to decide such criteria), which criteria shall include without limitation [**] and [**], whether such Development Candidate (both alone and in combination with another treatment) appears to be less desirable as a therapeutic option in the Field than such Available Product.  If, following such a determination, Company informs Foundation in writing that it intends to cease further Development and commercialization of the applicable Development Candidate, then Foundation shall have: (i) upon Foundation’s written notice to Company (such notice, a “Reversion Notice”), a Reversionary License and all other rights set forth in Section 6.1(c)(2) of the Agreement if such Available Product [**] (a “[**]”), or (ii) a Buy-Out Right if such Available Product is a [**], such right to be exercisable by Foundation on the terms provided in Sections 3.3(b)(v) and (vi) of the Agreement.

 

(b)           Company shall notify Foundation in writing if Company has, in its good faith judgment, decided that a particular Development Candidate is not commercially viable, which decision shall not be based, in whole or in part, upon the size of the addressable patient population for such Development Candidate.  Such notice shall include a written explanation of the basis for Company’s decision.  Unless the parties enter into a separate agreement pursuant to which [**] the Development or commercialization of such Development Candidate, Foundation shall, upon written notice to Company (such notice, a “Reversion Notice”), have a Reversionary License and all other rights set forth in Section 6.1(c)(2) of the Agreement.

 

(c)           Company shall notify Foundation in writing if Company has, in its good faith judgment, determined that (i) based on advice of outside patent counsel, the pharmaceutical preparation, composition of matter, method of manufacture or method of use of a particular Development Candidate is covered by at least one issued and apparently valid and enforceable United States Patent of a Third Party and (ii) it is not possible for Company (or its Affiliate or Licensee, as applicable) to obtain a license under such Third Party Patents on commercially reasonable terms (a “Third Party Patent License”). Upon receipt of such notice from Company and provision by Foundation of a written notice to Company (such notice, a “Reversion Notice”), Foundation shall have a Reversionary License and all other rights set forth in Section 6.1(c)(2) of the Agreement.

 

(d)           Company shall notify Foundation in writing if Company has, in its good faith judgment, decided to cease all Development and commercialization of a particular Development Candidate and it believes that such cessation is not a breach of the obligations set forth in Section 3.2 of the Agreement.  Such notice shall include a written explanation of the basis for Company’s belief.  Unless the Foundation notifies Company in writing that it does not agree with such belief and that Company is

 

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obligated to continue Development and commercialization of such Development Candidate in accordance with Sections 3.2 and 3.3 of the Agreement, then upon Foundation’s written notice to Company (such notice, a “Reversion Notice”), Foundation shall have a Reversionary License and all other rights set forth in Section 6.1(c)(2) of the Agreement.”

 

(b)           The parties acknowledge their continued interest in Research Project B in the area of [**] which is [**], and their good faith intention to continue negotiations (including negotiations with any Third Parties) with respect to finding a way to fund and advance research directed towards Research Project B. Therefore, notwithstanding anything to the contrary in this Second Amendment, the amendments effectuated by this Second Amendment shall not apply to such Research Project B or any Lead Candidates identified during the course of such Research Project B.  Instead, the terms of the Agreement (including those amendments implemented pursuant to the First Amendment) as they existed prior to amendment by this Second Amendment shall continue to apply, after the Second Amendment Effective Date, exclusively to such Research Project B and any Lead Candidates identified during the course of such Research Project B.

 

9.             PTC Corporate Change:

 

(a)           M&A Approval Request.  Company shall have the option to notify a designated representative of Foundation in writing (an “M&A Approval Request”) no later than [**] days prior to the entry into a definitive written agreement involving a PTC Corporate Change. Such M&A Approval Request shall include the identity of the proposed acquiring or merging entity or entities, the expected relationship (if any) between Company and its Affiliates, Company’s shareholders, and Company’s management following such PTC Corporate Change, and the expected impact of such PTC Corporate Change on Company’s obligations under the Agreement. In addition, subject to appropriate confidentiality protections and the consent of the potential acquiring or merging entity or entities (to the extent such information is information of the potential acquiring or merging entity or entities or relates to the economics or financial terms of the potential PTC Corporate Change), Company shall promptly provide to Foundation’s designated representative any supplemental information concerning such potential PTC Corporate Change as Foundation shall reasonably request. If Foundation responds to such M&A Approval Request by consenting to such proposed PTC Corporate Change prior to Company’s entry into a definitive written agreement involving a PTC Corporate Change, then the terms and conditions of this Agreement shall remain in full force and effect without alteration, and Foundation shall sign such documents and provide such consents as may be reasonably required to effectuate the proposed PTC Corporate Change as described in such M&A Approval Request. If Foundation does not respond prior to Company’s entry into a definitive written agreement involving a PTC Corporate Change, or responds by denying consent prior to Company’s entry into a definitive written agreement for such PTC Corporate Change, then the consequences in Second Amendment Section 9(b) shall apply. Having given an M&A Approval Request to Foundation, Company shall not enter into a definitive written agreement involving a PTC Corporate Change contemplated in such M&A Approval Request prior to the earlier of (i) receipt

 

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of a response from Foundation as specified in this Second Amendment Section 9(a), or (ii) [**] days following the provision of such M&A Approval Request to Foundation.

 

(b)           Parallel Notification Option.  If with respect to a particular definitive written agreement that would result in the a PTC Corporate Change, Company has not given the M&A Approval Request provided for in Second Amendment Section 9(a), or if Company has given such M&A Approval Request and Foundation has either failed to respond within [**] days or responded by denying consent, then within [**] of entering into such definitive written agreement, Company shall provide written notice thereof to a designated representative of Foundation (the “M&A Notice”). Such M&A Notice shall include the identity of the proposed acquiring or merging entity or entities, the expected relationship (if any) between Company and its Affiliates, Company’s shareholders, and Company’s management following such PTC Corporate Change, and the expected impact of such PTC Corporate Change on Company’s obligations under the Agreement. Unless otherwise agreed by Foundation, (i) in connection with an M&A Notice given by Company or (ii) if Foundation does not respond to, or denies, an M&A Approval Request pursuant to Second Amendment Section 9(a), then the following terms and conditions shall apply effective upon Company’s entry into such definitive written agreement:

 

(1)           Notwithstanding the provisions of Second Amendment Sections 5(b)(x), 5(c)(ii), 5(d) and 5(e), any updates or amendments to the Development Plan (including the initial preparation thereof; provided, however, if as of Company’s entry into such definitive written agreement  a DC has been selected, but no Development Plan exists, any failure of the JSC to agree on preparation of an initial Development Plan shall be escalated to the Chief Executive Officers and, if required, referred to Baseball Arbitration as provided in Second Amendment Section 5(d)) or Development Deadline Document shall require the prior approval of Foundation in its sole discretion.

 

(2)           Notwithstanding the provisions of Second Amendment Section 5(e), if following the achievement of Proof-of-Concept the JSC is unable to reach a unanimous decision on any matter within its jurisdiction (other than an update or amendment to the Development Plan or Development Deadline Document), and the parties’ respective Chief Executive Officers are not able to resolve the matter in good faith as set forth in Second Amendment Section 5(e), then either party may by written notice to the other submit the matter to Baseball Arbitration as provided in Section 17 of this Second Amendment;

 

(3)           If this Agreement is not assigned upon the consummation of such PTC Corporate Change to the entity that gained control of Company or its assets as a result of such PTC Corporate Change, then such entity shall enter into a written agreement with Foundation wherein such entity shall guarantee the performance of Company’s obligations pursuant to this Agreement; and

 

(4)           The entity that, following the PTC Corporate Change, will be principally responsible for the obligations of Company under the Agreement shall have [**] days following the consummation of such PTC Corporate Change to (A) have a member of the executive management team of such entity who is responsible for Development of products being developed by Company prior to the PTC Corporate Change participate in a meeting with representatives of Foundation at the Foundation’s headquarters to discuss

 

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such entity’s plans for conducting the DC Research (if not completed prior to the PTC Corporate Change) and for Developing Products based on Development Candidates and (B) provide to Foundation a written certification (the “M&A Certification”) by an authorized officer of such entity (i) affirming such entity’s intention to perform the Company’s obligations under the Agreement, (ii) summarizing in reasonable detail such entity’s plans with respect to conduct of any part of the DC Research not performed by Company as of the effectiveness of the PTC Corporate Change, including a demonstration that sufficient funds, FTEs and other resources have been allocated to the performance of such DC Research, and (iii) summarizing in reasonable detail such entity’s plans with respect to execution of the Development Plan and completion of the activities set forth in the Development Deadline Document prior to the deadlines specified therein, including a demonstration that sufficient funds, FTEs and other resources have been allocated to the performance of such Development, and such entity’s business plans for the Development Candidates; provided, that failure to provide such M&A Certification in the time frame specified in this Second Amendment Section 9(b)(4) shall entitle Foundation to exercise the Buy-Out Right specified in Section 3.3(b)(iv) of the Agreement, such right to be exercisable by Foundation on the terms provided in Sections 3.3(b)(v) and (vi) of the Agreement.

 

(c)           Special Provisions in Connection with M&A Approval Request and/or M&A Notice. The parties recognize the special sensitivity of the information contained in an M&A Approval Request and/or and M&A Notice, and agree that any such notice and its contents are Confidential Information of Company pursuant to this Agreement. In addition, Foundation agrees not to use, and to use Commercially Reasonable Efforts to prevent use by any of its Affiliates, of any material non-public information contained in an M&A Approval Request and/or and M&A Notice for the purposes of transactions involving the equity or debt securities of either (i) Company or its Affiliates or (ii) any entity participating in the potential or actual transactions resulting in the PTC Corporate Change described in such M&A Approval Request and/or and M&A Notice. In addition, following receipt of an M&A Approval Request and/or and M&A Notice that includes material non-public information given while Company is subject to the periodic reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and for so long as the material information included in the M&A Approval Request and/or M&A Notice is non-public, unless specifically invited in writing by Company to do so, Foundation shall not, and shall use Commercially Reasonable Efforts to prevent its Affiliates from, in any manner, directly or indirectly, (a) publicly effecting or seeking, initiating, offering or proposing to effect or cause or participating in (whether publicly or otherwise and whether directly or through a Third Party), any tender or exchange offer, merger, consolidation or other business combination involving Company; or any “solicitation” of “proxies” (as such terms are used in the proxy rules of the United States Securities and Exchange Commission) or consents to vote any voting securities of Company; (b) forming, joining or in any way participating in a “group” (as defined under the Securities Exchange Act of 1934, as amended) with respect to any voting securities of Company (or security convertible into rights to acquire any voting security of Company); (c) taking any action which could reasonably be expected to force Company to make a public announcement regarding any of the types of matters set forth in (a) above; or (d) entering into any agreements, discussions or arrangements with any Third Party with respect to any of the foregoing.  In addition, Foundation shall not, and shall use

 

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Commercially Reasonable Efforts to prevent its Affiliates from, causing or knowingly permitting any of its or their respective directors, officers, employees, investment bankers (acting in their capacities on behalf of Foundation or any such Affiliate, as applicable), attorneys (acting in their capacities on behalf of Foundation or any such Affiliate, as applicable), accountants (acting in their capacities on behalf of Foundation or any such Affiliate, as applicable), or other advisors or representatives (acting in their capacities on behalf of Foundation or any such Affiliate, as applicable) to initiate or participate in any of the actions described in the foregoing clauses (a), (b), (c), or (d).

 

10.          Partnering.

 

(a)           Company shall have the primary responsibility to evaluate the need for and timing of Collaboration Activities.

 

(b)           During any period in which Company is not actively pursuing Collaboration Activities, Company shall report to the JSC on [**] basis Company’s views of the partnering/collaboration marketplace for drug discovery and lead optimization efforts at a similar stage to efforts under the DC Research or, if a Development Candidate has been declared, the partnering/collaboration marketplace for development candidates at a similar stage of development to such Development Candidate.

 

(c)           If Company determines to actively pursue Collaboration Activities, whether at its own initiative or in response to inquiries from Third Parties, Company will first seek input from the JSC on the nature, scope, and potential terms of a transaction arising in connection with such Collaboration Activities, as well as a rank-ordered summary list of preferred potential counterparties to such transaction. To the extent prepared by Company rather than received by Company from a potential counterparty, Company shall also provide the JSC with an opportunity to review a draft term sheet and related materials in support of its proposed Collaboration Activities. The JSC shall promptly provide input on Company’s overall approach to Collaboration Activities, as well as specific input on any term sheet or related materials provided to the JSC.

 

(d)           Prior to Company commencing formal term sheet negotiations or contractual negotiations with any Third Party in connection with Collaboration Activities, Company shall first notify Foundation in writing concerning such negotiations (a “Partnering Notice”).  Such Partnering Notice shall be accompanied by any available drafts of term sheets or contracts, or if not available, a summary of the proposed transaction to the extent available, in either case subject to redactions of financial terms to the extent required to comply with any confidentiality agreements with the potential counterparty. Following receipt of a Partnering Notice, Foundation and Company shall have the following rights and obligations in connection with the proposed transaction described in the Partnering Notice (regardless of whether, in the course of negotiations, the terms change from those described the original Partnering Notice):

 

(i)            Foundation shall designate a representative to serve in an advisory capacity with respect such transaction and, if requested by Company, to participate in negotiations subject to appropriate confidentiality protections; provided, however, that such representative shall not have the power to commit Foundation to enter into any

 

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amendments to the Agreement absent formal written approval by an appropriately authorized officer of Foundation.

