Document:

Exhibit 10.21

 

Confidential Treatment
Requested.  Confidential portions of this
document have been redacted

and have been separately filed with the Commission.

 

COLLABORATION AND LICENSE
AGREEMENT

 

by and between

 

Incyte Corporation

Experimental Station, Route 141 &
Henry Clay Road

Wilmington, Delaware

 

and

 

Novartis International
Pharmaceutical Ltd.

131 Front Street

Hamilton, Bermuda HM 12

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II  Licenses

  	
  18

  
	
  2.1

  	
  Rights Granted by Incyte to
  Novartis

  	
  18

  
	
  2.2

  	
  Rights Granted by Novartis to
  Incyte

  	
  18

  
	
  2.3

  	
  Sublicense Rights

  	
  19

  
	
  2.4

  	
  Section 365(n) of The
  Bankruptcy Code

  	
  19

  
	
  2.5

  	
  Retained Rights

  	
  20

  
	
  2.6

  	
  Non-Compete

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE III  Governance

  	
  23

  
	
  3.1

  	
  Joint Steering Committee

  	
  23

  
	
  3.2

  	
  Subcommittees

  	
  23

  
	
  3.3

  	
  Committee
  Meetings

  	
  26

  
	
  3.4

  	
  Authority

  	
  27

  
	
  3.5

  	
  Decisions

  	
  27

  
	
  3.6

  	
  Committee Membership

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV  Development; Regulatory Matters

  	
  29

  
	
  4.1

  	
  Information Transfer

  	
  29

  
	
  4.2

  	
  Conduct of Development Activities

  	
  30

  
	
  4.3

  	
  Development Activity Proposals

  	
  33

  
	
  4.4

  	
  c-MET Licensed Compound
  Co-Development Option

  	
  36

  
	
  4.5

  	
  Potential JAK Back-Up Compounds

  	
  36

  
	
  4.6

  	
  Development Reports

  	
  38

  
	
  4.7

  	
  Regulatory Matters Related to
  Licensed Products

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE V  Clinical and Commercial Supply

  	
  40

  
	
  5.1

  	
  Clinical Supply

  	
  40

  
	
  5.2

  	
  Commercial Supply by Incyte

  	
  41

  
	
  5.3

  	
  Supply by Novartis to Incyte

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI  Commercialization and Co-Detailing Option

  	
  42

  
	
  6.1

  	
  Commercialization Diligence

  	
  42

  
	
  6.2

  	
  Marketing Responsibilities For
  Licensed Products

  	
  42

  
	
  6.3

  	
  Incyte Co-Detailing Option

  	
  42

  
	
  6.4

  	
  Novartis Co-Detailing Option

  	
  43

  
	
  6.5

  	
  Global Branding; Trademarks

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII  Intellectual Property Ownership, Protection
  and Related Matters

  	
  45

  
	
  7.1

  	
  Inventorship; Ownership

  	
  45

  
	
  7.2

  	
  Prosecution and Maintenance of
  Patent Rights

  	
  46

  
	
  7.3

  	
  Third Party Infringement

  	
  48

  
	
  7.4

  	
  Patent Marking

  	
  50

  

 

i

 

	
  7.5

  	
  Third Party Licenses

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII  Financial Provisions

  	
  51

  
	
  8.1

  	
  License Fee

  	
  51

  
	
  8.2

  	
  Milestone Payments

  	
  51

  
	
  8.3

  	
  Royalties

  	
  56

  
	
  8.4

  	
  Royalty Reports; Payments

  	
  58

  
	
  8.5

  	
  Financial Records

  	
  58

  
	
  8.6

  	
  Audits

  	
  58

  
	
  8.7

  	
  Tax Matters

  	
  59

  
	
  8.8

  	
  Currency Exchange

  	
  60

  
	
  8.9

  	
  Late Payments

  	
  61

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX  Term and Termination

  	
  61

  
	
  9.1

  	
  Agreement Term

  	
  61

  
	
  9.2

  	
  Termination

  	
  61

  
	
  9.3

  	
  Effects Of Termination

  	
  62

  
	
   

  	
   

  	
   

  
	
  ARTICLE X  Indemnification; Limitation of Liability

  	
  65

  
	
  10.1

  	
  By Novartis

  	
  65

  
	
  10.2

  	
  By Incyte

  	
  66

  
	
  10.3

  	
  Limitation of Liability

  	
  67

  
	
  10.4

  	
  Insurance

  	
  67

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI  Representations and Warranties and Covenants

  	
  68

  
	
  11.1

  	
  Representation Of Authority;
  Consents

  	
  68

  
	
  11.2

  	
  No Conflict

  	
  68

  
	
  11.3

  	
  Additional Incyte Representations
  and Warranties

  	
  68

  
	
  11.4

  	
  Incyte Covenant

  	
  69

  
	
  11.5

  	
  Disclaimer of Warranty

  	
  69

  
	
  11.6

  	
  Standstill

  	
  69

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII  Confidentiality

  	
  71

  
	
  12.1

  	
  Confidential Information

  	
  71

  
	
  12.2

  	
  Permitted Disclosure

  	
  72

  
	
  12.3

  	
  Publicity; Attribution; Terms of
  this Agreement; Non-Use of Names

  	
  72

  
	
  12.4

  	
  Publications

  	
  74

  
	
  12.5

  	
  Term

  	
  74

  
	
  12.6

  	
  Return of Confidential
  Information

  	
  74

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII  Dispute Resolution

  	
  75

  
	
  13.1

  	
  Dispute Resolution Process

  	
  75

  
	
  13.2

  	
  Injunctive Relief

  	
  75

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV  Miscellaneous

  	
  75

  
	
  14.1

  	
  Governing Law

  	
  75

  
	
  14.2

  	
  Consent to Jurisdiction

  	
  76

  

 

ii

 

	
  *** Confidential material
  redacted and filed separately with the Commission.

  
	
   

  	
   

  	
   

  
	
  14.3

  	
  Assignment

  	
  76

  
	
  14.4

  	
  Change of Control

  	
  77

  
	
  14.5

  	
  Entire Agreement; Amendments

  	
  78

  
	
  14.6

  	
  Notices

  	
  78

  
	
  14.7

  	
  Force Majeure

  	
  79

  
	
  14.8

  	
  Compliance With Laws

  	
  79

  
	
  14.9

  	
  Use Of Names, Logos Or Symbols

  	
  79

  
	
  14.10

  	
  Independent Contractors

  	
  79

  
	
  14.11

  	
  Headings

  	
  80

  
	
  14.12

  	
  No Implied Waivers; Rights
  Cumulative

  	
  80

  
	
  14.13

  	
  Severability

  	
  80

  
	
  14.14

  	
  Execution In Counterparts

  	
  80

  
	
  14.15

  	
  No Third Party Beneficiaries

  	
  80

  
	
  14.16

  	
  Exhibits

  	
  80

  

 

Exhibits

 

Exhibit A: Incyte Patent Rights

Exhibit A-1: c-MET
Patent Rights

Exhibit A-2: JAK Patent
Rights

Exhibit B: Initial Information Transfer to Novartis

Exhibit C

Exhibit C-1
Out-of-Pocket Costs

Exhibit C-2 Clinical
Supply Agreement

Exhibit D: Initial Development Plans

Exhibit D-1: c-MET
Development Plan

Exhibit D-2: JAK
Development Plan

Exhibit E: c-MET Studies

Exhibit F: Study 351 and Study 352

Exhibit F-1:
Out-of-Pocket Costs for Toxicology Studies

Exhibit F-2: Study 352
Out-of-Pocket Costs for EMEA Registration Study

Exhibit G: Press Release

Exhibit H: Replacement Provisions

Exhibit I: Pharmacovigilance Agreement

 

Schedules

 

Schedule 1.14: c-MET Licensed Back-Up Compounds

Schedule 1.62: JAK Licensed Back-Up Compounds

Schedule 4.1: ***

Schedule 4.1(c)(i): ***

Schedule 11.3: Exceptions to Representations and Warranties

 

iii

 

*** Confidential material redacted and filed separately with the
Commission.

 

COLLABORATION AND LICENSE
AGREEMENT

 

THIS COLLABORATION AND LICENSE AGREEMENT (the
“Agreement”) is entered into as of the 24th day of November, 2009 (the “Effective
Date”), by and between Incyte Corporation, a Delaware corporation having an
office at Experimental Station, Route 141 & Henry Clay Road,
Wilmington, Delaware (“Incyte”), and Novartis International
Pharmaceutical Ltd., a limited company organized under the laws of Bermuda
having an office at 131 Front Street, Hamilton, Bermuda HM 12 (“Novartis”).

 

WHEREAS, Incyte and Novartis are each in the
business of discovering, developing and commercializing pharmaceutical
products;

 

WHEREAS, Incyte has, pursuant to the c-MET
Program (as defined below) and the JAK Program (as defined below), discovered
and commenced Development of the Licensed Compounds (as defined below);

 

WHEREAS, Incyte and Novartis are interested
in collaborating on activities relating to the c-MET Program and the JAK
Program and Incyte has agreed to grant to Novartis the right to develop and
commercialize the Licensed Compounds;

 

NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

When used in this Agreement, each of the
following terms shall have the meanings set forth in this ARTICLE I:

 

1.1           “Abandon” or “Abandoned” means with respect
to either the JAK Program or the c-MET Program that (a) at any point in time
prior to First Commercial Sale of a Licensed Product under such Program, no
Good Faith Development activities have occurred during at least the preceding
*** and no significant constraints on such Development imposed by a Regulatory
Authority or a Force Majeure Event have been in effect during such period and (b) at
any point in time after First Commercial Sale of a Licensed Product under such
Program, (i) Novartis does not promote a JAK Licensed Product in at least
*** EU Major Market Countries during the preceding *** and during that period (w) Novartis
has not reasonably determined that promotion in the remaining EU Major Market
Countries is likely to reduce the overall commercial viability of the Program
in the Novartis Territory, (x) no significant constraints on such
promotion imposed by a Regulatory Authority have been in effect in the
jurisdictions in which such promotion failed to occur, (y) no Force
Majeure Event has been in effect in any jurisdictions in which such promotion
failed to occur and (z) Novartis is not actively seeking pricing approval
in at least *** EU Major Market Countries, or (ii) Novartis does not
promote a c-MET Licensed Product in at least *** EU Major Market Countries and
the United States during the preceding *** months and during that period (w) Novartis

 

1

 

*** Confidential material
redacted and filed separately with the Commission.

 

has not reasonably determined that promotion in the
remaining EU Major Market Countries or the United States, as applicable, is
likely to reduce the overall commercial viability of the Program in the
Novartis Territory, (x) no significant constraints on such promotion
imposed by a Regulatory Authority have been in effect in the jurisdictions in which
such promotion failed to occur, (y) no Force Majeure Event has been in
effect in any jurisdictions in which such promotion failed to occur and (z) Novartis
is not actively seeking pricing approval in at least *** EU Major Market
Countries and the United States.  For
purposes of clarity, Novartis may be deemed to have Abandoned a Program
irrespective of whether it has used Commercially Reasonable Efforts to Develop
and Commercialize Licensed Product(s) for such Program.

 

1.2           “Accounting Standards” with respect to Incyte means
that Incyte shall maintain records and books of accounts in accordance with (a) US
GAAP (United States Generally Accepted Accounting Principles); or (b) if
mandated by the SEC, IFRS (International Financial Reporting Standards);  and with respect to Novartis shall mean that Novartis shall
maintain records and books of accounts in accordance with IFRS.  Notwithstanding the above, prior period
restatements needed in conjunction with the IFRS adoption shall not impact
royalty payments, milestone payments and Development Costs already paid prior
to the IFRS adoption except for the fiscal year immediately prior to the fiscal
year in which the change in accounting standards is implemented.

 

1.3           “Affiliate” means any Person that, directly or
indirectly, controls, is controlled by or is under common control with a
Party.  For the purposes of this Section 1.3,
the word “control” (including, with correlative meaning, the terms “controlled
by” or “under common control with”) means the actual power, either directly or
indirectly through one or more intermediaries, to direct the management and
policies of such entity, whether by the ownership of *** of the Voting Stock of
such entity, by contract or otherwise. The Parties acknowledge that in the case
of certain entities organized under the laws of certain countries outside of
the United States, the maximum percentage ownership permitted by law for a
foreign investor may be less than ***, and that in such case such lower
percentage shall be substituted in the preceding sentence, provided  that
such foreign investor has the power to direct the management and policies of
such entity. Notwithstanding the foregoing, an entity shall not be deemed an
Affiliate by virtue of ownership of greater than *** of such entity if such
ownership is coupled with limitations, contractual or otherwise, that prevent
such owner from directing the management and policies of such entity ***.

 

1.4           “Annual Net Sales” means aggregate Net Sales of
c-MET Licensed Products or JAK Licensed Products, as applicable, by Novartis or
its Affiliates or sublicensees in any Calendar Year, or in the first and last
years of the term of this Agreement, the portion of such Calendar Year during
which this Agreement is in effect.

 

2

 

***
Confidential material redacted and filed separately with the Commission.

 

1.5           “Bankruptcy Event” means with respect to a Party, (i) the
entry of an order for relief under the Bankruptcy Code (or any other
bankruptcy, insolvency, reorganization or other similar act or law of any
jurisdiction now or hereafter in effect) by such Party; (ii) the
commencement of an involuntary proceeding under the Bankruptcy Code or any
other bankruptcy, insolvency, reorganization or other similar act or law of any
jurisdiction now or hereafter in effect against such Party, if not dismissed,
bonded or stayed within *** after such commencement; (iii) the making by
such Party of a general assignment for the benefit of creditors; or (iv) the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, or trustee of all or substantially all of the business or property
of such Party,

 

1.6           “Business Day” means a day other than a Saturday or
Sunday or Federal holiday in Wilmington, Delaware, Basel, Switzerland or
Hamilton, Bermuda.

 

1.7           “Calendar Quarter” means a calendar quarter ending
on the last day of March, June, September or December.

 

1.8           “Calendar Year” means a period of time commencing
on January 1 and ending on the following December 31.