 

(ii)           Foundation may designate legal counsel and [**] of Foundation, each subject to appropriate confidentiality protections, to review and provide comments upon proposed term sheets and contracts for such transaction subject to reasonable time frames consistent with overall progress and status of negotiations and not less than [**]percent ([**]%) of the timeframe specified by Company for the receipt of comments from its senior management. For clarity, such reasonable time frames may be as short as [**] if, in Company’s reasonable judgment, such time frames are required to support a successful negotiation process and such time frames are not less than [**] percent ([**]%) of the timeframe specified by Company for the receipt of comments from its senior management. If requested by the potential counterparty, Company shall have the right to redact financial terms from such term sheets and contracts. In reviewing and commenting on such proposed term sheet and contracts, Foundation counsel and designated representative shall indicate the relative importance of their comments, and if practicable a range of potential responses for negotiation purposes. Company shall use Commercially Reasonable Efforts to implement comments and negotiating positions suggested by Foundation’s counsel and/or representative, with due consideration given to the relative importance assigned to the comments and reflecting the outcome of any discussions between Company and Foundation’s counsel and/or representative with respect to modification of such comments. In addition, Company shall, as non-negotiable contractual terms, require (1) that the counterparty commit, in response to the JSC’s invitation, to sending a representative of such counterparty to such JSC meetings or portions of meetings as the JSC shall request for the purposes of informing, discussing and serving in an advisory role with respect to decisions regarding the progress of and all future plans for the DC Research and the Development and commercialization of the Reversion Candidates, Development Candidate(s) and Product(s) that are the subject of the agreement between Company and such counterparty, (2) an acknowledgement that the JSC shall remain the sole governance body for all research, Development and commercialization decisions regarding the DC Research and the Development and commercialization of Reversion Candidates, Development Candidates and Products that are the subject of the agreement between Company and such counterparty (which acknowledgement may include a clarification that the JSC’s role as such sole governance body shall not prevent the Company or its Licensee from making decisions necessary or useful to implement decisions made by the JSC regarding research, Development, commercialization, and Collaboration Activities with respect to Drug Candidates, Reversion Candidates, Development Candidate(s) and Product(s), so long as such implementation decisions are consistent with and faithful to the intent of the JSC’s decision), (3) that to the extent the counterparty will assume responsibility for Development of a Development Candidate or Product in any country, that such counterparty assume the obligations and rights of Company pursuant to Second Amendment Section 13 in that country, (4) an acknowledgement that the counterparty’s rights and licenses from Company with respect to Reversion Candidates, Development Candidates and Products will terminate upon a Special Termination or Company’s receipt of a Reversion Notice or Buy-Out Notice and an obligation in such circumstance for the

 

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counterparty to grant the licenses and rights specified in Section 3 of this Second Amendment and Section 6.1(c)(2) of this Agreement (including licenses and rights to (A) all intellectual property that, if developed, acquired or otherwise Controlled by Company, rather than such counterparty, would be Company Technology or Data (“Licensee Technology” and “Licensee Data”, respectively) and (B) all INDs, NDAs or similar regulatory filings made or obtained by such counterparty with respect to the relevant Reversion Candidates, Development Candidates and Products) and perform the activities specified therein in each case as if such counterparty were Company, and (5) third party beneficiary rights for Foundation in the event that such counterparty fails to fulfill any of the foregoing obligations.

 

(iii)          Prior to the conclusion of contractual negotiations pursuant to such Partnering Notice, Company shall schedule at least [**] with representatives of the negotiating team of potential counterparties to the transaction and the representatives designated by Foundation pursuant to the foregoing subsections (i) and (ii) to discuss Foundation’s goals and interests with respect to such proposed transaction. Unless otherwise agreed by Foundation, Company shall use Commercially Reasonable Efforts to cause [**] to take place in person at a location convenient to the New York metropolitan area.

 

(e)           Prior to Company entering into a definitive written agreement with any Third Party in connection with Collaboration Activities, Company shall seek the review and approval of the JSC by providing the members of the JSC a proposed final draft of the definitive written agreement and a summary [**] of the proposed transaction, including an overview of any items or terms subject to finalization in the draft provided. If required by the Company’s confidentiality agreement with the potential counterparty, Company shall have the right to redact financial terms from such proposed final draft of the definitive written agreement. As promptly as reasonably possible, but in no event later then [**] business days following receipt by the JSC members of such proposed final draft of the definitive written agreement and summary, the JSC shall convene a meeting to either approve or deny for such proposed transaction; provided, however, that if Company has otherwise complied with requirements of this Second Amendment Section 10, Foundation shall only be entitled to cast its JSC vote against such proposed transaction if it agrees either (i) to fund [**] percent ([**]%) of ongoing Development and commercialization costs for the applicable Development Candidate(s) or Product(s), or (ii) [**] and any related rights pursuant to Section [**]; and provided further, that failure of either party to make itself available within the time frames specified in this Second Amendment Section 10(e) shall entitle the other party to either approve or deny the proposed transaction in the name of the JSC without the requirement of holding an actual JSC meeting. If the JSC denies approval in accordance with this Second Amendment Section 10(e), Company shall not enter into such proposed definitive written agreement, but shall have the right to continue the applicable negotiations consistent with this Second Amendment Section 10 for the purposes of achieving a form of such definitive written agreement acceptable to the JSC.

 

(f)            Following the entry into a transaction pursuant to this Second Amendment Section 10, the following additional terms and conditions will apply:

 

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(i)                                     The JSC shall continue as the sole governance body for the conduct of the DC Research and the Development and commercialization of Reversion Candidates, Development Candidates and Products and shall continue to have all the rights and responsibilities specified in Second Amendment Section 5.

 

(ii)                                  The JSC shall invite the representative of the counterparty designated pursuant to Second Amendment Section 10(d)(ii)(1) to such JSC meetings, or portions of meetings, as the JSC shall deem advisable for the purposes of informing, discussing and serving in an advisory role with respect to decisions regarding the progress of and all future plans for the DC Research and the Development and commercialization of the Reversion Candidates, Development Candidate(s) and Product(s) that are the subject of the agreement between Company and such counterparty.

 

11.                               Company Payments to Foundation and Related Provisions: Sections 4.3, 4.4, 4.5, 4.6 and 4.7 of the Agreement (captioned “Milestone Donation by Company”, “Reporting of Product Revenues”, “Exchange Rate; Manner and Place of Payment”, “Taxes” and “Audits”, respectively) shall, as of the Second Amendment Effective Date, be amended and restated as follows:

 

“4.3                         Payments by Company. Company will make the following payments to Foundation in connection with Product Revenues:

 

“(a)                           Company will make payments as specified below to Foundation up to a maximum amount equal to [**] by [**] pursuant to the Agreement (the “SMAF Funding Amount,” which, for clarity, includes [**] pursuant to the [**] defined below (such total amount, the “Repayment Amount”).  For the purposes of this Section 4.3 of the Agreement, the “[**]” shall be [**] unless and until both (i) a Product has achieved Worldwide Net Sales of at least [**] US dollars ($[**]) in any calendar year; and (ii) the SMAF Funding Amount received with respect to such Product equals or exceeds a total of [**] US dollars ($[**]), upon the occurrence of which the [**].

 

“(b)                           In the event that Company and/or its Affiliates sells Products, then Company shall pay the Repayment Amount to the Foundation by making installment payments to the Foundation, each of which shall be equal to [**] percent ([**]%) of Net Sales received by Company and its Affiliates in the applicable calendar quarter and each of which shall be paid in U.S. dollars, by wire transfer to an account specified by the Foundation, within [**] days of end of such calendar quarter.  The first such installment payment shall be paid for the first calendar quarter following the first calendar year in which Net Sales equaled or exceeded [**] U.S. Dollars (US$[**]) (the “Sales Threshold”).  An additional installment payment shall be paid to the Foundation for each subsequent calendar quarter until such time as the sum of all installment payments made pursuant to this Section 4.3(b) of the Agreement, together with all installment payments made pursuant to Section 4.3(c) of the Agreement, equals the Repayment Amount.  If the [**], Company shall make additional payments until the updated Repayment Amount has been met.

 

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“(c)                            In the event that Company and/or its Affiliates enters into one or more license agreements for the development, manufacture, use, distribution, promotion or sale of a Drug Candidate or Product in one or more territories, then Company shall repay the Repayment Amount by making installment payments to the Foundation, each of which shall be equal to [**] percent ([**]%) of PTC License Income received by Company and its Affiliates in the applicable calendar quarter and each of which shall be paid in U.S. dollars, by wire transfer to an account specified by the Foundation, within [**] days of the end of such calendar quarter.  The first quarter during which such installment payments shall be paid shall be the first calendar quarter following the first calendar year in which both of the following criteria are met: (i) a Licensee makes or has previously made its First Commercial Sale and (ii) Worldwide Net Sales equal or exceeded [**] U.S. Dollars (US$[**]).  An additional installment payment shall be paid to the Foundation for each subsequent calendar quarter until such time as the sum of all installment payments made pursuant to this Section 4.3(c) of the Agreement, together with all installment payments made pursuant to Section 4.3(b) of the Agreement, equals the Repayment Amount.  If the [**], Company shall make additional payments until the updated Repayment Amount has been met.  Notwithstanding the foregoing, if the payments owed pursuant to this Section 4.3(c) of the Agreement would, when combined with other payments owed by Company to Third Parties in connection with the receipt of such PTC License Income, exceed [**] percent ([**]%) of such PTC License Income, then the payments owed pursuant to this Section 4.3(c) of the Agreement and such other payments owed by the Company to Third Parties shall all be automatically reduced pro rata until the combined payments no longer exceed [**] percent ([**]%) of such PTC License Income; provided, however, that this reduction shall only be available with respect to payments under this Section 4.3(c) of the Agreement if all other payments owed by Company to Third Parties in connection with the receipt of such PTC License Income are also subject to such pro rata reduction.

 

“4.4                         Reporting of Net Sales and PTC License Income.  From and after such time as Company first receives any Net Sales or PTC License Income and until such time as Company has paid in full the amount due under Section 4.3 of the Agreement (if any), Company shall deliver to the Foundation (or a Third Party designated in writing by the Foundation) quarterly written reports of Net Sales and PTC License Income received by Company and its Affiliates, which reports shall (a) separately indicate the total Net Sales and PTC License Income received, (b) show how Net Sales were calculated from the gross amounts received by Company and its Affiliates, with each deduction from gross amounts being separately itemized, (c) show how PTC License Income was calculated, and (d) itemize any amounts received by Company and its Affiliates from a Licensee that were excluded from PTC License Income and the rationale for such exclusion.  Company shall keep, and shall cause its Affiliates to keep, complete and accurate records pertaining to the receipt of Net Sales and PTC License Income in sufficient detail to permit the Foundation to confirm the accuracy of such reports.

 

“4.5                         Exchange Rate; Manner and Place of Payment.  All payments hereunder shall be payable in U.S. dollars; provided, that in the event that, by reason of applicable legal requirement in any country, it becomes impossible or illegal for a payor to transfer,

 

33

 

or have transferred on their behalf, royalties or other payments to the payee, the payor shall promptly notify the payee of the conditions preventing such transfer and such royalties or other payments shall be deposited in local currency in the relevant country to the credit of the payee in a recognized banking institution designated by the payee or, if none is designated by the payee within a period of [**] days, in a recognized banking institution selected by the payor and identified in a notice given to the payee.  When conversion of payments from any foreign currency is required for purposes of a calculation under this Agreement that relates to a payment from one party to the other, such conversion shall be at the exchange rate used by the payor (or, where applicable, a Licensee or licensee of Foundation) throughout its accounting system (which shall, in any event, be commercially reasonable) during the quarter for which such report is due.  All payments owed under this Agreement shall be made by check, or by wire transfer in immediately available funds to a bank and account designated in writing by the party entitled to receive payment, unless otherwise specified in writing by such party.

 

“4.6                         Taxes.  Each party will pay any and all taxes levied on account of any payments made to it under this Agreement out of the amounts it is to receive hereunder.  If any taxes are required to be withheld by the party making payment, such party will (a) deduct such taxes from the payment made by it, (b) timely pay the taxes to the proper taxing authority, (c) send proof of payment to the other party and certify its receipt by the taxing authority within [**] days following such payment, and (d) be deemed to have paid such amount to the other party hereunder.

 

“4.7                         Audits.  The Foundation shall have the right to cause an independent, certified public accountant reasonably acceptable to Company to audit the records of Company and its Affiliates to confirm the accuracy of (a) Company’s reports of Net Sales and PTC License Income, (b) Company’s accounting pursuant to Second Amendment Section 2(d) or 4(a) of its use of internal resources and the out-of-pocket expenses that Company incurred in accordance with the Research Plan, (c) the amount specified in Second Amendment Section 2(d) as the amount spent by Company on DC Research between [**] and [**], and (d) Company’s invoice pursuant to Second Amendment Section 2(d) with respect to the amounts it spent between [**] and the Second Amendment Effective Date, in each case for a period covering not more than the preceding [**] years.  Such audits may be exercised during normal business hours upon reasonable prior written notice to Company and no more than [**] per year.  If an audit reveals that Company has underpaid any amount due to the Foundation, overcharged Foundation pursuant to Second Amendment Section 2(d) or overstated in Second Amendment Section 2(d) the amount that it spent on DC Research between [**] and [**], Company shall pay all such amounts to the Foundation within thirty (30) days of receiving the Foundation’s audit report.  The Foundation shall bear the full cost of such audit unless such audit discloses (i) an underreporting of Net Sales or PTC License Income by Company of more than [**]% during any calendar year, (ii) an over-reporting of internal resources and the out-of-pocket expenses of more than [**]% during any calendar year or (iii) that Second Amendment Section 2(d) over-states by more than [**]% the amount that Company spent on DC Research between [**] and [**], in which case, Company shall bear the full cost of such audit.”

 

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12.                               Reversionary License. Section 6.1(c) of the Agreement (captioned “Reversionary Licenses to Data and Company Technology”) shall, as of the Second Amendment Effective Date, be amended and restated as follows:

 

“(c)                            Reversionary Licenses to Data and Company Technology.