 

1.9           “Change of Control” of a Party means that any of
the following has occurred:

 

(a)               any Person or group that is a *** becomes the
beneficial owner, directly or indirectly, of *** or more of the outstanding
Voting Stock or voting power over Voting Stock of (i) such Party or (ii) any
one or more Persons that controls such Party (such Party, together with the
Persons described in clause (ii), each hereinafter referred to, individually,
as a “Group Company” and, collectively, as the “Group Companies”);
or

 

(b)               the sale or disposition of all or substantially all of
the assets of the Group Companies, on a consolidated basis; or

 

(c)               a merger, reorganization, consolidation or other
similar transaction (or series of related transactions) of any Group Company
with any Person or any Affiliate of such Person, in each case, that is a ***
(other than with any of the Group Company’s wholly-owned subsidiaries) or with
a group that contains a ***, that results in the shareholders of the applicable
Group Company immediately before the occurrence of such transaction (or series
of related transactions) beneficially owning immediately after such transaction  ***
of the outstanding Voting Stock or voting power over Voting Stock of the
surviving or newly-created entity in such transaction (or series of related
transactions); or

 

(d)               a change in the board of directors of any Group
Company in which the individuals who constituted the board of directors of such
Group Company at the beginning of the *** period immediately preceding such
change (together with any other director whose election by the board of
directors of such Group Company or whose nomination for election by the
stockholders of such Group Company was approved by a vote of *** the directors
then in office either who were directors at the beginning of such period or
whose election or nomination for election was previously so approved (either by
a specific

 

3

 

*** Confidential material redacted and filed separately with the
Commission.

 

vote or by approval of a proxy statement in which such individual is
named as a nominee for election as a director)), cease for any reason to
constitute a majority of the directors then in office.

 

For purposes of this definition of “Change of
Control” only: (i) references to any Group Company shall be deemed to
include all successors in any merger, consolidation, reorganization or similar
transaction (or series of related transactions) preceding any transaction (or
series of related transactions) described above; (ii) “beneficial
ownership” (and other correlative terms) means beneficial ownership as defined
in Rule 13d-3 under the Exchange Act; it being understood and agreed that “beneficial
ownership” shall also include any securities that any Person or any of such
Person’s Affiliates has the right to acquire pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; (iii) “group”
means group as defined in the Exchange Act and the rules of the SEC
thereunder as in effect on the date hereof; (iv) “control” (including,
with correlative meaning, the term “controlled by”) means the actual power,
either directly or indirectly through one or more intermediaries, to direct the
management and policies of such entity, whether by the ownership of *** of the
Voting Stock of such entity, or by contract or otherwise; and (v) ***
shall mean at a given time, ***.

 

1.10         “c-MET” means human Met tyrosine kinase.

 

1.11         “c-MET Excluded Compound” means a ***.

 

1.12         “c-MET Field” means the treatment, control,
management, mitigation, prevention, cure or diagnosis  of
any and all Indications in humans and animals.

 

1.13         “c-MET Inhibitor Compound” means any compound ***.

 

1.14         “c-MET Licensed Compound” means (a) the c-MET
Inhibitor Compound known as INCB28060 (the chemical structure of which has
previously been disclosed to Novartis in a letter dated November 23,
2009);  (b) the back-up c-MET
Inhibitor Compounds set forth on Schedule 1.14 (the chemical structures
of which have previously been disclosed to Novartis in a letter dated November 20,
2009) (each a “c-MET Licensed Back-Up Compound”); (c) all salts,
prodrugs, esters, metabolites, solvates, stereoisomers and polymorphs of the
foregoing; and (d) all derivatives of the
foregoing containing one or more atoms substituted with a radio isotope
(including without limitation derivatives containing deuterium).

 

4

 

1.15         “c-MET Licensed Product” means a product or product
candidate that contains one or more c-MET Licensed Compounds as the active
ingredient, including all formulations and dosages of such c-MET Licensed
Compounds and all processes and delivery systems that incorporate such c-MET
Licensed Compounds.

 

1.16         “c-MET Program” means a program conducted pursuant to
this Agreement and directed to the research, Development and Commercialization
of c-MET Licensed Compounds and c-MET Licensed Products in the c-MET Field.

 

1.17         “c-MET Program Term” means the period beginning on
the Effective Date and continuing until the earlier of (a) the termination
of this Agreement in its entirety or the c-MET Program in accordance with Section 9.2
or (b) following the First Commercial Sale of any c-MET Licensed Product,
the expiration of the last-to-expire of all Royalty Terms with respect to all
c-MET Licensed Compounds and c-MET Licensed Products. 

 

1.18         “Clinical Trial” means a Phase I Study, a Phase II
Study, a Phase III Study, a Phase IV Study or a combination of two (2) of
any of the foregoing studies.

 

1.19         “Commercialization” or “Commercialize” means
any activities directed to obtaining pricing and/or reimbursement approvals,
marketing, promoting, distributing, importing, offering to sell, and/or selling
a product (including establishing the price for such product).

 

1.20         “Commercially Reasonable Efforts” of a Party means
the reasonable, diligent, good faith efforts of the type to accomplish such
objective as such Party would normally use to accomplish a similar objective
under similar circumstances, it being understood and agreed that, with respect
to efforts to be expended in relation to a product, such efforts shall be
substantially consistent with those efforts and resources commonly used by such
Party for any other product owned by it or in relation to which it may have
rights, which other product is at a similar stage in its Development or product
life and is of similar market and economic potential as products expected to
result from the Licensed Compounds at a similar stage in their Development or
product life, and that any such other product owned by it or over which it has
rights will not be given any preferential treatment when compared to the
objectives to be carried out pursuant to this Agreement, provided that such
efforts continue to be commercially reasonable in light of the scientific and
economic outlook for the product, all as measured by the facts and
circumstances at the time such efforts are due.

 

1.21         “Confidential Information” means (a) all
confidential or proprietary information relating to Licensed Compounds, and (b) all
other confidential or proprietary documents, technology, Know-How or other
information (whether or not patentable) actually disclosed by one Party to the
other pursuant to this Agreement or the Prior Confidentiality Agreements.

 

1.22         “Control” or “Controlled” means, with respect
to any (a) material, document, item of information, method, data or other
Know-How or (b) Patent Rights or other Intellectual Property Rights, the
possession by a Party or its Affiliates, whether by ownership or license (other
than by licenses granted under this Agreement), of the ability to grant to the
other Party access, a license and/or a sublicense as provided herein
without requiring the consent
of a Third 

 

5

 

Party
or violating the terms of any agreement or other arrangement with any Third
Party, in each case as of the Effective Date, or if any of
the same are acquired or created after the Effective Date, at the date it is
acquired or created by the relevant Party or its Affiliate.

 

1.23         “Cover”, “Covering” or “Covered” with
respect to a product, technology, process or method, means that, but for a
license granted to a Person under a Valid Claim included in the Patent Rights
under which such license is granted, the Development, manufacture,
Commercialization and/or other use of such product or the practice of such
technology, process or method, by such Person 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).

 

1.24         “Detail” means face-to-face discussions with
physicians and other health care practitioners who are permitted under
applicable Laws to prescribe a Licensed Product for the purpose of promoting a
Licensed Product to such physicians or practitioners.

 

1.25         “Development” or “Develop” means, with respect
to a compound, preclinical and clinical drug development activities, including,
among other things:  the conduct of
Clinical Trials, test method development and stability testing, toxicology,
formulation and delivery system development, process development, pre-clinical
and clinical Drug Substance and Drug Product supply, manufacturing scale-up,
development-stage manufacturing, quality assurance/quality control procedure
development and performance with respect to clinical materials, statistical
analysis and report writing and clinical studies, regulatory affairs, and all
other pre-Regulatory Approval activities. 
When used as a verb, “Develop” means to engage in Development.  For the avoidance of doubt, “Development”
shall include Phase IV Studies.

 

1.26         “Development Costs” means the costs and expenses
incurred by or on behalf of a Party attributable to, or reasonably allocable
to, the Development of Licensed Products and that are materially consistent, as
applicable, with the Development Plan and Development Budget.  Development Costs shall not include costs
that are allocable to the costs of management, financial, legal or business
development personnel.  “Development
Costs” shall include (a) the costs of Clinical Trials, the preparation,
collation and/or validation of data from such Clinical Trials and the preparation
of medical writing and publishing, (b) the FTE costs of the relevant Party
or its Affiliates, (c) all Out-of-Pocket Costs incurred by the Parties or
their Affiliates, including payments made to Third Parties with respect to any
of the foregoing (except to the extent that such costs have been included in
FTE costs), (d) Regulatory Expenses and (e) the cost of contract
research organizations (CROs) and clinical supply, including: (i) costs of
Drug Products, packaging of Drug Products and distribution of Drug Products
used in Clinical Trials, (ii) expenses incurred to purchase and/or package
comparator drugs, and (iii) costs and expenses of disposal of clinical
samples.

 

1.27         “Disclosing Party” means, with respect to
Confidential Information, Patent Rights or Know-How, the Party that Controls
such Confidential Information, Patent Rights or Know-How.

 

1.28         “Drug Product” means a finished dosage form that
contains the Drug Substance.

 

1.29         “Drug Substance” means the active pharmaceutical
ingredient. 

 

6

 

***
Confidential material redacted and filed separately with the Commission.

 

1.30         “EMEA” means the European Medicines Agency, or a
successor agency thereto.

 

1.31         “EU Major Market Countries” means ***.

 

1.32         “Executive Officers” means the Chief Executive
Officer of Incyte (or a senior executive officer of Incyte designated by Incyte’s
Chief Executive Officer) and the Chief Executive Officer of Novartis Oncology
(or a senior executive officer of Novartis or its Affiliate as designated by
the Chief Executive Officer of Novartis Oncology).

 

1.33         “FDA” means the United States Food and Drug
Administration, or a successor agency thereto.

 

1.34         “Field” means the c-MET Field and the JAK Field.

 

1.35         “First Commercial Sale” means, with respect to a
Licensed Product, the first shipment of such Licensed Product to a Third Party
by, as applicable, Novartis or its Affiliates or sublicensees or Incyte or its
Affiliates or sublicensees in a country following applicable Regulatory
Approval (other than applicable governmental price and reimbursement approvals)
of such Licensed Product in such country. 
Sales or transfers of reasonable quantities of Licensed Product for
Clinical Trial purposes, or for compassionate or similar use, shall not be
considered a First Commercial Sale.

 

1.36         “Force Majeure Event” means an event, act,
occurrence, condition or state of facts, in each case outside the reasonable
control of a Party, including acts of God; acts of any government; any rules,
regulations or orders issued by any governmental authority or by any officer,
department, agency or instrumentality thereof; fire; storm; flood; earthquake;
accident; war; rebellion; insurrection; riot; terrorism and invasion, that
interfere with the normal business operations of such Party.

 

1.37         “FPFV” means the first subject’s first screening
visit in a Clinical Trial that results in such subject signing an informed
consent.

 

1.38         “FTE” means a full-time equivalent person year
(consisting of a total of *** hours per year) of scientific, technical or commercialization
work undertaken by Incyte or Novartis employees, as applicable.

 

1.39         “FTE Rate” means the rate per FTE (which may be
prorated on a daily basis as necessary) of *** per annum, with respect to
Development or Commercialization activities conducted pursuant to this
Agreement, subject to annual adjustment by the rate of the Employment Cost
Index for total compensation for the “management, professional and related”
occupational group, as published by the United States Department of Labor,
Bureau of Labor Statistics (or any similar index agreed upon by the Parties if
such index ceases to be compiled and published).

 

1.40         “Generic Competition” means, with respect to a
Licensed Product in any country in a given Calendar Quarter, if, during such
Calendar Quarter and the immediately preceding Calendar Quarter, one or more
Generic Products shall be commercially available in such country 

 

7

 

*** Confidential material
redacted and filed separately with the Commission.

 

and such Generic Products shall in the aggregate
have a market share of *** of the aggregate market share of such Licensed
Product and Generic Products (based on data provided by IMS International or,
if such data is not available, such other reliable data source as agreed by the
Parties (such agreement not to be unreasonably withheld)) as measured by unit
sales.

 

1.41         “Generic Product” means any pharmaceutical product
that contains a Licensed Compound and that is sold under a marketing authorization
granted by a Regulatory Authority to a Person other than a Party or its
Affiliates, licensees or sublicensees.

 

1.42         “Good Faith Development” means Development conducted
in good faith with the intention of advancing a Program toward registration (and
not for the sole purpose of preserving rights hereunder).

 

1.43         “Hematology Field” means the treatment, control,
mitigation, prevention, cure, or diagnosis of all hematologic Indications as
defined as of the Effective Date in subsections 280 — 289 (Diseases of the
blood and blood-forming organs) of the International Classification of
Diseases, Ninth Revision, Clinical Modification (ICD-9-CM).

 

1.44         “Incyte Group Member” means Incyte and any direct or
indirect wholly owned subsidiary of Incyte.

 

1.45         “Incyte IP” means Incyte Know-How and Incyte Patent
Rights.

 

1.46         “Incyte Know-How” means all Know-How that (a) is
Controlled by Incyte or any of its Affiliates as of the Effective Date or
during the Term; and (b) is necessary or useful to Develop, manufacture or
Commercialize any Licensed Products or Licensed Compounds; provided, however, that
Incyte Know-How specifically excludes Joint IP.

 

1.47         “Incyte Patent Rights” means all Patent Rights that (a) are
Controlled by Incyte or any of its Affiliates as of the Effective Date or
during the Term; and (b) are necessary or useful to Develop, manufacture
or Commercialize any of (x) c-MET Licensed Compounds and c-MET Licensed
Products (the “c-MET Patent Rights”); and (y) JAK Licensed
Compounds and JAK Licensed Products (the “JAK Patent Rights”); provided,
however, that Incyte Patent Rights specifically exclude Joint IP.  The c-MET Patent Rights that exist as of the
Effective Date are set forth in Exhibit A-1 and the JAK Patent
Rights that exist as of the Effective Date are set forth on Exhibit A-2.

 

1.48         “Incyte Territory” means, with respect to all JAK
Licensed Products and JAK Patent Rights, the United States of America and its
territories and possessions.

 

1.49         “IND” means an Investigational New Drug Application filed
with the FDA under 21 C.F.R. Part 312 or similar non-United States
application or submission in any country or group of countries for permission
to conduct human clinical investigations.

 

1.50         “Indication” shall mean any disease, condition or
syndrome, or sign or symptom of, or associated with, a disease or condition.

 

8

 

***
Confidential material redacted and filed separately with the Commission.

 

1.51         “Inflammatory Disease” means any inflammatory disease,
including the following Indications: RA (and other arthritides including
Juvenile RA, ankylosing spondylitis, Sero-negative spondyloarthropathies and
psoriatic arthritis), IBD, Crohn’s, Psoriasis, Asthma, chronic obstructive
pulmonary disease, Multiple Sclerosis and Systemic Lupus Erythematosus.  Notwithstanding the foregoing, Inflammatory
Disease shall specifically exclude (a) any hematologic Indications as
defined as of the Effective Date in subsections 280 — 289 (Diseases of the
blood and blood-forming organs) of the International Classification of
Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) and (b) oncology
Indications as defined as of the Effective Date in subsections 140 — 239
(Neoplasms) of the International Classification of Diseases, Ninth Revision,
Clinical Modification (ICD-9-CM), including all hematologic malignancies, solid
tumors and myeloproliferative diseases (including Myelofibrosis, Polycythemia
Vera and Essential Thrombocythemia).