 

“(1)                           In the event that:

 

“(i)                               During the term of the DC Research, Company fails to perform its obligations as set forth in Second Amendment Section 2 with respect to conduct of the DC Research, and does not remedy such failure to comply within [**] days after notice thereof from Foundation; provided, however, that in the event [**], the parties shall promptly meet to negotiate in good faith the [**], and Company’s right to cure any failure under this Section 6.1(c)(1)(i) shall be extended to the longer of (xx) [**] days after Foundation provides Company written notice that it wishes to terminate such good faith negotiations, or (yy) such other period as the parties may agree in connection with a mutually-agreed plan to address [**];

 

“(ii)                            Company is otherwise in material breach of this Agreement with respect to the DC Research and does not remedy such breach within [**] days after notice of such breach from Foundation; or

 

“(iii)                         Company is in material breach of its obligations set forth in Section 3.2 of the Agreement, and does not remedy such breach within [**] days after notice thereof from Foundation;

 

“then, in any such case, Foundation shall have the option to declare the effectiveness of the terms and conditions specified in Section 6.1(c)(2) of the Agreement, such option to be exercised by providing written notice to Company (a “Reversion Notice”) within the [**] period following the last date on which Company could have cured such failure or breach pursuant to this Section 6.1(c)(1) of the Agreement.

 

“(2)                           Effective upon receipt of a Reversion Notice pursuant to Section 3.2, 3.4(a)(i), 3.4(b), 3.4(c) or 3.4(d) of the Agreement or within the time period specified in Second Amendment Section 3(d) or Section 6.1(c)(1) of the Agreement, or upon the effectiveness of a Buy-Out Notice pursuant to Section 3.3(b)(v) of the Agreement (regardless whether the Foundation obtained its Buy-Out Right pursuant to Section 3.3(b)(iv) of the Agreement, Section 3.4(a)(ii) of the Agreement or Second Amendment Section 9(b)(4)), the following terms and conditions shall apply:

 

“(i)                               Company shall, and it hereby does, grant to Foundation an exclusive worldwide license, including the right to grant sublicenses, under any Company Technology, Licensee Technology, Data or Licensee Data that relates to a pharmaceutical preparation, composition of matter, method of manufacture and/or method of use in the Field, of Reversion Candidates and/or Products containing one or more Reversion Candidates, solely for the purpose of

 

35

 

researching, developing, making, having made, using, selling, having sold, offering for sale and importing Reversion Candidates and Products containing Reversion Candidates (such Products, “Reversion Products”) in the Field (such license being referred to herein as the “Reversionary License”).  The Reversionary License shall be fully-paid up and royalty free unless the Foundation obtains the Reversionary License pursuant to (A) Section 3.3(b)(iv) of the Agreement, Section 3.4(a)(ii) of the Agreement, or Second Amendment Section 9(b)(4), in which case the licensing fees, royalties and other terms set forth in Section 6.1(c)(3) of the Agreement shall also apply or (B) Second Amendment Section 3(d) of the Agreement, in which case the royalties, [**], and other terms set forth in Section 6.1(c)(4) of the Agreement shall also apply;

 

“(ii)                            Company shall, and it hereby does, grant to Foundation a fully-paid up, royalty-free, non-exclusive, and worldwide license, including the right to grant sublicenses, to (xx) Company Technology and Licensee Technology to the extent not exclusively licensed pursuant to Section 6.1(c)(2)(i) of the Agreement, (yy) Data and Licensee Data, and (zz) Company Base IP, in each case solely to the extent (1) reasonably necessary for Foundation to exercise its rights under the Reversionary License or (2) useful for Foundation to exercise its rights under the Reversionary License and used or contemplated to be used in the DC Research or pursuant to the Development Plan (as applicable); provided, that the license granted to Foundation in this Section 6.1(c)(2)(ii) of the Agreement [**] or [**] or [**];

 

“(iii)                         Company shall reasonably cooperate with Foundation in order to enable Foundation to continue, initiate or re-initiate the Development, manufacture and commercialization of the Reversion Candidates or Reversion Products, such cooperation and assistance to be provided in a timely manner (having regard to the nature of the cooperation or assistance requested) and including without limitation (in each case with respect to the Reversion Candidates or Reversion Products): (A) within [**] months of the Reversion Notice or Buy-Out Notice:  (1) transferring or granting a right of reference to any INDs, NDAs, or similar regulatory filings made or obtained by Company or its Affiliate or Licensee; (2) providing a copy of all Data and Licensee Data and all reports and other information that were (or should have been) accessible to Foundation via the shared electronic collaboration space described in Second Amendment Section 4(a); and (3) providing reasonable quantities of existing stock of materials (other than (1) materials [**] or (2) materials [**] in Company’s possession or under its control and (xx) that are specific to, or were used or were contemplated to be used in, the DC Research or the Development Plan, and are not commercially available from Third Parties, (yy) that are reasonably necessary or useful for continued research, Development or commercialization of Reversion Candidates in the Field, and (zz) the transfer of which would not [**] trigger any contractual obligation to make payments to a Third Party (other than a Licensee); provided, however, that any subsequent transfers of such materials by Foundation to Third Parties shall be subject to the

 

36

 

terms of a materials transfer agreement reasonably acceptable to Company; (B) permitting Foundation to purchase, for a period of up to [**] years (or less if Foundation obtains an alternative validated, supply source within such [**] year period), Reversion Candidates and Reversion Products [**], but only to the extent (1) such Reversion Candidates or Reversion Products are manufactured by Company itself (as opposed to under a Third Party manufacturing contract) or (2) such Reversion Candidates or Reversion Products are manufactured for the Company by a Third Party and the agreement pursuant to which such Reversion Candidates or Reversion Products are manufactured (xx) provides for manufacture of other active pharmaceutical ingredients or pharmaceutical products that are not Reversion Candidates or Reversion Products, (yy) is not assignable to Foundation or (zz) has not been assigned to Foundation; (C) permitting Foundation to purchase [**] all or any part of Company’s worldwide unsold inventory of such Development Candidate or Product together with any raw materials and work-in-process relating to such Development Candidate or Product; (D) upon Foundation’s request, using Commercially Reasonable Efforts to assign to Foundation any Third Party manufacturing contracts relating to Reversion Candidate or Reversion Product; (E) upon Foundation’s request, using Commercially Reasonable Efforts to assign to Foundation any Third Party license agreements relating to such Reversion Candidate or Reversion Product; and (F) providing prompt technical assistance as requested by Foundation [**] for [**] months after the Reversion Notice or Buy-Out Notice;

 

“(iv)                        Foundation, at its own expense, shall maintain clinical trial and/or product liability insurance, as applicable, in an amount consistent with industry standards and only if available on commercially reasonable terms, and shall [**] with respect to such insurance, with respect to losses arising out of or related to its activities pursuant to the Reversionary License and other rights granted in this Section 6.1(c)(2) of the Agreement, and Foundation shall provide a certificate of insurance evidencing such coverage to Company upon request;

 

“(v)                           At Foundation’s option, on a license-by-license basis, either (i) Foundation may request in writing that Company use Commercially Reasonable Efforts to secure the assignment to Foundation or its designee any licenses granted by Company to Licensees; or (B) upon written notice from Foundation all licenses granted by Company to Licensees shall automatically terminate and Licensees shall be obligated to perform the obligations set forth in this Section 6.1(c)(2) of the Agreement as if they were Company.  Company shall include in each agreement with a Licensee an acknowledgement by Licensee of the foregoing and a provision that grants Foundation third party beneficiary status with respect to Licensee’s performance (or failure to perform) such obligations;

 

“(vi)                        The rights and obligations of the parties pursuant to Article 2 of the Agreement, Article 3 of the Agreement, Sections 4.3, 4.4, 4.5, 4.6, 4.7(a) and 6.3 of the Agreement, First Amendment Sections 5, 6 and 7, and Second Amendment Sections 2 (including Foundation’s obligations to fund the DC Research), 3, 4

 

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(except for the final report described in Second Amendment Section 4(b)(ii)), 5, 6, 7, 9, 10, 13, 17, 18(a), 18(b), 18(c), 18(d)and 18(f) shall also terminate; and

 

“(vii)                     Notwithstanding the foregoing provisions of Section 6.1(c)(2) of the Agreement, in no event shall Company be required to take any actions pursuant to Section 6.1(c)(2) of the Agreement that, in the good faith judgment of outside counsel to the Company, would infringe any Third Party intellectual property rights (and no non-infringing alternative is identified after a reasonable inquiry) or trigger a breach of any contractual obligations of Company with respect to a Third Party (other than a Licensee).”

 

“(3)                           In addition to the provisions of Section 6.1(c)(2) of the Agreement, if Foundation obtains the Reversionary License and other rights set forth in Section 6.1(c)(2) of the Agreement pursuant to Section 3.3(b)(iv) of the Agreement, Section 3.4(a)(ii) of the Agreement, or Second Amendment Section 9(b)(4), then (A) Foundation shall [**] and (B) Foundation shall make the following payments to Company with respect to such Reversionary License and rights:

 

“(i)                               If [**] pursuant to this Agreement (which, for clarity, [**] as of the accrual of the applicable Buy-Out Right, then Foundation shall pay to Company a licensing fee equal to [**] U.S. dollars ($[**]) as specified in (iii) below.

 

“(ii)                            In the alternative, if [**] with respect to [**] pursuant to this Agreement (which, for clarity, [**]) as of the accrual of the applicable Buy-Out Right, then Foundation shall pay, as specified in (iii) below, to Company a licensing fee that is equal to the sum of [**] U.S. dollars ($[**]) plus x, where x equals the lesser of (A) [**] and (B) [**] U.S. dollars ($[**]).  For clarity, such licensing fee shall never exceed [**] U.S. dollars ($[**]).

 

“(iii)                         Foundation shall pay the licensing fee set forth in (i) or (ii) above in three installments:  (A) a first installment, equal to [**] percent ([**]%) of such license fee shall be paid by Foundation simultaneously with Foundation’s notice that it is exercising such Buy-Out Right; (B) a second installment, equal to [**] percent ([**]%) of such license fee shall be paid by Foundation by the [**]month anniversary of Foundation’s notice that it is exercising such Buy-Out Right, provided that Company has complied with its obligations pursuant to Section 6.1(c)(2) of the Agreement in good faith and responded promptly and adequately to any Foundation notices detailing any alleged lack of such good faith compliance; and (C) a final installment, equal to [**] percent ([**]%) of such license fee shall be paid by Foundation (x) by the [**]month anniversary of Foundation’s notice that it is exercising such Buy-Out Right, provided that Company has complied with its obligations pursuant to Section 6.1(c)(2) of the Agreement in good faith and responded promptly and adequately to any Foundation notices detailing any alleged lack of such good faith compliance, or (y) if earlier, the date upon which Foundation is satisfied that Company has fully performed all obligations of Company set forth in Section 6.1(c)(2) of the Agreement;

 

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“(iv)                        [**], Foundation shall pay to Company the following percentage royalties (on a Reversion Product-by-Reversion Product basis) on product revenues (based on the definition of Product Revenues in the Agreement, but substituting “Reversion Product” for “Product” and “Foundation” for “Company” as the context requires) of any Reversion Product, such payments to be made on a quarterly basis in arrears no later than [**] days following the end of the applicable quarter:

 

	
Stage of Reversion Candidate Upon 
   Exercise of Buy-Out Right by
   Foundation
    	
 
    	
Royalty on Product
   Revenues of applicable
   Reversion Product
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    

 

“For the purposes of the foregoing table, [**] shall mean [**]. The royalties in the foregoing table shall commence, on a country-by-country basis, upon the first commercial sale (based on the definition of First Commercial Sale in the Agreement, but substituting “Foundation” for “Company” as the context requires) of the applicable Reversion Product in such country, and continue for the longer of (xx) [**] from the date of such first commercial sale or (yy) the date of expiration of the last Company Patent covering the applicable Reversion Product within the applicable country. Foundation shall comply with the applicable provisions of Sections 4.4, 4.5, 4.6 and 4.7 of the Agreement with respect to such royalty payments, substituting “Company” for “Foundation” and vice versa as the context may require.”

 

“(4)                           In addition to the provisions of Section 6.2(c)(2) of the Agreement, if Foundation obtains the Reversionary License and other rights set forth in Section 6.1(c)(2) of the Agreement pursuant to Section 3.2 of the Agreement or Second Amendment Section 3(d), then Foundation shall make the following payments to Company with respect to the Reversionary License and shall have the following obligations to Company:

 

“(i)                               Foundation shall (A) [**] and (B) make royalty payments to Company, on a Reversion Product-by-Reversion Product basis, equal to [**] percent ([**]%) of product revenues (based on the definition of Product Revenues in the Agreement, but substituting Reversion Product for Product and Foundation for Company as the context requires) of any Reversion Product, such payments to

 

39

 

be made on a quarterly basis in arrears no later than [**] days following the end of the applicable quarter.  Such royalty payments shall commence, on a country-by-country basis, upon the first commercial sale (based on the definition of First Commercial Sale in the Agreement, but substituting “Foundation” for “Company” as the context requires) of the applicable Reversion Product in such country, and continue for the longer of (xx) [**] from the date of such first commercial sale or (yy) the date of expiration of the last Company Patent covering the applicable Reversion Product within the applicable country. Foundation shall comply with the applicable provisions of Sections 4.4, 4.5, 4.6 and 4.7 of the Agreement with respect to such royalty payments, substituting “Company” for “Foundation” and vice versa as the context may require.”

 

“(ii)                            Before granting any Third Party an exclusive sublicense of the Reversionary License for any purpose that includes commercializing any Reversion Product in the United States, [**], for a period of up to [**] months, [**] would be [**] and [**] to [**].  If the [**], by the end of such [**] month period, a [**] that set[**], then Foundation shall be free to grant such a sublicense to a Third Party [**].”

 

“(5)                           If Foundation makes a final decision, with respect to each and every Reversion Candidate, that it has no interest in performing or having performed (including through a sublicensee), at such time or at any point in the future, any further research, Development, or commercialization upon such Reversion Candidate pursuant to the Reversionary License, then it shall provide written notice thereof to Company, and Company shall be entitled to [**] and this Agreement on written notice to Foundation.”