 

1.52         “Intellectual Property Rights” means patents, trade
secrets, copyrights and other forms of proprietary or industrial rights
pertaining to inventions, Know-How, original works, and other forms of
intellectual property.

 

1.53         “Inventions” means all patentable inventions,
discoveries, improvements and other technology and any Patent Rights based
thereon, that are discovered, made or conceived during and in connection with
the research, Development, manufacture and Commercialization of Licensed
Compounds or Licensed Products.

 

1.54         “JAK” means human Jak Tyrosine Kinase.

 

1.55         “JAK2” means Jak2
Tyrosine Kinase.

 

1.56         “JAK3” means Jak3
Tyrosine Kinase.

 

1.57         “JAK Excluded Compound” means a ***.

 

1.58         “JAK2 Inhibitor Compound” means ***.

 

1.59         “JAK Field” means the Hematology Field and the
Oncology Field, and includes all forms of administration except topical.

 

1.60         “JAK Licensed Compound” means (a) the JAK2
Inhibitor Compound known as INCB018424 (the chemical structure of which has
previously been disclosed to Novartis in a letter dated November 23,
2009); (b) the back-up JAK2 Inhibitor Compounds set forth on Schedule
1.60 (the chemical structures of which have previously been disclosed to
Novartis in a letter dated November 20, 2009) (each a “JAK Licensed
Back-Up Compound”); (c) any Potential JAK Licensed Compound to the
extent deemed a JAK Licensed Compound pursuant to Section 4.5; (d) all
salts, prodrugs, esters, metabolites, solvates, stereoisomers and polymorphs of
the foregoing; and (e) all derivatives of the
foregoing containing one or more atoms substituted with a radio isotope
(including without limitation derivatives containing deuterium).

 

9

 

***
Confidential material redacted and filed separately with the Commission.

 

1.61         “JAK Licensed Product” means a product or product
candidate that contains one or more JAK Licensed Compounds as the active
ingredient, including all formulations and dosages of such JAK Licensed
Compounds and all processes and delivery systems that incorporate such JAK
Licensed Compounds.

 

1.62         “JAK Program” means a program conducted pursuant to
this Agreement and directed to the research, Development and Commercialization
of JAK Licensed Compounds and JAK Licensed Products in the JAK Field.

 

1.63         “JAK Program Term” means the period beginning on the
Effective Date and continuing until the earlier of (a) the termination of
this Agreement in its entirety or the JAK Program in accordance with Section 9.2
or (b) following the First Commercial Sale of any JAK Licensed Product,
the expiration of the last-to-expire of all Royalty Terms with respect to all
JAK Licensed Compounds and JAK Licensed Products.

 

1.64         “Know-How” means any information, ideas, data,
inventions, works of authorship, trade secrets, technology, or materials,
including formulations, molecules, assays, reagents, compounds, compositions,
human or animal tissue, samples or specimens, and combinations or components
thereof, whether or not proprietary or patentable, or public or confidential,
and whether stored or transmitted in oral, documentary, electronic or other
form, including all Regulatory Documentation, but excluding any such
information or materials publicly disclosed in Patent Rights.

 

1.65         “Law” means any law, statute, rule, regulation,
ordinance or other pronouncement having the effect of law, of any federal,
national, multinational, state, provincial, county, city or other political
subdivision, including (a) good clinical practices and adverse event
reporting requirements, guidance from the International Conference on
Harmonization or other generally accepted conventions, and all other rules,
regulations and requirements of the FDA and other applicable Regulatory
Authorities, (b) the Foreign Corrupt Practices Act of 1977, as amended, or
any comparable laws in any country, and (c) all export control laws.

 

1.66         “Licensed Compounds” means:  (a) c-MET Licensed Compounds; and (b) JAK
Licensed Compounds.

 

1.67         “Licensed Patent Rights” means with respect to the
Patent Rights licensed to Novartis hereunder, the Incyte Patent Rights and with
respect to the Patent Rights licensed to Incyte hereunder, the Novartis Patent
Rights.  In each case, Patent Rights
forming part of the Joint IP shall be included, as applicable, in the Incyte
Patent Rights and Novartis Patent Rights.

 

1.68         “Licensed Product” means a c-MET Licensed Product or
a JAK Licensed Product.  As used in this
Agreement, except where not appropriate in context, the Licensed Product also
includes the Licensed Compound contained in the Licensed Product.

 

1.69         “***” means ***.

 

1.70         “MHLW” means the Japanese Ministry of Health, Labor
and Welfare, or a successor agency thereto.

 

10

 

***
Confidential material redacted and filed separately with the Commission.

 

1.71         “***” means ***.

 

1.72         “NDA” means (a) (i) a New Drug Application
submitted to the FDA, or any successor application or procedure, as more fully
defined in 21 C.F.R. § 314.50 et. seq., or (ii) any non-United States
counterpart of such a New Drug Application, and (b) all supplements and
amendments, including supplemental New Drug Applications (and any non-United
States counterparts) that may be filed with respect to the foregoing.

 

1.73         “Net Sales” means, with respect to any Licensed
Product, the net sales on behalf of a Royalty Paying Party or its Affiliates,
licensees or sublicensees sold to Third Parties as determined in accordance
with the Royalty Paying Party’s usual and customary accounting methods, which
are in accordance with Accounting Standards, as consistently applied by such
Royalty Paying Party, including a deduction of a fixed percentage of *** for
distribution and warehousing expenses and any amounts credited for
uncollectible amounts on previously sold Licensed Products.

 

(a)               In the case of any sale or other disposal of the
Licensed Product between or among a Royalty Paying Party and its Affiliates,
licensees and sublicensees for resale, Net Sales shall be deemed to occur and
shall be calculated as above only on the first arm’s-length sale thereafter to
a Third Party.

 

(b)               In the case of any sale that is not invoiced or is
delivered before invoice, Net Sales shall be calculated at the time all the
revenue recognition criteria under the applicable Accounting Standards are met.

 

(c)               In the case of any sale or other disposal for value,
such as barter or counter-trade, of Licensed Product, or part thereof, other
than in an arm’s length transaction exclusively for cash, Net Sales shall be
calculated as above on the value of the non-cash consideration received or the
fair market price (if higher) of the Licensed Product in the country of sale or
disposal, as determined in accordance with the Accounting Standards.

 

(d)               In the event the Licensed Product is sold in a
finished dosage form containing the Licensed Product in combination with one or
more other active ingredients (a “Combination Product”), the Net Sales
of the Licensed Product, for the purposes of determining royalty payments,
shall be determined by multiplying the Net Sales (as defined above in this
Section) of the Combination Product by the fraction, A/(A+B) where A is the
weighted (by sales volume) average sale price in a particular country of the
Licensed Product in the prior Calendar Year when sold separately in finished
form and B is the weighted average sale price in that country in the prior
Calendar Year of the other product(s) sold separately in finished
form.  In the event that such average
sale price cannot be determined for both the Licensed Product and the other
product(s) in combination, Net Sales for purposes of determining royalty
payments shall be

 

11

 

agreed by the Parties based on the relative value contributed by each
component, such agreement shall not be unreasonably withheld.

 

1.74         “Novartis Group Member” means Novartis AG and any
direct or indirect wholly owned subsidiary of Novartis.

 

1.75         “Novartis Improvements” means Novartis Patent Rights
that (a) constitute an improvement to the Incyte IP that is made by or on
behalf of Novartis or its Affiliates during the Term; (b) are necessary or
useful to Develop, manufacture or Commercialize any JAK Licensed Compounds; and
(c) relate to (i) uses of JAK Licensed Compounds or (ii) methods
of manufacturing JAK Licensed Compounds.

 

1.76         “Novartis IP” means, collectively, Novartis Know-How
and Novartis Patent Rights.

 

1.77         “Novartis Know-How” means all Know-How that: (a) is
Controlled by Novartis or any of its Affiliates as of the Effective Date or
during the Term; and (b) is necessary or useful to Develop, manufacture or
Commercialize any Licensed Compounds or Licensed Products; provided, however, that
Novartis Know-How specifically excludes Joint IP.

 

1.78         “Novartis Oncology” means the Novartis oncology
business unit of Novartis.

 

1.79         “Novartis Patent Rights” means all Patent Rights
that: (a) are Controlled by Novartis or its Affiliates as of the Effective
Date or during the Term; and (b) are necessary or useful to Develop,
manufacture or Commercialize all or any of the Licensed Compounds and Licensed
Products; provided,  however,
that Novartis Patents Rights specifically excludes Joint IP.  

 

1.80         “Novartis Sponsored Study” means any Clinical Trial
sponsored by Novartis, its Affiliates or sublicensees, but specifically
excludes any investigator initiated studies.

 

1.81         “Novartis Standard Exchange Rate Methodology” means,
with respect to amounts invoiced in United States Dollars, all such amounts
shall be expressed in United States Dollars. 
With respect to amounts invoiced in a currency other than United States
Dollars, all such amounts shall be expressed both in the currency in which the
amount was invoiced and in the United States Dollar equivalent.  The United States Dollar equivalent shall be
calculated using Novartis’ then-current standard exchange rate methodology,
which is in accordance with applicable Accounting Standards, applied in its
external reporting (which is ultimately based on official rates such as those
published by the European Central Bank) for the conversion of foreign currency
sales into United States Dollars.

 

1.82         “Novartis Territory” means (a) with respect to
c-MET Licensed Products and c-MET Patent Rights, the entire world; and (b) with
respect to JAK Licensed Products and JAK Patent Rights, the entire world other
than the Incyte Territory (the “Novartis JAK Territory”).

 

1.83         “Oncology Field” means the treatment, control,
mitigation, prevention, cure, or diagnosis of any oncology Indications as
defined as of the Effective Date in subsections 140 — 239 (Neoplasms) of the International
Classification of Diseases, Ninth Revision, Clinical

 

12

 

Modification (ICD-9-CM),
including all hematologic malignancies, solid tumors and myeloproliferative
diseases (including Myelofibrosis, Polycythemia Vera and Essential
Thrombocythemia).

 

1.84         “Out-of-Pocket Costs”
means, with respect to certain activities hereunder, direct expenses paid or
payable by either Party or its Affiliates to Third Parties (other than
employees of such Party or its Affiliates) that are specifically identifiable
and incurred to conduct such activities for Licensed Products, have been
recorded in accordance with the Accounting Standards, and for the avoidance of
doubt, do not include pre-paid amounts or capital expenditures.

 

1.85         “Party” means Novartis or Incyte.  “Parties” means Novartis and Incyte.

 

1.86         “Patent Rights” means all patents and patent
applications in any country in the world, including any continuations,
continuations-in-part, divisions, provisionals or any substitute applications,
any patent issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplemental protection
certificate) of any such patent, and any confirmation patent or registration
patent or patent of addition based on any such patent, and all non-United
States counterparts of any of the foregoing.

 

1.87         “Patent Term Extension” means any patent term
extension, adjustment or restoration or supplemental protection certificates. 

 

1.88         “Person” means any natural person, general or limited
partnership, corporation, limited liability company, limited liability
partnership, firm, association or organization or other legal entity. 

 

1.89         “Phase I Study” means a study in humans which provides
for the first introduction into humans of a product, conducted in healthy
volunteers or patients to obtain information on product safety, tolerability,
pharmacological activity or pharmacokinetics, as more fully defined in 21
C.F.R. § 312.21(a) (or the non-United States equivalent thereof).

 

1.90         “Phase II Study” means a study in humans of the
safety, dose ranging and efficacy of a product, which is prospectively designed
to generate sufficient data (if successful) to commence pivotal clinical
trials, as further defined in 21 C.F.R. § 312.21(b) (or the non-United
States equivalent thereof).

 

1.91         “Phase III Study” means a controlled study in humans
of the efficacy and safety of a product, which is prospectively designed to
demonstrate statistically whether such product is effective and safe for use in
a particular Indication in a manner sufficient to file an NDA to obtain
regulatory approval to market the product, as further defined in 21 C.F.R. §
312.21(c) (or the non-United States equivalent thereof).

 

1.92         “Phase IV Study” means a human clinical trial which
is conducted on a product after Regulatory Approval of the product has been
obtained from an appropriate Regulatory Authority, and includes (a) trials
conducted voluntarily for enhancing marketing or scientific knowledge of an
approved Indication or (b) trials conducted after Regulatory Approval due
to

 

13

 

*** Confidential material redacted and filed separately with the
Commission.

 

request or requirement of a
Regulatory Authority or as a condition of a previously granted Regulatory
Approval.

 

1.93         “Primary Detail” means a Detail in which *** of the
time spent during such sales presentation is spent on a Licensed Product and
for which *** of the sales representative’s incentive compensation is tied to
such Detail.

 

1.94         “Prior Confidentiality Agreements” means the Confidentiality Agreements between Incyte and Novartis Institutes
for BioMedical Research, Inc., an Affiliate of Novartis, dated as of October 30, 2008 and between Incyte and Novartis
Pharmaceuticals Corporation, an Affiliate of Novartis, dated as of December 11, 2008 and amended as of January 29, 2009.

 

1.95         “Program” means the JAK Program or the c-MET Program.
“Programs” means the JAK Program and the c-MET Program.

 

1.96         “Publication” means any publication in a scientific
journal, any abstract to be presented to any scientific audience, any
presentation at any scientific conference, including slides and texts of oral
or other public presentations, any other scientific presentation and any other
oral, written or electronic disclosure directed to a scientific audience which
pertains to the Licensed Compound, the Licensed Product or the use of the
Licensed Product.  

 

1.97         “Randomized Clinical Trial” means  a
Clinical Trial in human patients of the efficacy of a product that is designed
with parallel groups comparing, as applicable, a c-MET Inhibitor Compound or
Potential JAK Back-Up Compound to either a placebo or an active comparator.

 

1.98         “Regulatory Approval” means all approvals (including
any applicable governmental price and reimbursement approvals), licenses,
registrations, and authorizations of any federal, national, multinational,
state, provincial or local Regulatory Authority, department, bureau and other
governmental entity that are necessary and sufficient for the marketing and
sale of a product in a country or group of countries.

 

1.99         “Regulatory Authority” means, with respect to a
country, the regulatory authority or regulatory authorities of such country
with authority over the testing, manufacture, use, storage, importation,
promotion, marketing, pricing or sale of a pharmaceutical product in such
country.

 

1.100       “Regulatory Documentation” means, with respect to the
Licensed Compounds and Licensed Products, all INDs and other regulatory
applications submitted to any Regulatory Authority, Regulatory Approvals,
pre-clinical and clinical data and information, regulatory materials, drug
dossiers, master files (including Drug Master Files, as defined in 21 C.F.R.
314.420 and any non-United States equivalents), and any other reports, records,
regulatory correspondence and other materials relating to Development or
Regulatory Approval of a Licensed Compound or Licensed Product, or required to manufacture,
distribute or sell the Licensed Products, including any information that
relates to pharmacology, toxicology, chemistry, manufacturing and controls
data, batch records, safety and efficacy, and any safety database.

 

14

 

1.101       “Regulatory Exclusivity” means the ability to exclude
Third Parties from Commercializing a Licensed Product in a country, either
through data exclusivity rights, orphan drug designation, or such other rights
conferred by a Regulatory Authority in such country, other than through Patent
Rights.

 

1.102       “Regulatory Expenses” means, with respect to a Licensed
Compound or Licensed Product, all Out-of-Pocket Costs incurred by or on behalf
of a Party in connection with the preparation and filing of regulatory
submissions for Licensed Product and obtaining of Regulatory Approvals.

 

1.103       “Right of Reference or Use” means a “Right of Reference
or Use” as that term is defined in 21 C.F.R. §314.3(b), and any non-United
States equivalents.

 

1.104       “Royalty Paying Party” means the Party required to pay
royalties to the other Party with respect to a Licensed Product pursuant to
Sections 2.6(a)(iii), 4.5(c), 8.3 and 9.3(a).

 

1.105       “Royalty Receiving Party” means the Party that is
entitled to receive royalties from the other Party with respect to a Licensed
Product pursuant to Sections 2.6(a)(iii), 4.5(c), 8.3 and 9.3(a).  

 

1.106       “SEC” means the United States Securities and Exchange Commission.

 

1.107       “Secondary JAK Patent Rights” means all JAK Patent
Rights and Joint IP Covering the JAK Licensed Compounds and JAK Licensed
Products (“Joint JAK IP”) except for the Patent Rights that are
designated as INCY0039 (the “INCY0039 Patent Rights”).  The INCY0039 Patent Rights that exist as of
the Effective Date are set forth as INCY0039 on Exhibit A-2.   

 

1.108       “Software Source Code” means all Incyte Know-How that
are computer programs and applications including implementation of algorithms,
models and methodologies, in each case in source code form (unless Incyte does
not Control the same in source code form and then in object code form), as well
as compilations of data, descriptions, library functions, flow charts,
architecture, database design, display screens and development tools and other
information, work product or tools used to design, plan, organize or develop
any of the foregoing that relate to the JAK Program or the c-MET Program or
both.

 

1.109       “Supply Agreement” means a supply agreement entered
into by Incyte and Novartis as described in ARTICLE V.

 

1.110       “Terminated Program” means (a) with respect to the
termination of this Agreement with respect to a Program pursuant to Sections
9.2(a), 9.2(b) or 9.2(d), the Program subject to such termination; and (b) with
respect to termination of this Agreement in its entirety, both Programs.

 

1.111       “Third Party” means any Person other than a Party or
any of its Affiliates.

 

1.112       “Valid Claim” 
means (a) a claim of an issued patent that has not expired or been
abandoned, or been revoked, held invalid or unenforceable by a patent office,
court or other

 

15

 

*** Confidential material
redacted and filed separately with the Commission.

 

governmental agency of competent jurisdiction in a
final and non-appealable judgment (or judgment from which no appeal was taken
within the allowable time period) or (b) a claim within a patent
application that has not been revoked, cancelled, withdrawn, held invalid or
abandoned ***.

 

1.113       “Viable Compound” means a JAK Licensed Compound,
Potential JAK Back-Up Compound or JAK Candidate that has not failed to meet
predetermined efficacy or activity criteria established by unanimous agreement
of the JSC and where the patentability and freedom to operate of the JAK
Licensed Compound, Potential JAK Back-Up Compound or JAK Candidate appear
favorable.

 

1.114       “Voting Stock” means securities of any class or series
of a corporation, limited liability company, association or other entity, the
holders of which are ordinarily, in the absence of contingencies, entitled to
vote generally in matters put before the shareholders or members of such
corporation, limited liability company, association or other entity.

 

1.115       Additional Definitions. 
Each of the following definitions is set forth in the section of this
Agreement indicated below:

 

	
   

  	
  DEFINITION

  	
   

  	
  SECTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13D
  Group

  	
   

  	
  11.6(b)

  	
   

  
	
   

  	
  Agreement

  	
   

  	
  Preamble

  	
   

  
	
   

  	
  Auditee

  	
   

  	
  8.6(f)

  	
   

  
	
   

  	
  Audit
  Rights Holder

  	
   

  	
  8.6(f)

  	
   

  
	
   

  	
  Audit
  Team

  	
   

  	
  8.6(a)

  	
   

  
	
   

  	
  Bankruptcy
  Code

  	
   

  	
  2.4

  	
   

  
	
   

  	
  Breaching
  Party

  	
   

  	
  9.2(b)

  	
   

  
	
   

  	
  Buy-In
  Party

  	
   

  	
  4.3(c)

  	
   

  
	
   

  	
  Clinical
  Supply Agreement

  	
   

  	
  5.1(b)

  	
   

  
	
   

  	
  c-MET
  JDC

  	
   

  	
  3.2

  	
   

  
	
   

  	
  c-MET
  Licensed Back-Up Compound

  	
   

  	
  1.14

  	
   

  
	
   

  	
  c-MET
  Patent Rights

  	
   

  	
  1.47

  	
   

  
	
   

  	
  CoC
  Party

  	
   

  	
  Exhibit H

  	
   

  
	
   

  	
  Co-Detailing
  Right

  	
   

  	
  6.3(a)

  	
   

  
	
   

  	
  Combination
  Product

  	
   

  	
  1.73(d)

  	
   

  
	
   

  	
  Controlling
  Party

  	
   

  	
  7.2(d)

  	
   

  
	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
  Development
  Budget

  	
   

  	
  4.3(a)(iii)

  	
   

  
	
   

  	
  Development
  Plan

  	
   

  	
  4.2(a)(ii)

  	
   

  
	
   

  	
  Disclosing
  Party

  	
   

  	
  12.1

  	
   

  
	
   

  	
  Effective
  Date

  	
   

  	
  Preamble

  	
   

  
	
   

  	
  Exchange
  Act

  	
   

  	
  11.6

  	
   

  
	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
  Global
  Branding Strategy

  	
   

  	
  6.5(a)

  	
   

  
	
   

  	
  Global
  Safety Database

  	
   

  	
  4.7(c)

  	
   

  

 

16

 

*** Confidential material redacted and filed separately with the
Commission.

 

	
   

  	
  GMP

  	
   

  	
  5.1(b)(ii)

  	
   

  
	
   

  	
  Group
  Company

  	
   

  	
  1.9(a)

  	
   

  
	
   

  	
  INCY0039
  Patent Rights

  	
   

  	
  1.107

  	
   

  
	
   

  	
  Incyte

  	
   

  	
  Preamble

  	
   

  
	
   

  	
  Incyte
  Indemnified Parties

  	
   

  	
  10.1(a)

  	
   

  
	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
  Initial
  Development Plan

  	
   

  	
  4.2(a)(ii)

  	
   

  
	
   

  	
  JAK
  Candidate

  	
   

  	
  4.5(a)

  	
   

  
	
   

  	
  JAK
  JDC

  	
   

  	
  3.2

  	
   

  
	
   

  	
  JAK
  Licensed Back-Up Compound

  	
   

  	
  1.60

  	
   

  
	
   

  	
  JAK
  Mark

  	
   

  	
  6.5(b)(ii)

  	
   

  
	
   

  	
  JAK
  Patent Rights

  	
   

  	
  1.47

  	
   

  
	
   

  	
  JCC

  	
   

  	
  3.2

  	
   

  
	
   

  	
  JIPC

  	
   

  	
  3.2

  	
   

  
	
   

  	
  Joint
  c-MET IP

  	
   

  	
  7.2(b)

  	
   

  
	
   

  	
  Joint
  Development Activity

  	
   

  	
  4.3(a)(iii)

  	
   

  
	
   

  	
  Joint
  IP

  	
   

  	
  7.1(b)

  	
   

  
	
   

  	
  Joint
  JAK IP

  	
   

  	
  1.107

  	
   

  
	
   

  	
  JPT

  	
   

  	
  3.2

  	
   

  
	
   

  	
  JSC

  	
   

  	
  3.1(a)

  	
   

  
	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
  Non-Breaching
  Party

  	
   

  	
  9.2(b)

  	
   

  
	
   

  	
  Non-CoC
  Party

  	
   

  	
  Exhibit H

  	
   

  
	
   

  	
  Non-Controlling
  Party

  	
   

  	
  7.2(d)

  	
   

  
	
   

  	
  Notice

  	
   

  	
  14.6

  	
   

  
	
   

  	
  Novartis

  	
   

  	
  Preamble

  	
   

  
	
   

  	
  Novartis
  Indemnified Parties

  	
   

  	
  10.2(a)

  	
   

  
	
   

  	
  Novartis
  Information Rights

  	
   

  	
  4.1(c)(i)

  	
   

  
	
   

  	
  Novartis
  JAK Territory

  	
   

  	
  1.82

  	
   

  
	
   

  	
  Payments

  	
   

  	
  8.7

  	
   

  
	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
  Pharmacovigilance
  Agreement

  	
   

  	
  4.7(c)

  	
   

  
	
   

  	
  Potential
  JAK Back-Up Compound

  	
   

  	
  4.5(b)

  	
   

  
	
   

  	
  Promotional
  Plan

  	
   

  	
  6.3(a)

  	
   

  
	
   

  	
  Receiving
  Party

  	
   

  	
  12.1

  	
   

  
	
   

  	
  Royalty
  Term

  	
   

  	
  8.3(c)

  	
   

  
	
   

  	
  Severed
  Clause

  	
   

  	
  14.13

  	
   

  
	
   

  	
  SOPs

  	
   

  	
  3.2(a)(ii)

  	
   

  
	
   

  	
  Term

  	
   

  	
  9.1

  	
   

  
	
   

  	
  Third-Party
  Infringement

  	
   

  	
  7.3(a)

  	
   

  
	
   

  	
  UCC

  	
   

  	
  6.3(b)(iii)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

1.116       Construction.  In
construing this Agreement, unless expressly specified otherwise:

(a)               references to Sections, Exhibits and Schedules are to
sections of, and schedules and exhibits to, this Agreement;

 

17

 

(b)               except where the context otherwise requires, use of
either gender includes the other gender, and use of the singular includes the
plural and vice versa;

 

(c)               headings and titles are for convenience only and do
not affect the interpretation of this Agreement;

 

(d)               any list or examples following the word “including”
shall be interpreted without limitation to the generality of the preceding
words;

 

(e)               except where the context otherwise requires, the word “or”
is used in the inclusive sense;

 

(f)                all references to “dollars” or “$” herein shall mean
U.S. Dollars; and

 

(g)               each party represents that it has been represented by
legal counsel in connection with this agreement and acknowledges that it has
participated in the drafting hereof.  

 

In interpreting and applying
the terms and provisions of this agreement, the parties agree that no
presumption will apply against the party which drafted such terms and
provisions. 

 

ARTICLE
II

LICENSES

 

2.1           Rights Granted by Incyte to Novartis.

 

(a)               c-MET License Grant.   Subject to the terms of this Agreement,
Incyte hereby grants Novartis, during the Term, an exclusive (even as to Incyte
and its Affiliates), royalty-bearing, non-transferable (except in accordance
with Section 14.3) license, with the right to sublicense (subject to Section 2.3),
under Incyte IP and Incyte’s and its Affiliates’ interests in Joint IP, to
research, Develop, Commercialize, make, have made, use, offer for sale, sell
and import c-MET Licensed Compounds and c-MET Licensed Products in the Novartis
Territory in the c-MET Field.

 

(b)               JAK License Grant.  Subject to the terms of this Agreement,
Incyte hereby grants Novartis, during the Term, an exclusive (even as to Incyte
and its Affiliates), royalty-bearing, non-transferable (except in accordance
with Section 14.3) license, with the right to sublicense (subject to Section 2.3),
under Incyte IP and Incyte’s and its Affiliates’ interests in Joint IP, to (i) research,
Develop, Commercialize, make, have made, use, offer for sale, sell and import
JAK Licensed Compounds and JAK Licensed Products in the Novartis JAK Territory
in the JAK Field and (ii) research, Develop, make and have made JAK
Licensed Compounds and JAK Licensed Products in the Incyte Territory for the
sole purpose of using, offering for sale and selling JAK Licensed Products in,
and importing JAK Licensed Compounds and JAK Licensed Products into, the Novartis
JAK Territory in the JAK Field; provided  however, that Novartis
may not, directly or indirectly, conduct Clinical Trials or other clinical
studies, including any investigator initiated studies, in the Incyte Territory
without the prior approval of the JSC.

 

2.2           Rights Granted
by Novartis to Incyte.

 

18

 

***
Confidential material redacted and filed separately with the Commission.

 

(a)                                              Subject to the
terms of this Agreement, Novartis hereby grants Incyte, during the Term, a
non-exclusive non-transferable (except in accordance with Section 14.3)
license, with the right to sublicense (subject to Section 2.3), under
Novartis IP, to: (i) research, Develop, Commercialize, make, have made,
use, offer for sale, sell and import JAK Licensed Compounds and JAK Licensed
Products in the JAK Field in the Incyte Territory; and  (ii) research,
Develop, make and have made JAK Licensed Compounds and JAK Licensed Products in
the Novartis JAK Territory for the sole purpose of using, offering for sale and
selling JAK Licensed Products in, and importing JAK Licensed Compounds and JAK
Licensed Products into, the Incyte Territory in the JAK Field; provided  however,
that Incyte may not, directly or indirectly, conduct Clinical Trials or other
clinical studies, including any investigator initiated studies, in the Novartis
Territory without the prior approval of the JSC.

 

(b)                                             Subject to the
terms of this Agreement, Novartis hereby grants Incyte, during the Term, a
non-exclusive non-transferable (except in accordance with Section 14.3)
license, with the right to sublicense (subject to Section 2.3), under
Novartis Improvements to research, Develop, make, have made, use, offer for
sale, sell and import JAK Licensed Compounds (as such compounds exist as of the
Effective Date) and JAK Licensed Products (as such compounds exist as of the
Effective Date) in (i) topical formulations outside the JAK Field
worldwide; and (ii) non-oral formulations for ophthalmic Indications
worldwide.