 

13.                               Clinical Trials and Access to Materials.  The terms and conditions of this Second Amendment Section 13 shall apply equally to each Licensee as if such Licensee were Company, shall be included in the agreement pursuant to which Company grants rights to such Licensee with respect to any Drug Candidate or Product, and Foundation shall be a third party beneficiary with respect to such terms and conditions and shall have the right to take action directly against such Licensee if such Licensee fails to comply with such terms and conditions.

 

(a)                                 SMAF Clinical Trials Advisory Committee. Foundation shall have the right, but not the obligation, to create a committee of experts to advise Foundation and Company on clinical trials and expanded access with respect to Development Candidates and Products (the “SMAF Clinical Trials Advisory Committee”). Such SMAF Clinical Trials Advisory Committee shall consist of such individuals as Foundation may designate, but shall include at least one clinical investigator with experience in the Field, [**]. The SMAF Clinical Trials Advisory Committee shall have, as one of its principal mandates, the responsibility of balancing (i) the rapid and efficient Development and commercialization of Development Candidates and Products for the benefit of all potential patients in the Field and (ii) the appropriateness, based on available safety and efficacy information with respect to such Development Candidates and Products, of providing access to such Development Candidates or Products to individual patients via the extension protocols to Company Clinical Trials or expanded access programs further

 

40

 

described in Second Amendment Sections 13(b) and 13(c). Such SMAF Clinical Trials Advisory Committee may establish its own procedures for meetings and decision-making.

 

(b)                                 Company Clinical Trials.

 

(1)                                 Foundation shall have the right, but not the obligation, to assist with patient recruitment for any Company Clinical Trial involving SMA patients by (i) referring to Company (or, at Company’s request, referring directly to any clinical investigator at a clinical trial site for the applicable Company Clinical Trial) up to [**] SMA patients meeting the enrollment criteria for the applicable Company Clinical Trial and identified by Foundation or its designee, and/or (ii) proposing up to [**] clinical trial sites with access to appropriate patient populations for such Company Clinical Trial. Company shall use Commercially Reasonable Efforts to enable such patients to be enrolled in such Company Clinical Trial consistent with the applicable enrollment criteria, protocol, and target patient number for such Company Clinical Trial (it being understood that such patients should be given priority over other patients who are equally qualified to participate in such Company Clinical Trial, provided that the final decision regarding such enrollment is made by the clinical investigator and/or clinical trial site personnel of the investigating institution), and to contract with such clinical trial sites for such Company Clinical Trial. If Foundation, in its sole discretion, determines not to assist in patient recruitment for any Company Clinical Trial, then it shall so inform Company and Company shall assume all responsibility for patient recruitment and selection of clinical trial sites.

 

(2)                                 Each time that Company commences the drafting of a clinical trial protocol for a Development Candidate or Product and at reasonable times thereafter, Company will discuss with Foundation Company’s plans for making such Development Candidate or Product available to participants in such clinical trial after the completion of such trial. If mutually agreed by the parties based on such discussions, or if recommended by the SMAF Clinical Trials Advisory Committee in its sole discretion, Company will submit to the appropriate Regulatory Agency a suitable extension protocol and corresponding informed consent form providing for administration of such Drug Candidate or Product for at least [**] beyond the term provided for in a particular Company Clinical Trial. Company shall use Commercially Reasonable Efforts to obtain the applicable Regulatory Agency’s approval of such extension protocol and informed consent and subsequent approval from the Institutional Review Boards at the locations where such Company Clinical Trial is being conducted; provided, however, that the proposed [**] period for such extension protocol may be shortened based on the request or advice of the applicable Regulatory Agency. Upon receipt of such approvals, Company shall provide, in accordance with the approved extension protocol, such Development Candidate or Product to those SMA patients who enrolled in such Company Clinical Trial pursuant to this Second Amendment Section 13(b) and wish to continue to receive such Development Candidate or Product after the completion of such Company Clinical Trial (such patients, the “Enrollees”). For so long as Company is continuing to develop or seek approval from a Regulatory Agency for such Development Candidate or Product, and subject either to mutual agreement of Company and Foundation or to the recommendation of the SMAF Clinical Trials Advisory Committee in its sole discretion, Company shall use commercially reasonably efforts to obtain approval for an amended or new extension protocol providing for continued administration of such Development Candidate or Product to the Enrollees, and Company shall

 

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provide such Development Candidate or Product to the Enrollees in accordance with any such approved protocol. In any case in which Company, [**], does not concur in the decision to commence or continue any extension protocols pursuant to this Second Amendment Section 13(b)(2), then Company’s obligations to assist with such extension protocols and continue to supply such Development Candidate or Product to Enrollees shall [**], directly or indirectly, [**], and [**] of Development Candidate or Product to Enrollees.

 

(3)                                 If Company stops Developing or seeking approval from a Regulatory Agency of a Development Candidate or Product for which it filed an extension protocol pursuant to Second Amendment Section 13(b)(2), and either the parties mutually agree or the SMAF Clinical Trials Advisory Committee in its sole discretion (but having considered any safety issues) recommends that the Enrollees continue to have access to such Development Candidate or Product for a longer period than provided for in any existing extension protocol submitted by Company with respect to such Development Candidate or Product, then upon Foundation’s request, Company shall facilitate Foundation’s efforts to arrange for prolonged continued access to such Development Candidate or Product for some or all of the Enrollees by taking all reasonable actions requested by Foundation (consistent with the SMAF Clinical Trials Advisory Committee’s recommendations, if applicable), including without limitation: (i) either (1) transferring Company’s IND for such Development Candidate or Product to Foundation or its designee or (2) providing Foundation or its designee with a right of reference to the manufacturing-related information and safety and efficacy data in Company’s IND or Drug Master File or equivalent regulatory filing (as applicable) so that Foundation or its designee can submit its own IND with respect to such continued access; (ii) providing (for the shorter of [**] months or the amount of time necessary for Foundation or its designee to establish an alternative supply of equivalent clinical grade product) such Development Candidate or Product to Foundation or its designee for administration to such Enrollees in accordance with any extension protocol for which Foundation or its designee has obtained approval from the FDA or the applicable Agency; (iii) assisting Foundation or its designee with obtaining an alternative, equivalent clinical grade supply of such Development Candidate or Product by (1) facilitating Foundation’s or its designee’s negotiation of a supply agreement with Company’s manufacturer of such Development Candidate or Product or (2) providing technology transfer and other technical assistance reasonably requested by Foundation to enable Foundation or its designee to manufacture such Development Candidate or Product; and (iv) providing Foundation with a non-exclusive, fully paid, sublicensable license under Company Technology and Data, and solely to the extent reasonably necessary for Foundation to exercise its rights under the foregoing license, to Company Base IP (provided, that the license granted hereunder to Foundation [**] or [**] or [**] to perform or have performed on its behalf any and all activities necessary or reasonably useful to provide continued access to such Development Candidate or Product in accordance with this Second Amendment Section 13(b)(3). In any case in which Company, [**], does not concur in the decision to commence or continue any extension protocols pursuant to this Second Amendment Section 13(b)(3), then Company’s obligations to assist with such extension protocols and continue to supply such Development Candidate or Product to Enrollees shall [**], directly or indirectly, [**], and [**] of Development Candidate or Product to Enrollees. In connection with the foregoing, Foundation, [**], shall maintain clinical trial and/or product liability insurance, as applicable, in an amount consistent with industry standards and only if available on commercially reasonable terms, and shall [**] with respect to such insurance, with

 

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respect to losses arising out of or related to the activities contemplated under this Second Amendment Section 13(b)(3). Foundation shall provide a certificate of insurance evidencing such coverage to Company upon request.

 

(c)                                  Expanded Access Program.

 

(1)                                 At such a time as the parties mutually agree, or the SMAF Clinical Trials Advisory Committee in its sole discretion determines, that results from Company Clinical Trials and other Development activities with respect to the applicable Development Candidate or Product support expanded access to such Development Candidate or Product for patients with SMA, then Company and Foundation shall cooperate to establish such an expanded access program in which at least [**] SMA patients identified by Foundation who do not meet the enrollment criteria for a particular Company Clinical Trial (whether or not such Company Clinical Trial is directed to SMA patients) for such Development Candidate or Product (such patients, the “Patients”) may gain access to such Development Candidate or Product. Company agrees that at its earliest reasonable opportunity following the commencement of such cooperation (e.g., at a meeting with FDA), Company will inquire about the feasibility of an expanded access protocol for such Drug Candidate or Product for SMA purposes and will invite a designee of Foundation with appropriate medical or regulatory experience to participate in discussions with the FDA regarding the establishment and maintenance of such expanded access program. In connection with such expanded access program, at Foundation’s request and consistent with any recommendation made by the SMAF Clinical Trials Advisory Committee, Company will either (i) submit to the FDA a protocol that is reasonably acceptable to Foundation and calls for administering such Development Candidate or Product to the Patients or (ii) notify Foundation that it will not be making such a submission and facilitate the submission and approval of such a protocol by the Foundation or its designee.

 

(2)                                 If Company chooses option (i) above, then it shall use Commercially Reasonable Efforts to obtain approval of such protocol and upon receipt of such approval, it shall provide such Development Candidate or Product to the Patients in accordance with the approved protocol; provided, that the parties shall engage in good faith negotiations with respect to [**].

 

(3)                                 If Company chooses option (ii) above, then Company shall facilitate Foundation’s efforts to arrange for such expanded access program for such Development Candidate or Product for the Patients by taking all reasonable actions requested by Foundation, in each case [**], including without limitation: (1) either (1) allowing the expanded access program to be performed pursuant to Company’s IND (in which case Foundation or its designee shall provide Company with all data arising from and other information with respect to such expanded access program that is necessary or reasonably useful for Company to fulfill its obligations as the IND holder) or (2) providing Foundation or its designee with a right of reference to the manufacturing-related information and safety and efficacy data in Company’s IND or Drug Master File or similar regulatory filing (as applicable) so that Foundation or its designee can file its own IND with respect to such expanded access program; (ii) providing such Development Candidate or Product to an appropriate designee of Foundation for administration to the Patients in accordance with any expanded access protocol for which Foundation or its designee has obtained approval from the FDA [**]); and (iii) providing Foundation with a non-

 

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exclusive, fully paid, sublicensable license under Company Technology and Data, and solely to the extent reasonably necessary for Foundation to exercise its rights under the foregoing license, to Company Base IP (provided, that the license granted to Foundation hereunder [**] or [**] or [**] to perform or have performed on its behalf any and all activities necessary or reasonably useful to provide such expanded access to such Drug Candidate or Product in accordance with this Second Amendment Section 13(c)(3).  In connection with the foregoing, Foundation, [**], shall maintain clinical trial and/or product liability insurance, as applicable, in an amount consistent with industry standards and only if available on commercially reasonable terms, and shall [**] with respect to such insurance, with respect to losses arising out of or related to the activities contemplated under this Second Amendment Section 13(c)(3). Foundation shall provide a certificate of insurance evidencing such coverage to Company upon request.

 

(d)                                 Indemnification by Foundation. In connection with the foregoing Second Amendment Sections 13(b)(3) and 13(c)(3), Foundation hereby agrees to save, defend, indemnify and hold harmless Company, its trustees, officers, employees and agents (each, a “Company Indemnitee”) from and against any and all losses, damages, liabilities, expenses and costs, including reasonable legal expenses and attorneys’ fees (“Company Losses”), to which a Company Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any Third Party to the extent such Company Losses arise directly or indirectly out of (a) [**] or [**] of any Development Candidate or Product by Foundation, its Affiliate(s) or Licensee(s) pursuant to Second Amendment Sections 13(b)(3) or 13(c)(3), or (b) the breach of this Agreement by Foundation or the gross negligence or willful misconduct of Foundation pursuant to Second Amendment Sections 13(b)(3) or 13(c)(3), except in each case to the extent such Losses result from (x) the breach of this Agreement by Company or the gross negligence or willful misconduct of any Company Indemnitee, or (y) the activities of Company or its agents or employees in connection with any Development Candidate or Product. The obligations of Foundation under this Second Amendment Section 13(d) are conditioned upon Company’s delivery of written notice to Foundation of any potential Company Losses promptly after Company becomes aware of such potential Company Losses.  Foundation shall have the right to assume the defense of any suit or claim related to Company Losses if it has assumed responsibility for the suit or claim in writing.  If Foundation defends the suit or claim, Company may participate in (but not control) the defense thereof at its sole cost and expense but Company may not settle such suit or claim without the prior written consent of Foundation, not to be unreasonably withheld.

 

(e)                                  Clinical Trial/CRO Agreements. In connection with the foregoing Second Amendment Sections 13(b)(3) and 13(c)(3), Foundation hereby agrees that under any circumstance in which Foundation is contracting directly with clinical trial sites, clinical investigators, and contract research organizations (“CROs”), it will use as the basis for its negotiations [**], and will use Commercially Reasonable Efforts to secure terms with respect to publication, confidentiality, intellectual property (which shall be [**], as the case may be, [**]), and indemnification substantially similar to those routinely obtained by Company with respect to such an agreement, and naming the Company as a third-party beneficiary.

 

14.                               Patents. Section 6.2 of the Agreement (captioned “Patent Filings”) shall, as of the Second Amendment Effective Date, be amended and restated as follows:

 

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“6.2.                      Patent Filings.

 

“(a)                           Company shall control the filing, prosecution and maintenance of all Patents on Company Technology at its sole expense, which expense shall be included as part of Company’s contribution to the Research Project and not payable or reimbursable by Foundation; provided, that Foundation shall have reasonable rights of comment and consultation on all such filing, prosecution and maintenance activities; and provided further that with respect to initial filings claiming the composition of matter, method of use, or process for manufacturing small molecules, Foundation’s review shall be confined to specific individuals reasonably acceptable to Company.

 

“(b)                           Subject to the prior written consent of Foundation, such consent not to be unreasonably withheld, delayed or conditioned, Company shall have the right to disclose, in connection with the filing, prosecution or maintenance of any Patents on Company Technology filed by it pursuant to this Agreement, any Confidential Information to the extent reasonably necessary to support and enable the claims of any application with respect to such Patents, or to maintain or enforce any such issued Patents. If, with respect to a specific filing or other document to be submitted to a governmental or quasi-governmental authority in connection with an issued Patent or application for a Patent, Foundation has reviewed and commented on such filing or document pursuant to Section 6.2(a) of the Agreement and raised no objections to the use of Confidential Information, then such consent will be deemed to have been granted for such filing or document.

 

“(c)                            Notwithstanding the foregoing Sections 6.2(a) and 6.2(b) of the Agreement, if Company grants the Reversionary License to Foundation pursuant to Section 6.1(c)(2) of the Agreement with respect to a Reversion Candidate or Reversion Product, then Foundation (or its designee) shall have the rights and obligations of Company under Sections 6.2(a) and 6.2(b) of the Agreement (substituting “Foundation” for “Company” as the context requires) with respect to Patents exclusively licensed to Foundation pursuant to such Reversionary License; provided, however, that [**], and [**] of the Agreement.

 

“(d)                           Each of Company and Foundation shall execute all papers and instruments, and require its employees and contractors to execute all papers and instruments, so as to enable the other party to exercise the rights set forth in this Section 6.2 of the Agreement.”

 

15.                               Confidentiality and Exceptions. Section 5.1 of the Agreement (captioned “Confidentiality”) and Section 5.2 of the Agreement (captioned “Exceptions”) shall, as of the Second Amendment Effective Date, be amended and restated as follows:

 

“5.1                         Confidentiality.  Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the parties, the parties agree that, during the Term and for a period of [**] years thereafter, each party (the “Receiving Party”) will maintain in confidence all Confidential Information disclosed to it by the other party (the “Disclosing Party”), provided that, with regard to Confidential Information which is trade secret information, such obligation shall extend thereafter until such information is

 

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no longer a trade secret of the Disclosing Party.  The Receiving Party may use the Confidential Information of the Disclosing Party only to the extent required to accomplish the purposes of this Agreement.  The Receiving Party shall use at least the same standard of care as it uses to protect proprietary or confidential information of its own to ensure that its employees, agents, consultants and other representatives do not disclose or make any unauthorized use of the Disclosing Party’s Confidential Information; provided, however, each party shall ensure that any such employees, agents, consultants and other representatives who are granted access to trade secrets or, prior to publication, to other potentially patentable matter for which patent protection has been or is planned to be sought, arising from the DC Research shall sign written agreements containing confidentiality obligations substantially similar to those set forth in this Agreement except that the duration of such confidentiality obligations for consultants may be less than the duration set forth in this Agreement provided that the duration shall be for a minimum of [**] years from the date of disclosure.  Each party will promptly notify the other upon discovery of any unauthorized use or disclosure of the other party’s Confidential Information.

 

“5.2                         Exceptions.  The obligations of non-disclosure and non-use contained in Section 5.1 will not apply to the extent that it can be established by the Receiving Party by competent proof that such Confidential Information: (a) was already known to the Receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the Disclosing Party; (b) was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party; (c) became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the Receiving Party in breach of this Agreement; (d) is independently discovered or developed by the Receiving Party without the use of Confidential Information of the Disclosing Party; or (e) was disclosed to the Receiving Party, other than under an obligation of confidentiality, by a Third Party who had no obligation to the Disclosing Party not to disclose such information to others.”

 

16.                               Publications, Presentations and Public Disclosures. Section 5.4 of the Agreement (captioned “Publication”) and Section 5.5 of the Agreement (captioned “Publicity; Regulatory Disclosures”) shall, as of the Second Amendment Effective Date, be amended and restated as follows:

 

“5.4.                      Scientific and Medical Publications and Presentations.

 

“(a)                           Company and Foundation each acknowledge the other party’s interest in publishing or presenting certain results of the Research (including but not limited to the DC Research) to obtain recognition within the scientific community and to advance the state of scientific knowledge and enhance the progress of research in the Field, in all cases in a manner consistent with existing obligations to Third Parties and scientific and industry standards for the research, development and commercialization of small molecules for the treatment, mitigation or prevention of disease. Each party also recognizes their mutual interest in obtaining Patents in support of Products, and the need for such publications or presentations to be strictly monitored to prevent any adverse

 

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effect from premature publication or dissemination of results of the activities hereunder. Consequently, the JSC shall establish reasonable policies and procedures with respect to scientific publications and presentations that balance the foregoing interests, and once established both parties shall be bound by such policies and procedures, and may establish a separate publication committee to administer such policies and procedures. In the event no such procedures and policies are established by the JSC, either party, its employees or consultants wishing to make a publication in a scientific or medical journal or a presentation or similar oral disclosure made at a scientific or medical conference without obligation of confidentiality relating to work performed as part of the Research (the “Publishing Party”) shall transmit to the other party (the “Reviewing Party”) a copy of the proposed written publication or a written detailed description of the proposed oral disclosure at least [**] days prior to submission or disclosure (or, in the case of Third Party agreements, such shorter period as required by such Third Party agreement) prior to submission for publication or presentation. The Reviewing Party shall have the right (a) to make modifications to the publication for accuracy or intellectual property reasons, and (b) to obtain a delay in publication or presentation of up to [**] days (or, in the case of Third Party agreements, such shorter period as required by such Third Party agreement) in order to enable patent applications or similar applications protecting rights in such information to be filed, and each party shall have the right to prohibit disclosure of any of its Confidential Information (except as otherwise provided in Section 6.2 of the Agreement) in any such proposed publication or presentation. Notwithstanding the foregoing, in no event shall any publication, presentation, or other public disclosure disclose the chemical structure of any Lead Candidate, Drug Candidate, Development Candidate, or Product absent specific permission from the JSC. In any permitted publication or presentation by a party, the other party’s contribution shall be duly recognized, and authorship shall be determined in accordance with customary practice in the scientific or medical field.

 

(b)                                 Company shall provide in each Research Report a summary section which is suitable for immediate public disclosure and the Foundation may release copies of such portions of each Research Report and supporting Data other than chemical structures to any Third Party investigator who requests such material from the Foundation in writing; provided, however, that said Third Party investigator first executes Company’s non-disclosure agreement that the Company provides to the Foundation for such purpose (it being understood that such non-disclosure agreement will not prohibit said Third Party investigator from applying his or her knowledge of the Data to further SMA research and/or to treatment of SMA patients, but will prohibit him or her from transferring such Data except as incidental and necessary to treating SMA patients).

 

(c)                                  The parties acknowledge that during the course of research, development and commercialization of Products, it may be necessary to enter into agreements with Third Parties that require different standards for publication and presentation of research results relating to the Research. Notwithstanding Section 5.4(a) of the Agreement, the party conducting research, development or commercialization of Products may enter into agreements with academic, government, nonprofit or similar entities which allow principal investigators and other external researchers to publish or present the results of

 

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their research on terms inconsistent with Section 5.4(a) of the Agreement; provided, that each party entering into such agreements shall use Commercially Reasonable Efforts to include provisions reasonably consistent with and similar to those appearing in Section 5.4(a) of the Agreement in such Third Party agreements.

 

“5.5                         Publicity; Regulatory Disclosures.   In connection with the execution of the Second Amendment, the parties shall jointly issue one or more press releases, the contents of which shall be mutually agreed. Except as otherwise required by law or regulation, or as permitted pursuant to Section 5.4 of the Agreement, neither party shall issue any additional press release or make any other public disclosure concerning this Agreement or the subject matter hereof without first providing the other party with a copy of the proposed release or public disclosure for review and comment, provided that such right of review and comment shall only apply for the first time that specific information is to be disclosed, and shall not apply to the subsequent disclosure of substantially similar information that has previously been disclosed.  The party proposing to make the press release or other public disclosure shall give due consideration to any reasonable comments by the other party relating to such proposed press release or other public disclosure.  The principles to be observed by the parties in press releases or other public disclosures with respect to this Agreement shall be: accuracy, compliance with applicable legal and regulatory requirements, the requirements of confidentiality under this Agreement and customary business practice in the biopharmaceutical industry for disclosures by companies comparable to Company.  For the avoidance of doubt, either party may issue such press releases as it determines, based on advice of counsel, are reasonably necessary to comply with laws or regulations (including regulations of non-governmental regulatory bodies) or for appropriate market disclosure.  It is understood, however, that unless required by law or regulation, the parties shall not disclose the specific financial terms and conditions of this Agreement in any press release or other public disclosure.  In addition, if a public disclosure is required by law or regulation, including without limitation in a filing with the United States Securities and Exchange Commission, the disclosing party shall provide copies of the proposed disclosure reasonably in advance of such filing or other disclosure for the non-disclosing party’s prior review and comment and shall give due consideration to any reasonable comments by the non-filing party relating to such filing, including without limitation the provisions of this Agreement for which confidential treatment should be sought.”

 

17.                               Baseball Arbitration.

 

(a)                                 An arbitration under this Second Amendment Section 17 (a “Baseball Arbitration”) shall be initiated by written notice of one party to the other and may only be initiated with respect to disputes which meet both the following criteria: (i) the dispute arises from matters within the jurisdiction of the JSC following escalation to the respective Chief Executive Officers of the parties as provided elsewhere in the Agreement, and (ii) Baseball Arbitration is explicitly specified as the method for resolving such dispute pursuant to the Agreement.

 

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(b)           The Baseball Arbitration shall be held in a location mutually agreeable to the parties, or if no such location can be agreed, in New York City, according to the then-current commercial arbitration rules of the American Arbitration Association (“AAA”), except to the extent such rules are inconsistent with this Second Amendment Section 17.

 

(c)           The Baseball Arbitration will be conducted by one (1) arbitrator who shall be reasonably acceptable to the parties and who shall be appointed in accordance with AAA rules.  If the parties are unable to select an arbitrator within [**] days of the notice that initiated the Baseball Arbitration, then the arbitrator shall be appointed in accordance with AAA rules. Any arbitrator chosen hereunder shall have educational training and industry experience sufficient to demonstrate a reasonable level of scientific, financial, medical and industry knowledge relevant to the particular dispute.

 

(d)           Within [**] days after the selection of the arbitrator, each party shall submit to the arbitrator and the other party a proposed resolution of the dispute that is the subject of the arbitration, together with any relevant evidence in support thereof (the “Proposals”).  Within [**] business days after the delivery of the last Proposal to the arbitrator, each party may submit a written rebuttal of the other party’s Proposal and may also amend and re-submit its original Proposal.  The parties and the arbitrator shall meet within [**] business days after the parties have submitted their final Proposals (and rebuttals, if any), at which time each party shall have [**] to argue in support of its Proposal.  The parties shall [**]. Within [**] days after such meeting, the arbitrator shall select one of the final Proposals so submitted by one of the parties as the resolution of the dispute, but may not alter the terms of either final Proposal and may not resolve the dispute in a manner other than by selection of one of the submitted final Proposals. If a party fails to submit a Proposal within the initial [**] day time frame set forth in the first sentence of this Second Amendment Section 17, the arbitrator shall select the Proposal of the other party as the resolution of the dispute. Any time period set forth in this Second Amendment Section 17 may be extended by mutual agreement of the parties.

 

(e)           No arbitrator shall have the power to award punitive damages under this Agreement regardless of whether any such damages are contained in a Proposal, and such award is expressly prohibited.  The proceedings and decisions of the arbitrator shall be confidential, final and binding on the parties. Judgment on the award so rendered may be entered in a court having jurisdiction thereof.

 

(f)            [**] the costs of such Baseball Arbitration.

 

18.          Miscellaneous.

 

(a)           Compounds not Selected: During the Second Amendment Term and for the [**] period thereafter, should Company require additional funds for the conduct of research or Development in the Field of any Lead Candidate that was tested in the course of the DC Research but was not selected as a Reversion Candidate (such research and Development, “Non-DC Research”), Foundation will be consulted and provided the opportunity to fund such Non-DC Research in whole or in part prior to any fundraising efforts for such Non-DC Research. Should Company identify an opportunity for agreement with any Third Party or Third Parties with respect to such Non-DC Research during such [**] period, it will provide reasonable advance

 

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notice to Foundation, and the parties will negotiate in good faith (involving such Third Party or Third Parties as appropriate) to develop a structure that supports such additional funding, based on the following principles: (a) entities co-funding such Non-DC Research should share information on the Non-DC Research with each other, subject to appropriate confidentiality provisions, (b) governance with respect to co-funded Non-DC Research should be via a joint steering committee including representatives of Foundation, Company, and any Third Parties, and (c) entities that have provided funding to such co-funded Non-DC Research should have an opportunity (subject to compliance with the terms of their respective funding agreements) to continue their support of such Non-DC Research. For clarity, Company’s obligations under this Second Amendment Section 18(a) shall in no way limit Company’s ability to engage in general fund-raising activities and to enter into agreements relating thereto.

 

(b)           Additional Testing of Reversion Candidates.  After the end of the Research Term and selection of one or more Development Candidates, the JSC (at the request of either party) shall consider whether further research or pre-clinical Development on any Reversion Candidate that is not a Development Candidate is advisable for the purposes of enhancing the utility of such Reversion Candidate as a potential back-up compound or next-generation Product.  If deemed advisable by the JSC, and subject to agreement between the parties with respect to funding, Company shall make such Reversion Candidates available for such further research or pre-clinical Development under the terms of a commercially reasonable materials transfer agreement (or a more comprehensive agreement agreed by the parties with respect to such Third Party, which shall include commercially reasonable terms with respect to materials transfer).Without limiting the generality of the foregoing, each such materials transfer agreement shall provide that in no event shall any compound become the property of such Third Party, nor shall any such compound become subject to royalty or other reach-through payment obligations to such Third Party as a result of such testing by such Third Party, and shall also require that a summary of the results of the research be provided to the Company. Company shall share all such research results with the JSC.