 

2.3                                 Sublicense
Rights.  Each Party shall have the
right to grant sublicenses within the scope of the licenses under Section 2.1
or 2.2, as applicable, solely to its Affiliates and to Third Parties that are
conducting collaborative research, Development and/or Commercialization
activities with such Party or its Affiliates with respect to Licensed Compounds
and Licensed Products; provided  that any sublicense granted to
Third Party collaborators under this Agreement shall be pursuant to a written
agreement that subjects such sublicensee to all relevant restrictions and
limitations set forth in this Agreement, including the confidentiality
provisions of ARTICLE XII.  If either
Party grants a sublicense to a Third Party as permitted by this Section 2.3,
then such Party shall provide the other Party prompt written notice thereof and
shall provide the other Party with an executed copy of any such sublicense
(redacted as necessary to protect confidential or commercially sensitive
information). Except as otherwise agreed by the
Parties in writing, each Party shall be jointly and severally responsible with
its sublicensees to the other Party for failure by its sublicensees to comply
with this Agreement.  In the event
that (a) the sublicensee has failed to cure a material breach or take such
steps as would be considered reasonable to effectively cure such breach under
any such sublicense within *** after notice of such breach and (b) such
material breach also constitutes a breach of this Agreement, the sublicensor
shall terminate the sublicense at the request of the Party that is not the
sublicensor.

 

2.4                                 Section 365(n) of
The Bankruptcy Code.  All rights
and licenses granted under or pursuant to any section of this Agreement,
including the licenses granted under this ARTICLE II and the rights granted
under Section 4.3(d), are and will otherwise be deemed to be for purposes
of Section 365(n) of the United States Bankruptcy Code (Title 11,
U.S. Code), as amended (the “Bankruptcy Code”), licenses of rights to “intellectual
property” as defined in Section 101(35A) of the Bankruptcy Code.  The Parties will retain and may fully
exercise all of their respective rights and elections under the Bankruptcy
Code.  Each Party agrees that the other
Party, as
licensee of such rights under this Agreement, will retain and may fully
exercise all of its rights and elections under the Bankruptcy Code or any other
provisions of applicable Law outside the 

 

19

 

United States that provide similar protection for “intellectual
property.”  The Parties further agree
that, in the event of the commencement of a bankruptcy proceeding by or against
a Party under the Bankruptcy Code or analogous provisions of applicable Law
outside the United States, the other Party will be entitled to a complete
duplicate of (or complete access to, as the other (non-bankrupt) Party deems
appropriate) such intellectual property and all embodiments of such
intellectual property, which, if not already in such Party’s possession, will
be promptly delivered to it upon such Party’s written request thereof.  Any agreements supplemental hereto will be
deemed to be “agreements supplementary to” this Agreement for purposes of Section 365(n) of
the Bankruptcy Code.

 

2.5                                 Retained Rights.

 

(a)                                              No Implied
Licenses or Rights.  Except as
expressly provided in Section 2.1, and subject to Section 2.6, all
rights in and to the Incyte IP, Incyte’s and its Affiliates’ interests in Joint
IP and any other Patent Rights or Know-How of Incyte and its Affiliates, are
hereby retained by Incyte and its Affiliates. 
Except as expressly provided in Section 2.2, and subject to Section 2.6,
all rights in and to the Novartis IP, and Novartis’ and its Affiliates’
interests in Joint IP and any other Patent Rights or Know-How of Novartis and
its Affiliates, are hereby retained by Novartis and its Affiliates.

 

(b)                                             Other Retained
Rights.  Notwithstanding the exclusive
licenses granted to Novartis pursuant to Section 2.1, Incyte retains the
right to practice under the Incyte IP and Joint IP to:

 

(i)                                     perform (and to
sublicense Third Parties to perform) its obligations under this Agreement and
any Supply Agreement, including for the purpose of performing its activities in
connection with the Clinical Trials and any related manufacture of Drug Product
or Drug Substance; and

 

(ii)                                  make, have
made, use, and test Licensed Compounds solely for internal research
purposes.  For purposes of clarity, the
license granted to Novartis in Section 2.1 shall not require Incyte to
remove any Licensed Compounds from Incyte’s compound library.

 

(c)                                              JAK2 Inhibitor
Compounds that are not JAK Licensed Compounds.

 

(i)                                     For purposes of
clarity, the Parties acknowledge that the license grant in Section 2.1
does not include any rights under Incyte IP and Joint IP to research, Develop,
Commercialize, make, have made, use, offer for sale, sell and import JAK2
Inhibitor Compounds that are not JAK Licensed Compounds, including Incyte’s
compound INCB028050 and, subject to Section 2.6(b)(i), Incyte retains all
rights to practice under the Incyte IP and Joint IP to research, Develop,
Commercialize, make, have made, use, offer for sale, sell and import JAK2
Inhibitor Compounds that are not JAK Licensed Compounds (including Incyte’s
compound INCB028050) for all uses worldwide.

 

(ii)                                  Notwithstanding
Sections 2.5(c)(i) and 4.5, Incyte shall not research, Develop, Commercialize,
make, have made, use, offer for sale, sell and import, nor will

 

20

 

***
Confidential material redacted and filed separately with the Commission.

 

it allow its Affiliates or Third Party licensees to research,
Develop, Commercialize, make, have made, use, offer for sale, sell and import,
INCB028050 in the JAK Field.

 

2.6                                 Non-Compete.

 

(a)                                              c-MET Inhibitor
Compounds and c-MET Licensed Compounds.

 

(i)                                     During the
c-MET Program Term,  Incyte agrees
not to, and shall cause its Affiliates not to, directly or indirectly,
including through any ownership interest in any other entity (other than
through an ownership interest of *** or less of a public company), Develop or
Commercialize any c-MET Inhibitor Compounds in any field in any country.  Notwithstanding the foregoing, nothing in
this Agreement shall prohibit Incyte or its Affiliates from Developing or
Commercializing any c-MET Excluded Compound in any field anywhere in the world.

 

(ii)                                  During the
c-MET Program Term, Novartis agrees not to, and shall cause its Affiliates not
to, directly or indirectly, including through any ownership interest in any
other entity (other than through an ownership interest of *** or less of a
public company), conduct any Randomized Clinical Trial with, or Commercialize,
any c-MET Inhibitor  Compound  that is not a c-MET
Licensed Compound.  Notwithstanding the
foregoing, nothing in this Agreement shall prohibit Novartis or its Affiliates
from Developing or Commercializing any c-MET Excluded Compound in any field
anywhere in the world.

 

(iii)                               If no Licensed
c-MET Inhibitor Compound has been Commercialized by Novartis under this
Agreement and Novartis or its Affiliates commence a Randomized Clinical Trial
of any c-MET Inhibitor Compound other than a c-MET Excluded Compound within ***
after the termination of Novartis’ license under Section 2.1(a), then
Novartis shall pay Incyte a *** royalty on Net Sales of such c-MET Inhibitor
Compound  until the expiration of
the relevant Patent Rights that Cover such c-MET Inhibitor Compound.  For purposes of clarity, nothing in this Section 2.6(a)(iii) shall
be construed to extend the license grants to Novartis under Section 2.1 to
Cover such c-MET Inhibitor Compound.

 

(b)                                             JAK2 Inhibitor
Compounds and JAK Licensed Compounds.

 

(i)                                     During the JAK
Program Term, Incyte agrees not to, and shall cause its Affiliates not to,
directly or indirectly, including through any ownership interest in any other
entity (other than through an ownership interest of *** or less of a public
company), Develop or Commercialize any JAK2 Inhibitor Compounds in the JAK
Field anywhere in the world, other than as expressly permitted under this
Agreement (including Section 4.5).  Notwithstanding the foregoing,
nothing in this Agreement shall prohibit Incyte or its Affiliates from
Developing or Commercializing any JAK Excluded Compound in any field anywhere
in the world.

 

(ii)                                  During the JAK
Program Term, Novartis agrees not to, and shall cause its Affiliates not to,
directly or indirectly, including through any ownership interest in any other
entity (other than through an ownership interest of *** or less of a public

 

21

 

***
Confidential material redacted and filed separately with the Commission.

 

company), Develop or Commercialize any JAK2
Inhibitor Compounds in the JAK Field anywhere in the world, other than as
expressly permitted under this Agreement (including Section 4.5).  Notwithstanding the foregoing, nothing in
this Agreement shall prohibit Novartis or its Affiliates from Developing or
Commercializing any JAK Excluded Compound in any field anywhere in the world.

 

(iii)                               For the
avoidance of doubt, neither Novartis nor its Affiliates will Develop or
Commercialize any JAK Licensed Compounds anywhere in the world for the
treatment of any Inflammatory Disease.

 

(iv)                              Nothing herein
shall limit Novartis’ or its Affiliates’ rights to Develop or Commercialize any
product outside the JAK Field containing a compound whose primary activity is related
to JAK3 as Developed or Commercialized by Novartis or its Affiliates or
sublicensees ***.

 

(v)                                 During the JAK
Program Term, Incyte may not Develop or Commercialize JAK Licensed Compounds
outside the JAK Field except that Incyte may Develop and Commercialize JAK
Licensed Compounds for use in (A) topical formulations outside the JAK
Field worldwide, and (B) non-oral formulations for ophthalmic Indications
anywhere in the world.

 

(c)                                              JSC Designation
as Excluded Compound.  In the
event that either Party identifies a c-MET Inhibitor Compound (that is not a
c-MET Excluded Compound under Section 1.11(a)) or a JAK2 Inhibitor
Compound (that is not a JAK Excluded Compound under Section 1.57(a)) that
such Party reasonably believes would not compete with a Licensed Product,
including because (i) such compound, when tested in vivo,
is shown to have its pharmacological effect via a mechanism other than via
c-MET or JAK2, respectively, or (ii) such compound would be reasonably
expected to serve a different and distinct patient population compared to
existing Licensed Products, then such Party may schedule a discussion on this
topic for the next scheduled JSC meeting. At such JSC meeting, such Party shall
present the data supporting its contention that such compound would reasonably
be expected not to compete with existing Licensed Products and therefore
formally request that such compound be designated either a c-MET Excluded
Compound or a JAK Excluded Compound. The JSC shall, no later than the next
scheduled JSC meeting, decide whether to approve such request, which decision
shall be approved solely by unanimous agreement of the JSC, provided that the
Parties shall consider such decisions in good faith on the merits of whether
clause (i) or (ii) above have been satisfied. In the event that
either Party identifies a c-MET Inhibitor Compound or a JAK2 Inhibitor Compound
that such Party reasonably believes would serve a different and distinct
patient population compared to the respective Licensed Product but also is expected
to serve some portion of the patient population served by existing Licensed
Products, then in addition to presenting the relevant data about that compound,
the requesting Party shall also propose an appropriate royalty rate that would
fairly compensate the other Party for the potential royalties that it would be
expected to forego based on the likely use of such compound in lieu of the
relevant Licensed Product.

 

22

 

ARTICLE
III

GOVERNANCE

 

3.1                                 Joint Steering
Committee.

 

(a)                                              Establishment.  The Parties shall
establish a joint steering committee (“JSC”) within thirty (30) days
after the Effective Date that will have the responsibility for the overall
coordination and oversight of the Parties’ activities under this
Agreement.  As soon as practicable
following the Effective Date (but in no event more than thirty (30) days
following the Effective Date), each Party shall designate its initial three (3) representatives
on the JSC.  Each Party’s representatives
and any substitute for a representative shall be bound by the obligations of
confidentiality set forth in ARTICLE XII.
A representative from Novartis shall act as the chairperson of the JSC.  The chairperson shall not have any greater
authority than any other representative on the JSC and shall conduct the
following activities of the JSC: (i) calling meetings of the JSC; (ii) preparing
and issuing minutes of each such meeting within thirty (30) days thereafter; (iii) ensuring
that any decision-making delegated to the JSC is carried out in accordance with
Section 3.5; and (iv) preparing and circulating an agenda for the
upcoming meeting; provided  that the chairperson shall include any
agenda items proposed by Incyte.  Each Party
shall be free to change its representatives on notice to the other or to send a
substitute representative to any JSC meeting; provided, however, that each Party shall ensure
that at all times during the existence of the JSC, its representatives on the
JSC are appropriate in terms of expertise and seniority (including at least one
member of senior management) for the then-current stage of Development and
Commercialization of the Licensed Products and have the authority to bind such
Party with respect to matters within the purview of the JSC.

 

(b)                                             Responsibilities.  The JSC shall have responsibility for:  (i) the general oversight of the collaboration, including approval of Development Budgets; (ii) periodic
review of the overall goals and strategy of the Programs; (iii) attempting
to resolve any disputes and to consider any other issues brought to its
attention by the Parties; (iv) establishing the efficacy and activity
criteria for Viable Compounds in accordance with Section 1.113; and (v) performing
such other functions as appropriate to further the purposes of this Agreement,
as mutually agreed upon by the Parties in writing.

 

3.2                                 Subcommittees.  The
JSC may establish and disband such
subcommittees as deemed necessary by the JSC.  Each such subcommittee shall consist of the
same number of representatives designated by each Party, which number shall be
mutually agreed by the Parties.  Each
Party shall be free to change its representatives on notice to the other or to
send a substitute representative to any subcommittee meeting; provided, however,
that each Party shall ensure that at all times during the existence of
any subcommittee, its representatives on such subcommittee are appropriate in
terms of expertise and seniority for the then-current stage of Development and
Commercialization of the Licensed Product in the Field in the Territory and
have the authority to bind such Party with respect to matters within the
purview of the relevant subcommittee. Each Party’s representatives and any
substitute for a representative shall be bound by the obligations of
confidentiality set forth in ARTICLE XII. 
Except as expressly provided in this Agreement, no subcommittee shall
have the authority to bind the Parties hereunder and each subcommittee shall
report to, and any decisions shall be made by, the JSC.  The initial subcommittees of the JSC will

 

23

 

be
the Joint c-MET Development Committee (“c-MET JDC”), Joint JAK
Development Committee (“JAK JDC”), Joint Program Team (“JPT”),
the Joint Commercialization Committee (“JCC”) and the Joint Intellectual
Property Committee (“JIPC”)

 

(a)                                              Joint c-MET
Development Committee.

 

(i)                                     The c-MET
JDC will have the responsibility for the overall coordination and oversight of the c-MET
Program in the c-MET Field in the Novartis Territory.  As soon as practicable following the
Effective Date (but in no event more than thirty (30) days following the
Effective Date), each Party shall designate its initial three (3) representatives on the c-MET JDC.  Novartis shall appoint a person from among
its representatives on the c-MET JDC to serve as the chairperson of the c-MET
JDC.  The
chairperson shall not have any greater authority than any other representative
on the c-MET JDC and
shall conduct the following activities of the c-MET JDC: (A) calling meetings of the c-MET JDC; (B) preparing and issuing minutes of each such
meeting within thirty (30) days thereafter; (C) preparing and circulating
an agenda for the upcoming meeting; provided  that the chairperson
shall include any agenda items proposed by Incyte; and (D) ensuring that
any decision-making delegated to the c-MET JDC is carried out in accordance with Section 3.5.