 

(c)           Testing by Foundation Partners.  Upon the Foundation’s request, and under the supervision of the JSC with respect to design of the testing to be done and selection of appropriate compounds and (only during the Research Term) consistent with the then-current Research Plan, Company shall provide reasonable quantities of compounds synthesized or tested during the DC Research (“Research Compounds”) to other Foundation partners for testing on a blinded basis in assays already being run by such Foundation partner, provided that (i) after the end of the Research Term, such testing shall be limited to Reversion Candidates and shall not include, without the prior written consent of Company, any Development Candidate that is, at such time, the subject of a Company Clinical Trial, (ii) the Foundation or such Foundation partner shall disclose the results of such screening to Company and (iii) such testing shall be performed pursuant to a separate materials transfer agreement reasonably acceptable to Company and negotiated in good faith by the parties prior to provision of any Research Compounds or related information, which agreement shall contain reasonable and customary terms to protect the parties’ respective intellectual property rights.  Without limiting the generality of the foregoing, each such materials transfer agreement shall provide that in no event shall any Research Compound become the property of the Foundation partner, nor shall any Research Compound become subject to royalty or other reach-through payment obligations to the

 

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Foundation partner as a result of such testing by such Foundation partner, and shall also require that a summary of the results of the research be provided to the Foundation.  Foundation shall share all such research results with the JSC on a regular basis.

 

(d)           Financial Reporting.  For so long as it is not a publicly-traded company, (i) Company shall provide Foundation, within [**] days after the end of each of the first three quarters of the fiscal year of the Company, with a copy of the financial report for such quarter that Company generates for its investors, and (ii) Company shall use best its efforts to provide within [**] days, but in no event more than [**] days, after the end of the fiscal year of the Company, a copy of the annual audit report for such year that the Company generates for its investors.  The financial reports provided pursuant to Second Amendment Section 18(d)(i) shall be prepared in accordance with generally accepted accounting principles consistently applied, and duly certified (subject to year-end audit adjustments) by the chief financial officer of the Company, and the annual audit report provided pursuant to Second Amendment Section 18(d)(ii) shall be duly certified by independent public accountants of recognized standing.  [**], Company may request Foundation consider amending the provisions of this Second Amendment Section 18(d), and Foundation shall consider such request in good faith.

 

(e)           Representations, Warranties and Covenants.  Each party hereby represents, warrants and covenants to the other that (i) it has the authority and right to enter into this Second Amendment and to perform its obligations hereunder and (ii) it has not granted as of the Second Amendment Effective Date, and will not grant during the Term (except as specifically allowed and consistent with the applicable terms of this Agreement), any assignment, license, covenant not to sue, option to obtain a license or other right, interest or benefit, exclusive or otherwise, to any Third Party relating to the DC Research or any Reversion Candidate, Drug Candidate, Development Candidate or Product that conflicts with or limits the rights granted to or exercisable by the other party hereunder.

 

(f)            Designation of Third Party Representatives. In any case under this Agreement under which Foundation is entitled to designate a representative, such representative may be a person other than a Foundation employee provided the following criteria are met: (i) Foundation identifies such person in writing to Company, [**], and requests Company’s written consent for such addition, such consent not to be unreasonably withheld or delayed and to be based solely on objective written criteria determined by the JSC within [**] months after the Second Amendment Effective Date, which criteria shall vary depending upon the information to which such person is anticipated to have access to in the course of his or her service as such representative; and (ii) such person signs a confidentiality agreement with Company substantially in the form attached as Exhibit SA-7. The JSC shall also establish policies and procedures regarding continuing disclosure obligations for such representatives with respect to conflicts of interest within [**] months of the Second Amendment Effective Date. A breach by a designated representative of Foundation of such conflict of interest policies, or of the confidentiality agreement between Company and such representative, shall entitle Company to terminate such representative effective upon written notice by Company to Foundation stating the grounds for such termination.

 

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(g)           Corrective Amendments.

 

(i) The following Section of the Agreement is cancelled and of no further force and effect: Section 1.20 of the Agreement, the last sentence of Section 2.4(b) of the Agreement, the Option defined in First Amendment Section 2, and First Amendment Section 8.

 

(ii) Section 2.8 of the Agreement (captioned “Subcontracts”) is amended and restated as follows:

 

“2.8        Subcontracts.  Company may perform some of its obligations under the Research Plan through one or more subcontractors, provided that (a) the Research Plan calls for such activities to be subcontracted, (b) none of the rights of either party hereunder are diminished or otherwise adversely affected as a result of such subcontracting, and (c) Company will at all times be responsible for the performance and, except as otherwise agreed by the parties in writing, payment of such subcontractor.  In determining whether any Company obligations under the Research Plan will be performed in-house or by a Third Party subcontractor, Company shall take into consideration Company’s then-current capabilities, the relative efficiency of utilizing such internal capabilities versus Third Party services and guidance from the JSC.”

 

(iii)          Section 6.1(a) of the Agreement (captioned “Data”) is amended and restated as follows:

 

“(a)         Data.  Company shall solely own all Data.”

 

(iv)          Section 6.4 of the Agreement (captioned “No Other License”) is amended and restated as follows:

 

“6.4        No Other License.  Other than any licenses granted pursuant to Section 6.1(c) and Second Amendment Section 3 or 13, no license is granted or implied with respect to any Company Technology, Company Base IP or Data for any use.”

 

(v)           Section 7.1 of the Agreement (captioned “Term”) is amended and restated as follows:

 

“7.1        Term.  The term of this Agreement (the “Term”) shall commence on the Effective Date and shall continue until the earliest of: (a) Foundation’s receipt of the Repayment Amount in full (including any subsequent payments due on account of [**]); (b) if Foundation exercises a Buy-Out Right, Company’s receipt of all payments due pursuant to Section 6.1(c)(3) of the Agreement; (c) if Foundation obtains a Reversionary License pursuant to Section 3.2 of the Agreement or Second Amendment Section 3(d), Company’s receipt of all payments due pursuant to Section 6.1(c)(4) of the Agreement; (d) if Foundation obtains a Reversionary License other than as a result of the exercise of a Buy-Out Right or pursuant to Section 3.2 of the Agreement or Second Amendment Section 3(d), the expiration of the last-to-expire Patent licensed to Foundation pursuant to such Reversionary License; or (e) the effective date of any termination in

 

52

 

accordance with this Article 7.  For clarity, a Special Termination shall not terminate the term of this Agreement.”

 

(vi)          The last sentence of Section 7.3 of the Agreement (captioned “Termination Upon Principal Scientist’s Unavailability”) is amended and restated as follows: “In the event of a termination of this Agreement pursuant to this Section 7.3 of the Agreement, and notwithstanding any other provision of this Agreement to the contrary (including but not limited to Section 7.4 of the Agreement), only the provisions of Sections 4.7, 6.1(a), 6.1(b), 6.1(c)(2), 6.2(a), 6.2(b), 6.2(d), 7.3, 7.5 of the Agreement, Articles 1, 5, 8, and 9 of the Agreement and Sections 1, 4(b)(ii),  and 18(a) of the Second Amendment will survive such termination of this Agreement.”

 

(vii)         Section 7.4 of the Agreement (captioned “Consequences of Expiration or Termination”) is amended and restated as follows:

 

“7.4        Consequences of Expiration or Termination.  Expiration or termination of this Agreement will not relieve the parties of any obligation accruing prior to such expiration or termination.  Except as otherwise provided in Section 7.3 of the Agreement in the case of a termination pursuant to its terms, and notwithstanding any other provision of this Agreement to the contrary, only the provisions of Sections 4.3, 4.4, 4.5, 4.6, 4.7, 7.4, and 7.5 of the Agreement, and Articles 1, 5, 6 (to the extent applicable), 8 and 9 of the Agreement and Sections 1, 4(b)(ii), and 18(a) of the Second Amendment will survive expiration or termination of this Agreement.”

 

(viii)        The second sentence of Section 7.5 of the Agreement is amended and restated as follows:  “The parties agree that the Foundation, to the extent it receives a license pursuant to Section 6.1(c) of the Agreement or Second Amendment Section 3 or 13, will retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code.”

 

(ix)          Section 9.7 of the Agreement (captioned “Notices”) is amended and restated as follows:

 

“9.7        Notices.  All notices and other communications provided for hereunder shall be in writing and shall be mailed by first-class, registered or certified mail, postage paid, or delivered personally, by overnight delivery service or by facsimile, with confirmation of receipt, addressed as follows:

 

“If to Foundation:

 

“Spinal Muscular Atrophy Foundation
 “888 Seventh Avenue, Suite 400
 “New York, NY 10019
 “Fax:  (212) 247-3079
 “Attention: Ms. Cynthia Joyce, Executive Director

 

53

 

“With a copy to:

 

“Cooley Godward Kronish LLP
 “4401 Eastgate Mall
 “San Diego, CA  92121
 “Fax:  (858) 550-6420
 “Attention:  Matthew Browne, Esq.

 

“If to Company:

 

“PTC Therapeutics, Inc.
 “100 Corporate Court 
 “South Plainfield, NJ 07080-2449
 “Fax:  908-222-1128
 “Attention: Legal Department

 

“With an email copy to: legal@ptcbio.com

 

“Either party may by like notice specify or change an address to which notices and communications shall thereafter be sent.  Notices sent by facsimile shall be effective upon confirmation of receipt, notices sent by mail or overnight delivery service shall be effective upon receipt, and notices given personally shall be effective when delivered.”

 

19.          No Other Modifications. In all other respects, the terms and conditions of the Agreement shall remain unchanged and in full force and effect. In the event of any conflict between the terms of this Second Amendment and the terms of the Agreement or the First Amendment, the terms of this Second Amendment shall govern. For clarity, any cross-references to Agreement Sections refer to those Agreement Sections as amended by this Second Amendment.

 

54

 

IN WITNESS WHEREOF, the parties have executed this Second Amendment by their duly authorized officers as of the date set forth above.

 

	
PTC THERAPEUTICS, INC.
    	
SPINAL MUSCULAR ATROPHY   FOUNDATION
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Stuart Peltz
    	
 
    	
/s/ Florence A. Eng
    
	
By:
    	
Stuart Peltz
    	
 
    	
By:
    	
Florence A. Eng
    
	
Title:
    	
President & CEO
    	
 
    	
Title:
    	
President
    

 

55

 

EXHIBIT SA-1

 

Research Plan for DC Research

 

[See following for Research Plan and related budget]

 

FTE Rates

 

	
 
    	
FTE Category
    	
 
    	
FTE Rate (Annual)
    	
 
    
	
 
    	
[**]
    	
 
    	
[**]
    	
 
    
	
 
    	
[**]
    	
 
    	
[**]
    	
 
    
	
 
    	
[**]
    	
 
    	
[**]
    	
 
    
	
 
    	
[**]
    	
 
    	
[**]
    	
 
    
	
 
    	
[**]
    	
 
    	
[**]
    	
 
    
	
 
    	
[**]
    	
 
    	
[**]
    	
 
    
	
 
    	
[**]
    	
 
    	
[**]
    	
 
    

 

56

 

DC Research Plan
  Exhibit SA-1

 

[**]

 

Confidential Materials omitted and filed separately with the Securities and Exchange Commission. A total of seven pages were omitted. [**]

 

57

 

Note: This draft budget is based on slides presented to SMAF in November 2008 that contemplated funding by SMAF commencing in December 2008. The dates and numbers in this draft will need to be adjusted depending on the date we actually sign the contract.

 

DC Research Budget

 

Draft of December 31, 2008

 

Ours is a New Way of Looking

 

MONTHS 1-12: FTES AND EXTERNAL EXPENSES TO BE FUNDED BY SMAF

 

	
Employee Type
    	
 
    	
12/08
    	
 
    	
1/09
    	
 
    	
2/09
    	
 
    	
3/09
    	
 
    	
4/09
    	
 
    	
5/09
    	
 
    	
6/09
    	
 
    	
7/09
    	
 
    	
8/09
    	
 
    	
9/09
    	
 
    	
10/09
    	
 
    	
11/09
    	
 
    	
TOTAL
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Total   FTEs
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
Total   FTE Cost ($000s)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
External   Spend ($000s)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
Grand   Total - SMA ($000s)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

PTC Therapeutics, Inc. © 2009 - Slide 1

 

58

 

MONTHS 13-24: FTES AND EXTERNAL EXPENSES TO BE FUNDED BY SMAF

 

	
Employee Type
    	
 
    	
12/09
    	
 
    	
1/10
    	
 
    	
2/10
    	
 
    	
3/10
    	
 
    	
4/10
    	
 
    	
5/10
    	
 
    	
6/10
    	
 
    	
7/10
    	
 
    	
8/10
    	
 
    	
9/10
    	
 
    	
10/10
    	
 
    	
11/10
    	
 
    	
TOTAL
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Total   FTEs
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
Total   FTE Cost ($000s)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
External   Spend ($000s)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
Grand   Total –SMA ($000s)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

PTC Therapeutics, Inc. ©2

 

59

 

MONTHS 1-12: FTES AND EXTERNAL EXPENSES TO BE FUNDED BY PTC

 

	
Employee Type
    	
 
    	
12/08
    	
 
    	
1/09
    	
 
    	
2/09
    	
 
    	
3/09
    	
 
    	
4/09
    	
 
    	
5/09
    	
 
    	
6/09
    	
 
    	
7/09
    	
 
    	
8/09
    	
 
    	
9/09
    	
 
    	
10/09
    	
 
    	
11/09
    	
 
    	
TOTAL
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Total   FTEs
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
Total   FTE Cost ($000s)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
External   Spend ($000s)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
Grand   Total - PTC ($000s)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

PTC Therapeutics, Inc. © 2009 - Slide 3

 

60

 

MONTHS 13-24: FTES AND EXTERNAL EXPENSES TO BE FUNDED BY PTC

 

	
Employee Type
    	
 
    	
12/09
    	
 
    	
1/10
    	
 
    	
2/10
    	
 
    	
3/10
    	
 
    	
4/10
    	
 
    	
5/10
    	
 
    	
6/10
    	
 
    	
7/10
    	
 
    	
8/10
    	
 
    	
9/10
    	
 
    	
10/10
    	
 
    	
11/10
    	
 
    	
TOTAL
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Total   FTEs
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
Total   FTE Cost ($000s)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
External   Spend ($000s)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
Grand   Total - PTC ($000s)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

61

 

SMA PROJECT BUDGET SUMMARY

 

	
 
    	
 
    	
Gap Period
    July 2008 -Nov 2008
    	
 
    	
Year One
    Dec 2008 - Nov 2009
    	
 
    	
Year Two
    Dec 2009 - Nov 2010
    	
 
    	
Total
    
	
SMA   Request
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
PTC   Share
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
Total   Investment
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

PTC Therapeutics, Inc. ©2009 -Slide 5

 

62

 

EXHIBIT SA-2

 

Format for DC Research Reports

 

[See following]

 

63

 

	
Project: XYZ
    	
 
    	
Date:
    Period Covered:
    Project Objective:
    	
 
    	
SMAF Logo
    

 

 

Major Accomplishments

 

 

 

 

Key Issues - Plans to Address Them

 

 

 

 

Next Major Milestones and Dates

 

 

 

 

Critical Decision-Enabling Activities and Timelines

 

 

 

 

Confidential

 

64

 

EXHIBIT SA-3

 

Product Profile Format for other SMA Efforts

 

[See following]

 

65

 

Exhibit SA-3: Lead Profile Status Report (Unfunded)

 

	
Attributes
    	
 
    	
Other Effort(1)
    
	
Potency (EC1.5X)
    	
 
    	
 
    
	
Increase SMN protein level in cells (fold)
    	
 
    	
 
    
	
Target selectivity
    	
 
    	
 
    
	
Selectivity Index (CC50/EC1.5X)
    	
 
    	
 
    
	
Metabolism (%loss in 1hr)
    	
 
    	
 
    
	
Route of administration
    	
 
    	
 
    
	
PK (e.g. exposure)
    	
 
    	
 
    
	
hERG inhibition (% at 5 μM)
    	
 
    	
 
    
	
P450 inhibition (IC50)
    	
 
    	
 
    
	
Increase SMN expression in a mouse model
    	
 
    	
 
    

 

	
 
    	
 
    	
(1) Effort by PTC in SMA field not covered   under the collaboration agreement
    

 

Confidential - PTC Therapeutics, Inc. © 2009 - Slide 0

 

66

 

EXHIBIT SA-4A

 

Development Deadline Document

 

This Development Deadline Document is an Exhibit to the Sponsored Research Agreement, as amended (the “Agreement”), by and between Spinal Muscular Atrophy Foundation (the “Foundation”) and PTC Therapeutics, Inc. (the “Company”), and describes deadlines for Development as further specified in that Agreement. Capitalized terms used but not otherwise defined in this Development Deadline Document shall have the meanings set forth in the Agreement.

 

	
Activity/Milestone
    	
 
    	
Deadline
   (months)
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
 
    

 

67

 

EXHIBIT SA-4B

 

Company’s Anticipated Development Activities and Goals

 

This Exhibit SA-4B to the Sponsored Research Agreement, as amended (the “Agreement”), by and between Spinal Muscular Atrophy Foundation (the “Foundation”) and PTC Therapeutics, Inc. (the “Company”), describes the Company’s expectations, as of the Second Amendment Effective Date, of the activities required to obtain Regulatory Approval and its goal timelines for completing such activities. Capitalized terms used but not otherwise defined in this Exhibit SA-4B shall have the meanings set forth in the Agreement.

 

	
 

Activity/Milestone
     	
 
     	
Goal 
    (months)
     
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
 
    

 

68

 

EXHIBIT SA-5

 

Foundation Representatives with Access to Shared Electronic Collaboration Space

 

[**]

 

69

 

EXHIBIT SA-6

 

Foundation Representatives with Access to Sensitive Data in Shared Electronic Collaboration Space

 

[**]

 

70

 

EXHIBIT SA-7

 

Form of CDA for Foundation Representatives

 

[See following]

 

71

 

CONFIDENTIALITY AGREEMENT

 

This Agreement is made as of                       , 20    , by and between PTC Therapeutics, Inc., having an address of 100 Corporate Court, Middlesex Business Center, South Plainfield, NJ, 07080 (the “Company”), and                      (“Recipient”), a designated representative of the Spinal Muscular Atrophy Foundation (“Foundation”) pursuant to that certain Sponsored Research Agreement dated as of June 1st, 2006, as amended (the “SRA”).

 

1.             Background. The Recipient will serve as the designated representative of Foundation pursuant to Section             of the SRA.

 

2.             Proprietary Information. As used in this Agreement, the term “Proprietary Information” shall mean all confidential or proprietary information or materials of the Company, whether disclosed in writing, orally, or visually, including, without limitation, technical information, including inventions, methods, plans, processes, specifications, characteristics, chemical structures, raw data, know-how, experience, and trade secrets; developmental, marketing, sales, operating, performance, and cost information; and all record bearing media containing or disclosing the foregoing information, including business plans, patents and patent applications, grant applications, notes, and memoranda, or drafts of any of the foregoing, whether in writing or presented, stored or maintained in or by electronic, magnetic, or other means.

 

3.             Disclosure of Proprietary Information. The Recipient shall hold in confidence, and shall not disclose to any person, any Proprietary Information disclosed to Recipient by the Company or the Foundation except as specifically permitted herein. The Recipient shall use such Proprietary Information only to accomplish the purposes of the SRA and shall not use or exploit such Proprietary Information for his own benefit or the benefit of another (except for the benefit of the Foundation as contemplated by the SRA) without the prior written consent of the Company. The Recipient may disclose Proprietary Information received by him under this Agreement only (i) to the Foundation and its Affiliates subject to the obligations of confidentiality specified in the SRA; or (ii) to those other representatives of Foundation who have a need to know such Proprietary Information in the course of the performance of their duties and who are bound by written agreement to protect the confidentiality of such Proprietary Information in accordance with terms set forth in the SRA.

 

4.             Limitation on Obligations. The obligations of the Recipient specified in Section 3 above shall not apply, and the Recipient shall have no further obligations hereunder, with respect to any Proprietary Information to the extent that such Proprietary Information;

 

(a)           is generally known to the public at the time of disclosure or becomes generally known through no wrongful act on the part of the Recipient;

 

(b)           is in the Recipient’s possession at the time of disclosure to Recipient other than as a result of prior disclosure by the Company or Foundation or a breach of any legal obligation by Recipient or third party;

 

(c)           is in the Foundation’s possession at the time of disclosure to Foundation other than as a result of prior disclosure by the Company or a breach of any legal obligation by Foundation or third party;

 

(d)           becomes known to the Recipient through disclosure by a source other than the Company or Foundation, provided that such source has no duty of confidentiality to the

 

72

 

Company, whether direct or indirect, with respect to such Proprietary Information and has the legal right to disclose such Proprietary Information;

 

(e)           is independently developed by the Recipient or Foundation without reference to or reliance upon the Proprietary Information, as can be documented by written records; or

 

(f)           is required to be disclosed by the Recipient or Foundation to comply with applicable laws or governmental regulations, provided that the Recipient provides prior written notice of such disclosure to the Company and takes reasonable and lawful actions to avoid and/or minimize the extent of such disclosure.

 

5.             Ownership of Proprietary Information. The Recipient agrees that the Company is and shall remain the exclusive owner of the Proprietary Information and all patent, copyright, trade secret, trademark and other intellectual property rights therein. No license or conveyance of any such rights to the Recipient is granted or implied under this Agreement.

 

6.             Return of Documents. The Recipient shall, upon the request of the Company, turn over to the Foundation, or with the Foundation’s prior written permission, return to the Company, all drawings, documents, materials and other tangible manifestations of the Proprietary Information received by the Recipient pursuant to this Agreement (and all copies and reproductions thereof) except that one copy of each may be retained by Recipient for the purposes of assuring compliance with the terms of this Agreement.

 

7.             Term. The Recipient’s obligations with respect to each item of Proprietary/Information shall extend until [**] years from the end of the Term of the SRA; provided, however, that with respect to trade secret information, Recipient’s obligations shall further extend until such information no longer constitutes a trade secret of Company under applicable law.

 

8.             Miscellaneous.

 

(a)           The Company acknowledges that the Recipient is a representative of the Foundation and that Company has the confidentiality obligations set forth in Section 5.1 of the SRA with respect to any confidential or proprietary information of Foundation disclosed to Company by the Recipient.

 

(b)           This Agreement supersedes all prior agreements, written or oral, between the Company and the Recipient relating to the subject matter of this Agreement. This Agreement may not be modified, changed or discharged, in whole or in part, except by an agreement in writing signed by the Company and the Recipient.

 

(c)           This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns.

 

(d)           This Agreement shall be construed and interpreted in accordance with the laws of the State of New York, without giving effect to conflict of laws provisions.

 

(e)           The provisions of this Agreement are necessary for the protection of the business and goodwill of the parties and are considered by the parties to be reasonable for such purpose. The Recipient agrees that any breach of this Agreement will cause the Company substantial and irreparable harm and, therefore, in the event of any such breach, in addition to other remedies which may be available, the Company shall have the right to seek specific performance and other injunctive and equitable relief.

 

73

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first above written.

 

	
PTC   THERAPEUTICS, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Name:
    	
 
    
	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
RECIPIENT:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Name:
    	
 
    
	
Title:
    	
 
    
	
Institutional   Affiliation/Employer:
    	
 
    

 

74

 

EXHIBIT SA-8

 

Foundation initial JSC and Joint Team Members

 

Foundation initial JSC members:

 

[**]

 

Foundation initial Joint Team members:

 

[**]

 

75

 

Table of Contents

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
1.
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Continuing   Research
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Special   Termination
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Research   Reports and Access to Information
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Information
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Reports
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Availability   for Communications
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Governance   
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Joint   Steering Committee
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Duties   of the JSC during the Research Term
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Duties   of the JSC Following the Research Term
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Meetings   and Decision-Making by the JSC — Before Proof-of-Concept
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Meetings   and Decision-Making by the JSC — Following Proof-of-Concept
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Meeting   Minutes
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
Joint   Teams
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(h)
    	
Appointment   of JSC Members and Joint Team Members
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
Information   Concerning other SMA Efforts
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
Foundation   Access to Company Meetings Following Declaration of a Development Candidate
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
Development   of Products
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
PTC   Corporate Change
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
M&A   Approval Request
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Parallel   Notification Option
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Special   Provisions in Connection with M&A Approval Request and/or M&A Notice
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
Partnering
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
Company   Payments to Foundation and Related Provisions
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
Reversionary   License
    	
35
    
	
 
    	
 
    	
 
    	
 
    
	
13.
    	
Clinical   Trials and Access to Materials
    	
40
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
SMAF   Clinical Trials Advisory Committee
    	
40
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Company   Clinical Trials
    	
41
    

 

i

 

Table of Contents

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Expanded   Access Program
    	
43
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Indemnification   by Foundation
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Clinical   Trial/CRO Agreements
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
14.
    	
Patents
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
15.
    	
Confidentiality   and Exceptions
    	
45
    
	
 
    	
 
    	
 
    	
 
    
	
16.
    	
Publications,   Presentations and Public Disclosures
    	
46
    
	
 
    	
 
    	
 
    	
 
    
	
17.
    	
Baseball   Arbitration
    	
48
    
	
 
    	
 
    	
 
    	
 
    
	
18.
    	
Miscellaneous
    	
49
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Compounds   not Selected
    	
49
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Additional   Testing of Reversion Candidates
    	
50
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Testing   by Foundation Partners
    	
50
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Financial   Reporting
    	
51
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Representations,   Warranties and Covenants
    	
51
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Designation   of Third Party Representatives
    	
51
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
Corrective   Amendments
    	
52
    
	
 
    	
 
    	
 
    	
 
    
	
19.
    	
No   Other Modifications
    	
54
    

 

ii

 

AMENDMENT No. 3 TO SPONSORED RESEARCH AGREEMENT

 

This third amendment (“Third Amendment”) to the Sponsored Research Agreement is effective as of the 1st day of January, 2011 (the “Third Amendment Effective Date”), by and between Spinal Muscular Atrophy Foundation (the “Foundation”) and PTC Therapeutics, Inc. (the “Company”), with reference to the following facts and circumstances.

 

WHEREAS Foundation and Company are parties to that certain Sponsored Research Agreement (the “Agreement”) dated as of June 1st, 2006, as amended by the First Amendment on October 12th, 2007 and by the Second Amendment on May 1, 2009 (the “Second Amendment”);

 

WHEREAS, the parties desire to further amend the Agreement in connection with continued research, beyond the [**] specified in the Second Amendment, on small molecule therapeutics for SMA;

 

NOW THEREFORE, in consideration of the premises and mutual covenants contained in this Third Amendment, the parties agree as follows:

 

1.                                      Continuing Research.

 

(a)                                 By letter dated [**], Foundation called a special meeting of the JSC pursuant to Second Amendment Section 2(g) to address the Cost/Timeline Issue that a [**] by the [**] of [**] and that the [**] of $[**] before a [**] would be [**].  As contemplated by Second Amendment Section 2(g)(1) the JSC has agreed upon the Corrective Plan and related budget that are attached as Exhibits TA-1 and TA-2, respectively.  Such Corrective Plan and related budget constitutes an amendment of the Research Plan and related budget.  Company shall conduct the DC Research in accordance with the Agreement, as amended.

 

(b)                                 In connection with adoption of the Corrective Plan, the JSC has also agreed upon the DC Criteria attached as Exhibit TA-3 and the parties have agreed to extend the DC Timeline Goal to [**] and the Research Term until the earliest of (i) the date upon which the JSC first designates a Development Candidate, (ii) [**] or (iii) the effective date of any termination of the Research Term pursuant to Second Amendment Section 3.  If a Development Candidate is not selected by the extended DC Timeline Goal, the parties shall have the right to call a special meeting of the JSC to address [**] in accordance with Second Amendment Section [**], including by agreeing upon [**], and if applicable thereafter, the rights specified in Section Amendment Section 2(h) and/or Second Amendment Section [**].