 

(ii)                                  The c-MET JDC
shall have responsibility for (A) overseeing the initial transfer of
information and designated activities from Incyte to Novartis relating to the
c-MET Program; (B) overseeing the subsequent flow and transfer of
information between the Parties related to the c-MET Program pursuant to Section 4.1(b);
(C) overseeing, reviewing and coordinating the c-MET Program; (D) subject
to unanimous approval by the JSC, defining the exact assay conditions for c-MET
testing activity and overseeing the exchange of standard operating procedures (“SOPs”)
in connection with the same; (E) approving c-MET Licensed Back-Up Compound(s) selected
by Novartis  for further Development; and (F) as
applicable, overseeing, reviewing and coordinating the work being done under
the Development Plans.

 

(b)                                             Joint JAK
Development Committee.

 

(i)                                     The JAK JDC
will have the responsibility for the overall coordination and oversight of the JAK
Program in the JAK Field worldwide.  As
soon as practicable following the Effective Date (but in no event more than
thirty (30) days following the Effective Date), each Party shall designate its
initial three (3) representatives
on the JAK JDC.  Novartis and
Incyte shall each appoint a person from among its representatives on the JAK
JDC to serve as the co-chairperson of the JAK JDC.  The
co-chairpersons shall not have any greater authority than any other
representative on the JAK JDC
and shall conduct the following activities of the JAK JDC: (A) calling meetings of the JAK JDC; (B) preparing and issuing minutes of each such
meeting within thirty (30) days thereafter; (C) preparing and circulating
an agenda for the upcoming meeting; and (D) ensuring that any
decision-making delegated to the JAK JDC is carried out in accordance with Section 3.5.

 

(ii)                                  The JAK JDC
shall have responsibility for (A) overseeing the initial transfer of
information and designated activities from Incyte to Novartis relating to the
JAK Program; (B) overseeing the subsequent flow and transfer of
information between the Parties related to the JAK Program pursuant to Section 4.1(b);
(C) overseeing, reviewing and

 

24

 

coordinating the JAK
Program; (D) subject to unanimous approval by the JSC, defining the exact
assay conditions for JAK testing activity and overseeing the exchange of SOPs
in connection with the same; (E) approving the JAK Licensed Back-Up
Compound(s) selected by the JPT  for further
Development; (F) as applicable, overseeing, reviewing and coordinating the
work being done under the Development Plans; and (G) selecting Indications
for Development for the JAK Program.

 

(c)                                              Joint Program
Team.  

 

(i)                                     The JPT shall
be the principal organization through which the Development of the JAK Program
is planned, administered and evaluated. 
As soon as practicable following the Effective Date (but in no event
more than thirty (30) days following the Effective Date), each Party shall
designate its initial three (3) representatives
on the JPT.  The JPT shall be
composed of representatives from Incyte’s and Novartis’s various functional
groups involved in Development of the JAK Licensed Product, namely Clinical
Development and Medical Affairs, Drug Regulatory Affairs, Exploratory
Development, Marketing and Technical Research and Development.  Novartis and Incyte shall each appoint a
person from among its representatives on the JPT to serve as the co-chairperson
of the JPT.  The
co-chairpersons shall not have any greater authority than any other
representative on the JPT
and shall conduct the following activities of the JPT: (A) calling meetings of the JPT; (B) preparing
and issuing minutes of each such meeting within thirty (30) days thereafter; (C) preparing
and circulating an agenda for the upcoming meeting; and (D) ensuring that
any decision-making delegated to the JPT is carried out in accordance with Section 3.5.

 

(ii)                                  The JPT shall
have responsibility for: (A) selecting the JAK Licensed Back-Up Compounds
for approval by the JAK JDC; (B) reviewing the Development Plans prepared
by Novartis pursuant to Section 4.2(a)(ii); (C) amending the
Development Plan to include any Joint Development Activities in accordance with
Section 4.3(a); and (D) overseeing the overall JAK Program.

 

(d)                                             Joint
Commercialization Committee.

 

(i)                                     The JCC shall
oversee Commercialization of JAK Licensed Products in the Field worldwide.  As soon as practicable following the Effective
Date (but in no event more than thirty (30) days following the Effective Date),
each Party shall designate its initial three
(3) representatives on the JCC. 
The JCC shall be composed of appropriate and key executives of Novartis
together with an equal number of appropriate and key executives from
Incyte.  Novartis and Incyte shall each
appoint a person from among its representatives on the JCC to serve as the
co-chairperson of the JCC.  The co-chairpersons shall not have any greater authority
than any other representative on the JCC and shall conduct the following activities of the JCC: (A) calling meetings of the JCC; (B) preparing and issuing minutes of each such
meeting within thirty (30) days thereafter; (C) preparing and circulating
an agenda for the upcoming meeting; and (D) ensuring that any
decision-making delegated to the JCC is carried out in accordance with Section 3.5.

 

(ii)                                  The JCC shall be responsible
for: (A) overseeing, reviewing and coordinating the Commercialization of
JAK Licensed Products in the Field worldwide; (B) 

 

25

 

developing and overseeing
the Global Branding Strategy; (C) setting overall strategic objectives and
plans related to Commercialization of JAK Licensed Products in the Field
worldwide; (D) reviewing, commenting on and approving the Promotional
Plan; (E) reviewing Commercialization
issues for JAK Licensed Products in the Field in the Novartis Territory that
will have an impact on Commercialization of JAK Licensed Products in the Field
in the Incyte Territory; (F) reviewing
Commercialization issues for JAK Licensed Products in the Field in the Incyte
Territory that will have an impact on Commercialization of JAK Licensed
Products in the Field in the Novartis Territory; (G) providing a
forum for the Parties to discuss the Commercialization of JAK Licensed Products
in the Field worldwide; and (H) such
other  responsibilities as may be
assigned to the JCC pursuant to this Agreement or as may be mutually agreed
upon by the Parties from time to time.

 

(e)                                              Joint
Intellectual Property Committee.

 

(i)                                     The JIPC shall
have the responsibility for oversight relating to the filing, prosecution and
maintenance of JAK Patent Rights under Section 7.2(c).  As soon as practicable following the
Effective Date (but in no event more than thirty (30) days following the
Effective Date), each Party shall designate its two (2) representatives on
the JIPC.  A representative of Incyte
shall act as the chairperson of the JIPC. 
The chairperson shall not have any greater authority than any other
representative on the JIPC and shall conduct the following activities of the
JIPC:  (A) calling meetings of the
JIPC at least every quarter; (B) preparing and issuing minutes of each
such meeting within thirty (30) days thereafter; (C) preparing and
circulating an agenda for the upcoming meeting, provided that the chairperson
shall include any agenda items proposed by Novartis; and (D) ensuring that
any decision-making delegated to the JIPC is carried out in accordance with Section 3.5.

 

(ii)                                  The JIPC shall
have responsibility for the following with respect to JAK Patent Rights under Section 7.2(c):  (A) on an application by-application
basis, determining what claims will be prosecuted and what claims or applications
will be abandoned; and (B) conducting periodic portfolio reviews to
maximize the strength of the patent portfolio and cost effectiveness of the
preparation, filing, prosecution and maintenance of JAK Patent Rights.

 

(iii)                               Subject to JIPC
discussions, Incyte shall promptly file any U.S. priority applications for
patent rights covering the JAK Licensed Back-Up Compounds.

 

3.3                                 Committee Meetings.

 

(a)                                              Commencing in
the first Calendar Quarter of 2010, the JSC and each of the subcommittees shall
each hold at least one (1) meeting per Calendar Quarter at such times
during such Calendar Quarter as the chairperson elects to do so.  Except where a Party fails to appoint a
member or members to the JSC or its subcommittees or fails to participate in
meetings of the JSC or its subcommittees pursuant to Section 3.6, meetings of the JSC and the subcommittees, respectively, shall be
effective only if at least one (1) representative of each Party is present
or participating.  The JSC and its
subcommittees may meet either (i) in person at either Party’s facilities
or at such locations as the Parties may otherwise agree or (ii) by audio
or video teleconference; provided  that no less than one (1) meeting
during each Calendar Year shall be conducted in person.  Other representatives of each Party involved
with the Licensed Product

 

26

 

may attend meetings as
non-voting participants, subject to the confidentiality provisions set forth in
ARTICLE XII.  Additional meetings of the
JSC and its subcommittees may also be held with the consent of each Party, or
as required under this Agreement, and neither Party shall unreasonably withhold
its consent to hold such additional meetings. 
Each Party shall be responsible for all of its own expenses incurred in
connection with participating in all such meetings. 

 

(b)                                             At the first
meeting of each of the JSC, c-MET JDC
and JAK JDC, such committee shall establish, as applicable, the efficacy
and activity criteria for Viable Compounds, the assay conditions for c-MET
testing activity and the assay conditions for JAK testing activity.

 

3.4                                 Authority.  The JSC and any subcommittee shall have only
the powers assigned expressly to it in this ARTICLE III and elsewhere in this
Agreement, and shall not have any power to amend, modify or waive compliance
with this Agreement.  In furtherance
thereof, each Party shall retain the rights, powers and discretion granted to
it under this Agreement and no such rights, powers or discretion shall be
delegated or vested in the JSC or any subcommittee unless such delegation or
vesting of rights is expressly provided for in this Agreement or the Parties
expressly so agree in writing. 

 

3.5                                 Decisions.

 

(a)                                              Initial Dispute
Resolution Procedures. 
Subject to the provisions of this Section 3.5, actions to be taken by the JSC and each of the
subcommittees shall be taken only following a unanimous vote, with each Party
having one (1) vote.  If any
subcommittee fails to reach unanimous agreement on a matter before it for
decision for a period in excess of thirty (30) days, the matter shall be
referred to the JSC.

 

(b)                                             Final
Decision-Making. If the JSC fails to reach unanimous agreement on a
matter before it for decision for a period in excess of thirty (30) days, the
following provisions shall apply:

 

(i)                                     The JSC
representatives appointed by Novartis shall have the deciding vote on any
matter involving (A) the Development or Commercialization of any c-MET Licensed Compound and c-MET Licensed Product (including selection of Indications); (B) the Development or
Commercialization of any JAK Licensed Compound or
JAK Licensed Product in the JAK Field (including selection of
Indications) in  the Novartis JAK Territory; (C) whether
a Potential JAK Back-Up Compound is Developed in the JAK Field in the Novartis
JAK Territory in a Randomized Clinical Trial and beyond in accordance with Section 4.5
and (D) any matter within the scope of responsibility of the JIPC
pertaining to the Secondary JAK Patent Rights in the Novartis JAK
Territory.  Incyte shall have the right
to appeal any such decision of the JSC to the Novartis Executive Officer or a
designee of the Novartis Executive Officer with decision-making authority for
resolution. In such case, the Novartis Executive Officer or designee shall have
the final decision-making authority on such issue.

 

(ii)                                  The JSC
representatives appointed by Incyte shall have the deciding vote on any matter
involving (A) the Development or Commercialization of JAK Licensed Compound or JAK Licensed Product in the JAK Field
(including selection of

 

27

 

***
Confidential material redacted and filed separately with the Commission.

 

Indications) in the Incyte
Territory; (B) the Development activities described in Section 4.2(b) until
such time as Novartis assumes responsibility for such activities; (C) whether
a Potential JAK Back-Up Compound is Developed in the JAK Field in the Incyte
Territory in a Randomized Clinical Trial and beyond in accordance with Section 4.5;
and (D) any matter within the scope of responsibility of the JIPC
pertaining to (x) the INCY0039 Patent Rights worldwide and (y) Secondary
JAK Patent Rights in the Incyte Territory. 
Novartis shall have the right to appeal any such decision of the JSC to
the Incyte Executive Officer or a designee of the Incyte Executive Officer with
decision-making authority for resolution. In such case, the Incyte Executive
Officer or designee shall have the final decision-making authority on such
issue.

 

(c)                                              Exceptions.  Notwithstanding the foregoing, neither Party
shall exercise its right to finally resolve a dispute pursuant to Section 3.5(b):  (i) in a manner that excuses such Party
from any of its obligations specifically enumerated under this Agreement, (ii) in
a manner that negates any consent rights or other rights specifically allocated
to the other Party under this Agreement; (iii) to increase Development
Costs for the other Party for a given Calendar Year by more than *** above the
then current Development Budget for the Calendar Year; (iv) to resolve any
dispute regarding whether a Party may conduct Development or Commercialization
activities in the other Party’s territory; (v) to establish FTE Rates for
any Development activities; (vi) to resolve any dispute regarding whether
a milestone event set forth in Section 8.2 has been achieved; or (vii) in
a manner that would require the other Party to perform any act that it
reasonably believes to be inconsistent with any Law or any approval, order,
policy or guidelines of a Regulatory Authority.

 

(d)                                             Unanimous
Agreement.  If the
provisions of this Agreement (other than Section 3.5(a)) specify that
unanimous agreement of the JSC or any subcommittee is required for any matter,
then neither Party may exercise a deciding vote under the provisions of Section 3.5(b) with
respect to such matter.

 

3.6                                 Committee
Membership.

 

(a)                                              Appointment is
a Right.  The appointment of members of
the JSC and any subcommittees of the JSC is a right of each Party and not an
obligation and shall not be a “deliverable” as referenced in any existing
authoritative accounting literature. 
Each Party shall be free to determine not to appoint members to the JSC
or any subcommittee of the JSC.

 

(b)                                             Consequence of
Non-Appointment.  If a Party
does not appoint members of the JSC or any subcommittee of the JSC, it shall
not be a breach of this Agreement, nor shall any consideration be required to
be returned, and unless and until such members are appointed, the Party that has made the requisite appointments may unilaterally
discharge the roles of the JSC or any
subcommittee thereof for which members were not appointed, provided that (i) neither Party shall unilaterally discharge
the roles of the JSC or any subcommittee thereof as permitted under this Section 3.6(b) unless the other Party has not appointed any members within thirty (30)
days after the first Party has completed its appointment of its members, and (ii) the
responsibility of the JIPC shall be carried out through bilateral meetings of
representatives of Incyte and Novartis, with any disputed matters resolved in
accordance with Sections 3.5(b)(i)(D) and 3.5(b)(ii)(D).

 

28

 

***
Confidential material redacted and filed separately with the Commission.

 

ARTICLE
IV

DEVELOPMENT;
REGULATORY MATTERS

 

4.1                                 Information
Transfer.

 

(a)                                              Initial
Information Transfer to Novartis.  (i) Within a reasonable period not to
exceed *** after the Effective Date, Incyte shall make available to Novartis,
in a mutually-agreed upon format and without further financial consideration,
the material clinical data and manufacturing Know-How included in the Incyte
Know-How and that is described in Exhibit B, and (ii) from the
Effective Date through ***, Incyte shall make its relevant scientific and
technical personnel reasonably available to Novartis at Incyte’s offices, at
reasonable times during Incyte’s normal business hours and upon reasonable
prior notice, to answer any questions or provide instruction as reasonably
requested by Novartis concerning the information delivered pursuant to this Section 4.1.

 

(b)                                             Continuing
Information Transfer.  On an
ongoing basis during the JAK Program Term, on a *** basis (or such more
frequent basis as determined by the JAK JDC), each Party shall make available
to the other Party, in a mutually agreed-upon format, (i) material
clinical data, (ii) manufacturing Know-How included in the Incyte Know-How
or Novartis Know-How, as applicable, (iii) software tools used by Incyte
or Novartis, as applicable, to analyze data arising from the JAK Program, and (iv) such
other aspects of the Incyte Know-How or Novartis Know-How, as applicable, as
shall be reasonably requested by the other Party.

 

(c)                                              Access to
Information Under Incyte Clinical and Supply Agreements.

 

(i)                                     As promptly as
practicable following the Effective Date, Incyte ***, “Novartis Information
Rights”).  Without limiting the
foregoing, Incyte *** the Novartis Information Rights.  Incyte shall ***.  If *** the Novartis Information Rights ***,
Novartis shall ***.  Incyte shall *** to
the extent *** the Novartis Information Rights ***.

 

(ii)                                  Subject to the
exception set forth in subsection (iv) and unless and to the extent that
Novartis previously agrees in writing, Incyte shall not enter into a ***,

 

29

 

***
Confidential material redacted and filed separately with the Commission.

 

in each case ***, unless such ***. 
As used above, the term ***.

 

(iii)                               Novartis shall
exercise the Novartis Information Rights only under circumstances in  which specified Incyte
Know-How that would be encompassed within the Novartis Information Rights
(including information that would be obtained through any audit, inspection,
collection and retention of physical samples, interview of personnel and
attendance and participation at meetings) has not been provided by Incyte
pursuant to Section 4.1(b) and Novartis has requested such
information in writing but has been unable to obtain such information promptly
through exercise of its other rights hereunder. 
In the event that Novartis obtains Incyte Know-How through the exercise
of Novartis Information Rights, Novartis shall limit its use of such Incyte
Know-How to the JAK Program in the JAK Field and in the Novartis JAK Territory.

 

(iv)                              The provisions
of subsection (ii) shall not apply to any Incyte Know-How arising out of
agreements with Third Parties to the extent relating to a Clinical Trial or
other Development activities that are the subject of a proposal by Incyte under
Section 4.3(a) on which Novartis elects not to collaborate with
Incyte, unless and until Novartis exercises its buy-in rights with respect to
such Clinical Trial or Development activity under Section 4.3(c).

 

(d)                                             Software Source
Code.  Following the Effective Date,
Incyte shall upon request by Novartis and in any event no less frequently than
every *** transfer to Novartis any Software Source Code that has not previously
been provided to Novartis, including updates and bug fixes to previously
provided Software Source Code.

 

(e)                                              Right of
Reference or Use.  Incyte
hereby grants to Novartis, solely for the purposes set forth in this Agreement,
a Right of Reference or Use to any and all Regulatory Documentation Controlled
by Incyte relating to Licensed Products and existing as of the Effective Date
or generated from any Clinical Trial commenced by Incyte prior to the Effective
Date, and agrees to sign, and cause its Affiliates to sign, any instruments
reasonably requested by Novartis in order to effect such grant.  Notwithstanding the foregoing, nothing in
this Section 4.1 is intended to imply the existence of any particular
data, information, drug master file or other Regulatory Documentation.

 

(f)                                                Applicability
of Bankruptcy Code.  For the
avoidance of doubt, rights granted under this ARTICLE IV shall be deemed to be
license of rights to “intellectual property” as defined in Section 101
(35A) of the Bankruptcy Code and shall otherwise be subject to Section 2.4.

 

4.2                                 Conduct of
Development Activities.

 

30

 

(a)                                              Generally.

 

(i)                                     From and after
the Effective Date, (A) Novartis will, subject to the terms of this
Agreement, be responsible, at its expense, for the Development of (1) the
c-MET Licensed Products in the c-MET Field in the Novartis Territory and (2) the
JAK Licensed Products in the JAK Field in the Novartis JAK Territory; and (B) Incyte
will remain responsible, at its expense, for the Development of the JAK
Licensed Products in the JAK Field in the Incyte Territory.  While the Parties may choose, at their sole
discretion, to work together on particular projects, except as otherwise
provided in this Agreement, the Parties will operate independently in their
activities for their respective Development and Commercialization of the
Licensed Products, but will provide access to certain information related to
the Development of c-MET Licensed Products to the c-MET JDC, the JSC and to
each other as expressly described in this Agreement and certain information
related to the Development and Commercialization of JAK Licensed Products to
the JAK JDC, the JPT, the JCC, the JSC and to each other as expressly described
in this Agreement.

 

(ii)                                  The Development
of Licensed Products shall be governed by Development plans that describe the
proposed overall program of Development for c-MET Licensed Products and JAK
Licensed Products (the “Development Plans”).  The initial Development Plans are attached
hereto as Exhibits D-1 and D-2 respectively (collectively, the “Initial
Development Plan”).  Novartis shall
have the sole right and responsibility for preparing the Development Plan for
each Licensed Product in the Field in the Novartis Territory.  Except as otherwise provided in this
Agreement (including as provided in Sections 4.2(b) and 4.3), with respect
to Licensed Product in the Field in the Novartis Territory, all decisions with
respect to the creation, modification and implementation of the Initial Development
Plan, all other Development Plans and all Development activities shall be made
by Novartis in its sole discretion; provided  that Novartis will
present a draft Development Plan for each Licensed Product and any material
changes to the Initial Development Plan to, as applicable, the c-MET JDC or the
JAK JDC and will give due consideration to any comments of Incyte thereto.

 

(iii)                               Notwithstanding
the foregoing, prior to commencing any Clinical Trial or other clinical study
as part of the JAK Program, the Party that proposes to conduct such Clinical
Trial or other clinical study shall first submit to the JPT the proposed
protocol for such proposed Clinical Trial or clinical study and a written
summary, in a form mutually agreed by the Parties, of such Clinical Trial or
clinical study for review by the JPT; provided  that neither Party
may proceed with such Clinical Trial or clinical study if the other Party
reasonably determines that the Clinical Trial or clinical study is reasonably
likely to have a material adverse impact on the Development and/or
Commercialization of JAK Licensed Products in its territory. Notwithstanding
the foregoing, any disputes regarding whether an activity is reasonably likely
to have a material adverse impact on the Development and/or Commercialization
of JAK Licensed Products in a Party’s territory shall be resolved in accordance
with Section 3.5.

 

(iv)                              Novartis shall
use Commercially Reasonable Efforts to (A) conduct the studies and
Development activities described in Exhibit D; and (B) Develop
Licensed Compounds and Licensed Products in accordance with the applicable
Development Plan.

 

31

 

*** Confidential material
redacted and filed separately with the Commission.

 

(v)                                 Incyte shall use
Commercially Reasonable Efforts to conduct study 351 in accordance with the
protocol existing on the Effective Date.

 

(b)                                             Specific Incyte
c-MET Licensed Compound Development Responsibilities.  Notwithstanding anything to the contrary
above, Incyte will be responsible and shall bear all costs for the conduct of
the studies described in Exhibit E. 
For the avoidance of doubt, Novartis shall be responsible for conducting
and shall bear all costs for all c-MET Development activities other than the
studies described in Exhibit E and as provided in Section 4.4.

 

(c)                                              Studies 352 and
351.

 

(i)                                     The Parties
acknowledge that (A) Incyte shall be responsible for conducting and shall
bear the Out-of-Pocket Costs for the toxicology studies as described in Exhibit F-1;
(B) Novartis shall bear the Out-of-Pocket Costs for the toxicology studies
as described in Exhibit F-1; and (C) Novartis shall be
responsible for conducting and shall bear all Out-of-Pocket Costs for the
Clinical Trial as described in Exhibit F-2, in addition to all
Development Costs incurred by Novartis with respect to study 352 after the
Effective Date of the Agreement.  A Party
seeking reimbursement of Out-of-Pocket Costs hereunder shall submit an itemized
invoice together with reasonable back-up documentation, and the other Party
shall pay such invoice within *** of receipt. 
Each Party shall have the right to possess, retain and use all clinical
data and related Regulatory Documentation Controlled by either Party and
generated in the course of studies 352 and 351 (which studies are described in Exhibit D
and for which the costs are described in Exhibit F) in order to
Develop, obtain Regulatory Approval for and Commercialize Licensed Product in
the Field in such Party’s territory, in accordance with the terms of this
Agreement.  Each Party shall disclose to
the other Party on a quarterly basis (and without further financial
consideration) all clinical data (including the data from interim reviews),
internal and external reports, and related Regulatory Documentation Controlled
by such Party and generated in the course of such Clinical Trials and hereby
grants to the other Party a Right of Reference or Use to any and all such
clinical data, reports and Regulatory Documentation, and agrees to sign, and
cause its Affiliates to sign, any instruments reasonably requested by such
other Party in order to effect such grant.

 

(ii)                                  Incyte shall
make available to Novartis, at Novartis’ expense, all material clinical data
generated in the course of study 351 as required by Novartis to support
Novartis’ registration of INCB018424 for the Indication of Myelofibrosis as
well as for any subsequent needs related to the Development of JAK Licensed
Compounds, including safety updates, and responses to requests from Regulatory
Authorities, and Novartis shall make available to Incyte, at Incyte’s expense,
all material clinical data generated in the course of study 352 as required by
Incyte to support Incyte’s registration of INCB018424 for the Indication of
Myelofibrosis as well as for any subsequent needs related to the Development of
JAK Licensed Compounds, including safety updates, and responses to requests
from Regulatory Authorities.  ***.  Incyte shall provide Novartis

 

32

 

*** Confidential material redacted and filed separately with the
Commission.

 

with at least *** prior notice from the date
of data cut-off.  Novartis shall provide such data set within ***
following the date of data cut-off and shall also provide Incyte with ***. At
its own discretion, Novartis may also choose to provide by this same date, the
Tables, Listings and Figures for such study, provided that all analyses defined
in the protocol have been performed as defined in such study’s Statistical
Analysis Plan.  The Statistical Analysis
Plan for study 352 shall be the responsibility of Novartis, but may be reviewed
upon request by Incyte.  The Statistical Analysis Plan for study 351 shall
be the responsibility of Incyte, but may be reviewed upon request by Novartis. Unless
otherwise agreed by both Parties, Incyte shall provide to Novartis a final
clinical study report of Study 351 within *** of the last patient’s last visit
to be included in the database for the clinical study report and unless
otherwise agreed by both Parties, Novartis shall provide to Incyte a final
clinical study report of Study 352 within *** of the last patient’s last visit
to be included in the database for the clinical study report.  Following
submission to Regulatory Authorities, if the Regulatory Authority requests a
safety update, the Party providing such data set shall provide an electronic
data set to the requesting Party at the requesting Party’s cost and expense not
more than *** days after receipt of a written request from the requesting
Party.

 

4.3                                 Development
Activity Proposals.

 

(a)                                              Joint Development Activities.

 

(i)                                     Either Party may at any time submit to the
JPT a proposal to collaborate with the other Party to conduct Clinical Trials
or other Development activities in connection with the Development of a JAK
Licensed Product; provided  that such proposal is submitted in
writing as far in advance as reasonably practicable and in any event not later
than three (3) months before the planned FPFV.  Such
proposal shall contain, at a minimum, information supporting the rationale for
the proposed activity related to the JAK Licensed Product from a scientific,
regulatory and commercial standpoint, as well as an estimated developmental
critical path and an estimate of the cost of such Development.

 

(ii)                                  At any time during the period between
when the proposal has been presented to the JPT and the JPT has approved the Clinical
Trial or Development activity, and prior to six (6) months after such
proposal is received by the JPT, the other Party may elect to participate in
such Clinical Trial or other Development activity.

 

(iii)                               In the event (A) the JPT determines
that such Clinical Trial or Development activity may support the worldwide
Development of JAK Licensed Products; (B) the JPT approves such proposal;
and (C) the Parties agree to collaborate to conduct such Clinical Trial or
other Development activity with respect to JAK Licensed Products (the “Joint
Development Activity”), then the Parties
shall, through the JPT, amend the Development Plan for JAK Licensed Products to
include a detailed description of the Joint Development Activity to be
undertaken by the Parties and develop a detailed annual budget for
all Development Costs for such activities to be included in the applicable
Development Plan (the “Development Budget”).  Each Party shall use
Commercially Reasonable Efforts to perform the obligations allocated to such
Party under a Development Plan for a Joint Development Activity.  *** Development Costs

 

33

 

*** Confidential material redacted and filed separately with the
Commission.

 

set forth in the applicable Development Budget *** set forth in the applicable Development
Budget).  At the time such Development
Plan and Development Budget is created by the JPT and approved by the JSC, the
Parties shall agree upon a quarterly reporting and payment structure to
implement the cost sharing set forth in the preceding sentence.  In the event either Party fails to timely
make an undisputed payment under the agreed upon payment plan, the payment
amount shall be reflected as a credit against the monies due by the other Party
under ARTICLE VIII, or, if no such credit is available as no such monies are
due, shall be paid within *** after invoice.

 

(b)                                             Right to Proceed with Development
Activity.  If the other Party declines
or does not elect to participate in such proposed Development activity prior to
the planned FPFV (so long as such FPFV does not occur less than three (3) months
after receipt by the JPT of a written proposal in accordance with Section 4.3(a)(i)),
the submitting Party
may proceed with such Clinical Trial or Development activity for its territory;
provided  that neither Party may proceed with such Clinical Trial
or Development activity if a Party
reasonably determines that the activity is reasonably likely to have a material
adverse impact on the Development and/or Commercialization of JAK Licensed
Products in its territory.  Any disputes
regarding whether an activity is reasonably likely to have a material adverse
impact on the Development and/or Commercialization of JAK Licensed Products in
a Party’s territory shall be resolved in accordance with Section 3.5.

 

(c)                                              Buy-In Right.