 

(c)                                  Notwithstanding Second Amendment Section 2(d), Company shall be responsible for funding one hundred percent (100%) of the total overall cost of all DC Research performed on or after the Third Amendment Effective Date; provided, however, that Company shall have the ability to set its own budgets with respect to the conduct of the research after [**] so long as the Company’s obligations under Section 2.5 of the Agreement (captioned “Performance Standards”) are met.  Company acknowledges and agrees that Foundation has paid all amounts due to Company pursuant to Second Amendment Section 2(d) and does not have any further

 

1

 

obligation to reimburse Company for any amounts incurred by Company, whether before or after the Third Amendment Effective Date, with respect to the DC Research.  If Foundation decides in its discretion to engage [**] or other external contract research organizations (“CROs”) or academic collaborators [**] to test, after the Third Amendment Effective Date, any compounds arising from the DC Research, Foundation shall be solely responsible for paying any amounts owed to [**] or such other CROs or academic collaborators in connection with such testing.

 

2.                                      Governance. Second Amendment Section 5(d) is amended and restated in its entirety as follows:

 

“(d)                           Meetings and Decision-Making by the JSC — Before Proof-of-Concept. During the Research Term and through achievement of Proof-of-Concept, the JSC shall meet periodically as needed, but in no event less than [**], in person (with the location to be at Foundation’s offices in New York City unless otherwise agreed by the Parties) or by teleconference or other electronic means as mutually agreed, to discuss matters within its jurisdiction. In addition, the JSC may agree to hold special meetings at any time on reasonable notice given by the chairperson or the secretary to the other members of the JSC. Unless waived by a party in writing, at least [**] JSC representatives of each party must participate in a meeting of the JSC in order for there to be a quorum at such meeting. The members of the JSC shall seek to make all determinations to be made by them unanimously following full discussion thereof (with each party’s representatives having, collectively, one (1) vote). If the JSC is unable to reach a unanimous decision on any matter within its jurisdiction, the parties’ respective Chief Executive Officers shall meet in person to attempt to resolve the matter in good faith. If the parties’ respective Chief Executive Officers are unable to reach agreement on a matter referred to them pursuant to the foregoing sentence within [**] days after the matter referral, then either party may by written notice to the other submit the matter to Baseball Arbitration as provided in Section 17 of this Second Amendment; provided, however, that the following matters shall not be subject to such referral to Baseball Arbitration, : (i) [**]; (ii) any [**] described in Second Amendment Section [**] as [**] to or [**]; (iii) any changes to [**] for the [**] that would require [**] than contemplated in [**]; (iv) deciding whether to pursue [**] of this Second Amendment in the event of a [**]; and (v) any disputes referred to the CEOs pursuant to Second Amendment Section [**]. Disputes not subject to referral to Baseball Arbitration pursuant clauses (i) through (v) of the preceding sentence shall be resolved as follows: any dispute arising in the JSC with respect to clause (v) shall be decided by [**], and any disputes arising in the JSC with respect to clauses (i) through (iv) may only be resolved by mutual agreement of the parties.”

 

3.                                      Partnering Activities.

 

Second Amendment Section 10(c) is amended and restated in its entirety as follows:

 

“(c)                            If Company determines to actively pursue Collaboration Activities, whether at its own initiative or in response to inquiries from Third Parties, Company will first seek input from Foundation through a mutually-agreed team of Foundation representatives

 

2

 

(the “Foundation Partnering Team”) on the nature, scope, and potential terms of a transaction arising in connection with such Collaboration Activities, as well as a rank-ordered summary list of preferred potential counterparties to such transaction. To the extent prepared by Company rather than received by Company from a potential counterparty, Company shall also provide the Foundation Partnering Team with an opportunity to review a draft term sheet and related materials in support of its proposed Collaboration Activities. The Foundation shall collect input from the Foundation Partnering Team on Company’s overall approach to Collaboration Activities, as well as specific input on any term sheet or related materials provided to the Foundation Partnering Team, and shall promptly provide such input to Company. The initial mutually-agreed members of the Foundation Partnering Team are set forth on Exhibit TA-4.  The Foundation may replace the outside counsel member of the Foundation Partnering Team with an alternative outside counsel chosen by the Foundation; such replacement will be effective upon notice to Company.  The Foundation may replace any other member of the Foundation Partnering Team with an alternative individual chosen by the Foundation; such replacement will be effective upon PTC’s written consent, which will not be unreasonably withheld or delayed.”

 

Second Amendment Section 10(e) is amended and restated in its entirety as follows:

 

“(e)                            Prior to Company entering into a definitive written agreement with any Third Party in connection with Collaboration Activities, Company shall seek the review and approval of the Foundation by providing the members of the Foundation Partnering Team with a proposed final draft of the definitive written agreement, a summary (which may be oral or written) of the proposed transaction, including an overview of any items or terms subject to finalization in the draft provided, and the timely opportunity (which may include one or more in-person meetings) to discuss such draft and summary and answer the Foundation’s questions with respect thereto. If required by the Company’s confidentiality agreement with the potential counterparty, Company shall have the right to redact financial terms from such proposed final draft of the definitive written agreement. As promptly as reasonably possible, but in no event later then [**] business days following receipt by the Foundation Partnering Team members of such proposed final draft of the definitive written agreement and summary, Foundation shall either approve or deny such proposed transaction; provided, however, that if Company has otherwise complied with requirements of this Second Amendment Section 10, Foundation shall only be entitled to deny such proposed transaction if it agrees either (i) to fund [**] percent ([**]%) of ongoing Development and commercialization costs for the applicable Development Candidate(s) or Product(s), or (ii) [**] or [**] and any related rights pursuant to [**]; and provided further, that failure of Foundation to communicate its approval or denial of a transaction pursuant to Second Amendment Section 10(e) shall entitle PTC to treat the proposed transaction as approved by Foundation. If the Foundation denies approval in accordance with this Second Amendment Section 10(e), Company shall not enter into such proposed definitive written agreement, but shall have the right to continue the applicable negotiations consistent with

 

3

 

this Second Amendment Section 10 for the purposes of achieving a form of such definitive written agreement acceptable to Foundation.”

 

4.                                      No Other Modifications. In all other respects, the terms and conditions of the Agreement shall remain unchanged and in full force and effect. In the event of any conflict between the terms of this Third Amendment and the terms of the Agreement, the First Amendment, or the Second Amendment, the terms of this Third Amendment shall govern. For clarity, any cross-references to Agreement Sections refer to those Agreement Sections as amended by this Third Amendment.

 

4

 

IN WITNESS WHEREOF, the parties have executed this Third Amendment by their duly authorized officers as of the date set forth above.

 

	
PTC THERAPEUTICS, INC.
    	
SPINAL MUSCULAR ATROPHY   FOUNDATION
    
	
 
    	
 
    
	
/s/ Mark   E. Boulding
    	
 
    	
 
    	
/s/ Florence (Loren) Eng
    
	
By: 
    	
Mark E. Boulding
    	
 
    	
By:
    	
Florence (Loren) Eng
    
	
Title: 
    	
SVP & General Counsel
    	
 
    	
Title:
    	
President
    

 

5

 

EXHIBIT TA-1

 

Corrective Plan

 

PTC and SMAF are proposing this amended Research Plan and related budget as a Corrective Plan to continue their existing collaboration directed towards the discovery of compounds with the potential to treat spinal muscular atrophy. [**]

 

Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  A total of six pages were omitted.  [**]

 

Summary

 

[**].

 

Goal of the research proposal:

 

[**].

 

6

 

EXHIBIT TA-2

 

Budget for Corrective Plan

 

	
Employee Type
    	
 
    	
Jan-11
    	
 
    	
Feb-11
    	
 
    	
Mar-11
    	
 
    	
Apr-11
    	
 
    	
May-11
    	
 
    	
Jun-11
    	
 
    	
Cost
    	
 
    	
 
    	
Total FTEs
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
[**]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
[**]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
[**]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
[**]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
[**]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
[**]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
[**]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
External   Spend (PTC)
    	
 
    	
Jan-11
    	
 
    	
Feb-11
    	
 
    	
Mar-11
    	
 
    	
Apr-11
    	
 
    	
May-11
    	
 
    	
Jun-11
    	
 
    	
Cost
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
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[**]
    	
 
    	
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[**]
    	
 
    	
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[**]
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
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[**]
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
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[**]
    	
 
    	
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[**]
    	
 
    	
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Total
    	
 
    	
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External Spend (PGI)
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
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Total
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    

 

7

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Cost   Assumptions
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
Employee   Type
    	
 
    	
FTE Rate
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
[**]
    	
[**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
[**]
    	
[**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
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[**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
[**]
    	
[**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
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[**]
    	
[**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
[**]
    	
[**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
[**]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
																										

 

8

 

	
 
    	
SMA
   FOUNDATION
    	
 
    	
 
    	
 
    	
 
    	
 
    	
CONFIDENTIAL -Slide 1
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PTC
   Therapeutics
    	
 
    

 

9

 

EXHIBIT TA-3

 

DC Criteria

 

	
Activity
    	
 
    	
Goals
    	
 
    	
Assay Description
    	
 
    	
Notes
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Confidential Materials omitted and filed separately with the Securities and Exchange Commission.  A total of ten pages were omitted.

 

[**]

 

10

 

EXHIBIT TA-4

 

Foundation Partnering Team

 

	
 
    	
Name
    	
 
    	
Relationship to Foundation
    	
 
    
	
 
    	
[**]
    	
 
    	
[**]
    	
 
    
	
 
    	
[**]
    	
 
    	
[**]
    	
 
    
	
 
    	
[**]
    	
 
    	
[**]
    	
 
    
	
 
    	
[**]
    	
 
    	
[**]
    	
 
    

 

11

 

Execution version

 

AMENDMENT No. 4 TO SPONSORED RESEARCH AGREEMENT

 

This Fourth Amendment (“Fourth Amendment”) to the Sponsored Research Agreement is effective as of the 22 day of November, 2011 (the “Fourth Amendment Effective Date”), by and between Spinal Muscular Atrophy Foundation (the “Foundation”) and PTC Therapeutics, Inc. (the “Company”), with reference to the following facts and circumstances.

 

WHEREAS Foundation and Company are parties to that certain Sponsored Research Agreement dated as of June 1st, 2006, as amended by the First Amendment on October 12th, 2007, by the Second Amendment on May 1, 2009 (the “Second Amendment”), and by the Third Amendment on January 1, 2011 (as so amended, the “Agreement”);

 

WHEREAS, the parties desire to further amend the Agreement to extend the DC Timeline Goal and the Research Term; and

 

WHEREAS, the parties have been coordinating with respect to Collaboration Activities involving a proposed License and Collaboration Agreement (the “Proposed Roche Agreement”) by and among F.  Hoffmann-La Roche Ltd, a Swiss corporation with an office and place of business at Grenzacherstrasse 124, 4070 Basel, Switzerland (“Roche Basel”) and Hoffmann-La Roche Inc., a New Jersey corporation with an office and place of business at 340 Kingsland Street, Nutley, New Jersey 07110, U.S.A. (“Roche Nutley”; Roche Basel and Roche Nutley together referred to as “Roche”) on the first hand, the Company on the second hand and (solely with respect to the Foundation Provisions (as defined in the Proposed Roche Agreement)) the Foundation on the third hand, which Proposed Roche Agreement is expected to be finalized in the near future;

 

NOW THEREFORE, in consideration of the premises and mutual covenants contained in this Fourth Amendment, the parties agree as follows:

 

1.                                      Extension.  The parties hereby agreed to extend the DC Timeline Goal to [**] and the Research Term until the earliest of (i) the date upon which the JSC first designates a Development Candidate, (ii) [**] or (iii) the effective date of any termination of the Research Term pursuant to Second Amendment Section 3.  If a Development Candidate is not selected by the extended DC Timeline Goal, the parties shall have the right to call a special meeting of the JSC to address [**] in accordance with Second Amendment Section [**], including by agreeing upon [**], and if applicable thereafter, the rights specified in Section Amendment Section [**] and/or Second Amendment Section [**].

 

2.                                      SMAF Funding Amount.  As of the Fourth Amendment Effective Date, the SMAF Funding Amount shall be $[**].

 

3.                                      Proposed Roche Agreement.  With respect to the Proposed Roche Agreement, the Company and the Foundation agree as follows: (a) the Foundation hereby waives the requirement for an in-person meeting set forth in Second Amendment Section 10(d)(iii) with respect to the Proposed Roche Agreement, (b) the Foundation approves the Proposed Roche

 

1

 

Agreement pursuant to Second Amendment Section 10(e), and (c) the effectiveness of this Fourth Amendment Section 3 shall be contingent upon the execution by the Company, Foundation and Roche of the definitive final version of the Proposed Roche Agreement.

 

4.                                      No Other Modifications.  In all other respects, the terms and conditions of the Agreement shall remain unchanged and in full force and effect. In the event of any conflict between the terms of this Fourth Amendment and the terms of the Agreement, the terms of this Fourth Amendment shall govern. For clarity, any cross-references to Agreement Sections refer to those Agreement Sections as amended by this Fourth Amendment.

 

IN WITNESS WHEREOF, the parties have executed this Fourth Amendment by their duly authorized officers as of the date set forth above.

 

	
PTC THERAPEUTICS, INC.
    	
 
    	
SPINAL MUSCULAR ATROPHY   FOUNDATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Stuart Peltz
    	
 
    	
/s/ Florence Eng (Loren)
    
	
By:
    	
Stuart Peltz
    	
 
    	
By:
    	
Florence Eng (Loren)
    
	
Title:
    	
President and CEO
    	
 
    	
Title:
    	
President
    

 

2

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