 

(i)                                     If a Party
fails to elect to participate in a Clinical Trial or Development activity
pursued by the other Party pursuant to Section 4.3(b) within the *** period
following receipt by the JPT of a written proposal in accordance with Section 4.3(a)(i) relating
thereto, such Party (the “Buy-In Party”) may obtain access to and use of
the clinical data generated pursuant to the relevant Clinical Trial or
Development activity in accordance with the following procedure:  At least on a *** basis, the Party
participating in a Clinical Trial or Development activity pursuant to Section 4.3(b) shall update the Buy-In
Party on the status of such Clinical Trial or Development activity, including a
summary of relevant data.  At any time,
the Buy-In Party may provide the other Party with notice of its election to
participate in such Clinical Trial or Development activity, and promptly
thereafter the other Party shall provide the Buy-In Party with an invoice for
*** of the Development Costs incurred by the other Party in the generation of
such clinical data as of the date of the Buy-In Party’s written request, which
invoice the Buy-In Party shall pay within *** after receipt.  Thereafter, to the extent the Development
activity has not been completed, the Buy-In Party shall be responsible for ***
of the Development Costs incurred by the other Party.  Such payment shall entitle the Buy-In Party
to use only the data so paid for.  The
other Party shall, as applicable, provide copies of, and/or a Right of
Reference or Use of, the requested clinical data to the Buy-In Party promptly
after receipt of the invoiced amount.

 

(ii)                                  In the event
Novartis is the Buy-In Party and has exercised the buy-in right with respect to
a Clinical Trial that would qualify for a milestone set forth in Section

 

34

 

*** Confidential material redacted and filed separately with the
Commission.

 

8.2, then in addition to the Development
Costs set forth in Section 4.3(a)(i) above, Incyte shall invoice
Novartis for the applicable milestone payment(s) set forth in Section 8.2
and Novartis shall pay such milestone payment(s) in accordance with Section 8.2(i).

 

(iii)                               For the
avoidance of doubt, the buy-in right pursuant to this Section 4.3(c) does not include the right
to operational participation in the conduct of the Clinical Trial or
Development activity unless, at the sole discretion of the Party that initiated
the Clinical Trial or Development activity, such Party grants operational
participation to the Buy-In Party.

 

(iv)                              In the event the Buy-In Party fails to meet
any payment obligation pursuant to this Section 4.3(c), and such failure
continues for *** after the original due date of the payment, until
such delinquency is cured, the data generated pursuant to the Clinical Trial or
Development activity shall not be shared with the Buy-In Party.  In the event such delinquency is not cured
within ***, the Buy-In
Party’s notice of election to participate shall be considered void.

 

(d)                                             Rights to Data
and Documentation.  With
respect to any Joint Development Activities:

 

(i)                                     Subject to Section 4.3(c), each Party shall have the
right to possess, retain and use all clinical and non-clinical data and related
Regulatory Documentation Controlled by either Party and generated in the course
of such Development activities in order to Develop, obtain Regulatory Approval
for and Commercialize JAK Licensed Products in the JAK Field in such Party’s
territory in accordance with the terms of this Agreement.  For the avoidance of doubt, Novartis’ right
to possess, retain and use pre-clinical and clinical data related to JAK
Licensed Compounds and JAK Licensed Products and Controlled by Incyte that
exist as of the Effective Date or that are generated from Study INCB018424-256
for all Polycythemia Vera filings to a Regulatory Authority for JAK Licensed Compounds
and JAK Licensed Products, shall not be subject to Section 4.3(c);

 

(ii)                                  each Party
hereby grants to the other Party a Right of Reference or Use to any and all
such Regulatory Documentation, and agrees to sign, and cause its Affiliates to
sign, from time to time, promptly upon request, any instruments reasonably
requested by such other Party in order to effect such grant;

 

(iii)                               each Party
shall maintain complete and accurate records of all results, data, Development
Costs and developments made pursuant to its efforts under the Development
Plan.  Such records shall appropriately
reflect all work done and results achieved in the performance of Development
activities in sufficient detail and in good scientific manner appropriate for
patent and regulatory purposes; and

 

(iv)                              in any
agreement between either Party and a clinical research organization related to
a Joint Development Activity, the contracting Party shall use reasonable
efforts to name the other Party as a third party beneficiary for the purpose of
receiving data derived from Clinical Trials related to such Joint Development
Activity from such clinical research organization in the event of a Bankruptcy
Event of such Party.

 

35

 

*** Confidential material redacted and filed separately with the
Commission.

 

4.4                                 c-MET Licensed
Compound Co-Development Option.

 

(a)                                              Within ***
prior to the anticipated initiation of a Phase III Study for the c-MET Licensed
Compound INCB28060, Novartis shall notify Incyte of such anticipated initiation
and shall provide Incyte with the following information:  all material pre-clinical and clinical data
and related analysis and regulatory information submitted to any Regulatory Authorities prior to the applicable
time-period mentioned above, and Novartis’ then current Development
plans and budgets with respect to such c-MET Licensed Compound.  Incyte shall have the option, exercisable by (A) providing
Novartis written notice within *** after receipt of such information and (B) co-funding
*** of Novartis’ global Development Costs for such c-MET Licensed Compound
incurred after the date of such notice.

 

(b)                                             If Incyte
timely delivers such notice, within *** following the end of each Calendar
Quarter after Incyte has delivered such notice, Novartis shall prepare and
deliver to Incyte a quarterly report detailing its Development Costs incurred
during such period with respect to such c-MET Licensed Compound.  Novartis shall submit any supporting
information reasonably requested by Incyte related to such Development Costs
included in its report within *** after its receipt of such request.  Novartis shall issue an invoice to Incyte for
*** of the Development Costs identified in such report. Incyte shall pay all
amounts payable under any such invoice within *** after its receipt of such
invoice.  Incyte shall have the right to
audit the records of Novartis with respect to any purported Development Costs
included in such reports, in accordance with Section 8.6.

 

(c)                                              If Incyte pays
all Development Costs invoiced for such c-MET Licensed Compound as described
above, the royalty rates set forth in Section 8.3(a) payable on any
c-MET Licensed Product that contains INCB28060 shall *** will be ***.  For purposes of clarity, the royalty rate
shall not be changed unless and until payment of all such Development Costs
have been received in cash by Novartis.

 

4.5                                 Potential JAK
Back-Up Compounds.

 

(a)                                              Either Party or
its Affiliates may Develop a JAK2 Inhibitor Compound (that is not a JAK
Excluded Compound or Incyte’s compound INCB028050) in the JAK Field up to the
point of, but not including, a Randomized Clinical Trial.  The Party or its Affiliates Developing such
JAK2 Inhibitor Compound shall be solely responsible for the cost of Development
to such point.  A Party shall provide
written notice to the other if such Party or its Affiliates Develops a JAK2
Inhibitor Compound (that is not a JAK Excluded Compound or Incyte’s compound
INCB028050) prior to proceeding to the first clinical use of such compound in a
human (a “JAK Candidate”).

 

(b)                                             If a Party
elects to propose to the JSC that a JAK Candidate proceed to a Randomized
Clinical Trial, such Party shall provide written notice to the JSC identifying
such JAK Candidate (a “Potential JAK Back-Up Compound”).  The submitting Party shall include

 

36

 

***
Confidential material redacted and filed separately with the Commission.

 

with such written notice information supporting the rationale for proceeding to a
Randomized Clinical Trial with respect to such Potential JAK Back-Up Licensed Compound from a
scientific, regulatory and commercial standpoint, as well as an estimated
developmental critical path and an estimate of the cost of such
Development.  Such Potential JAK Back-Up
Compound may be further Developed either if:

 

(i)                                     the JSC
determines that the Development of INCB018424 has failed, whether due to
unacceptable safety or tolerability, failure to meet the primary efficacy
endpoint, or an adverse Regulatory Authority action; or

 

(ii)                                  the JSC
determines to conduct such Development for life cycle management purposes with
respect to INCB018424 following receipt of Regulatory Approval  for the first JAK Licensed Product that contains
INCB018424; or

 

(iii)                               the Parties
otherwise explicitly agree to the Development of such Potential JAK Back-Up
Compound.

 

(c)                                              If a Potential
JAK Back-Up Compound is further Developed in accordance with Section 4.5(b),
the following provisions shall apply, as applicable:

 

(i)                                     if both Parties
agree to participate in the Development of such Potential JAK Back-Up Compound
prior to FPFV of a Randomized Clinical Trial, such Potential JAK Back-Up
Compound will be deemed to be a JAK Licensed Compound for all purposes under
this Agreement, including with respect to ARTICLE II and ARTICLE VIII
(including Novartis’ obligations thereunder to pay development milestones,
regulatory milestones, sales milestones and royalties ***), except as set forth
in subsection (iii) below.

 

(ii)                                  if either Party
declines to participate in the Development of such Potential Back-Up Compound
prior to FPFV of a Randomized Clinical Trial, then the following provisions
shall apply, as applicable:

 

A.                                   If Incyte has
declined to participate in such Development, then Novartis may proceed with
such Development and the Commercialization in the JAK Field in the Novartis JAK
Territory of any such Potential JAK Back-Up Compound proposed to the JSC by
Novartis, to the extent that Novartis has the right to do so absent a license
from Incyte under the Incyte IP.  At
Novartis’ request, Incyte may, in its sole discretion, extend the license grant
under the Incyte IP and Incyte’s and its Affiliates’ interests in Joint IP set
forth in Section 2.1(b) (subject to Incyte’s retained rights set forth
in Section 2.5) to include such Potential JAK Back-Up Compound, and such
Potential JAK Back-Up Compound shall be deemed a JAK Licensed Compound for the
purposes of ARTICLE II and ARTICLE VIII, in which event Novartis shall pay to
Incyte the development milestones, regulatory milestones, sales milestones and
royalties payable by Novartis pursuant to ARTICLE VIII;

 

37

 

*** Confidential material redacted and filed separately with the
Commission.

 

B.                                     If Novartis has
declined to participate in such Development, then Incyte may proceed with such
Development and the Commercialization in the JAK Field in the Incyte Territory
of any such Potential JAK Back-Up Compound proposed to the JSC by Incyte, to
the extent that Incyte has the right to do so absent a license from Novartis
under the Novartis IP.  At Incyte’s
request, Novartis may, in its sole discretion, extend the license grant under
the Novartis IP set forth in Section 2.2 to include such Potential JAK
Back-Up Compound, and such Potential JAK Back-Up Compound shall be deemed a JAK
Licensed Compound for the purposes of ARTICLE II and ARTICLE VIII, ***; and

 

C.                                     At any time
after a Party declines to participate in such Development, then the
non-participating Party may elect to obtain rights to such Potential JAK
Back-Up Compound by buying-in to such Development in accordance with the
procedure set forth in Section 4.3(c) as if such Development were a
Joint Development Activity.  In the event
a Party exercises such option, such Potential JAK Back-Up Compound will be
deemed to be a JAK Licensed Compound for all purposes under this Agreement,
including with respect to ARTICLE II and ARTICLE VIII (including Novartis’
obligations thereunder to pay development milestones, regulatory milestones,
sales milestones and royalties ***), except as set forth in subsection (iii) below.

 

(iii)                               If, pursuant to
Section 4.5(c)(i) or Section 4.5(c)(ii)(C), both Parties
participate in the Development of a Potential JAK Back-Up Compound and both of
the following are applicable:

 

A.                                   There are no
JAK Licensed Compounds, Potential JAK Back-Up Compounds or JAK Candidates
Controlled by Incyte that are Viable Compounds; and

 

B.                                     The
Development, manufacture, Commercialization and/or other use of such Potential
JAK Back-Up Compound is not Covered by a Valid Claim of Patent Rights
Controlled by Incyte;

 

then certain of the payments under ARTICLE VIII with
respect to such Potential JAK Back-Up Compound will be modified as follows:
***, it being understood that, except for the specific modifications set forth
in subsections (1) and (2) above, all other payment obligations in
ARTICLE VIII shall remain in effect. 

 

4.6                                 Development
Reports.

 

(a)                                              Novartis shall
provide, as applicable, the c-MET JDC and the JAK JDC with a written report at
least quarterly summarizing in reasonable detail Novartis’ and its Affiliates’
activities and progress related to the Development of Licensed Products in the
Field in the Novartis Territory, including information concerning the conduct
of non-clinical activities and Clinical Trials, applications for and securing
of Regulatory Approvals, First Commercial Sale of the Licensed Product on a
country-by-country basis and any future
planned Development

 

38

 

activities; provided  that
a presentation before the JSC, accompanied with written documentation such as
slides, may substitute for such written report.

 

(b)                                             Incyte shall
provide, as applicable, the c-MET JDC and the JAK JDC with a written report at
least quarterly summarizing in reasonable detail Incyte’s and its Affiliates’
activities and progress related to the Development of c-MET Licensed Products
in accordance with Section 4.2(b) and the Development of JAK Licensed
Products in the JAK Field in the Incyte Territory, including information
concerning the conduct of non-clinical activities and Clinical Trials,
applications for and securing of Regulatory Approvals, First Commercial Sale of
JAK Licensed Product in the JAK Field in the Incyte Territory and any future planned Development activities; provided
that a presentation before the JSC, accompanied with written
documentation such as slides, may substitute for such written report.

 

4.7                                 Regulatory Matters Related
to Licensed Products. 

 

(a)                                              Regulatory
Submissions.  Incyte
shall oversee, monitor and coordinate all regulatory actions, communications
and filings with, and submissions to, the FDA with respect to JAK Licensed
Products in the JAK Field in the Incyte Territory.  Novartis shall oversee, monitor and
coordinate all regulatory actions, communications and filings with, and
submissions to: (i) the EMEA, MHLW and other Regulatory Authorities in the
Novartis JAK Territory with respect to the JAK Licensed Products in the JAK
Field and (ii) all Regulatory Authorities with respect to the c-MET
Licensed Products in the c-MET Field in the Novartis Territory.  Each
Party shall keep the JAK JDC reasonably informed in connection with the
preparation of all Regulatory Documentation, Regulatory Authority review of
Regulatory Documentation, and Regulatory Approvals, annual reports, annual
re-assessments, and variations and labeling, in each case with respect to the
JAK Licensed Product in the Field; provided  that the providing
Party shall have the right to redact any information to the extent not related
to JAK Licensed Product in the Field. 
Each Party shall respond within a reasonable time frame to all
reasonable inquiries by the other Party with respect to any information
provided pursuant to this Section 4.7(a). 
Unless already the Confidential Information of a Party, any information
disclosed pursuant to this Section 4.7(a) shall be the Confidential
Information of the disclosing Party.  For
the purposes of this Section 4.7(a), each Party grants the other Party a
royalty-free license to use, copy and distribute any articles, clinical study
summaries or other materials that it has prepared solely for the purposes of
preparing and pursuing its regulatory submissions and filings and communication
with the Regulatory Authorities.  The
Parties shall use Commercially Reasonable Efforts to promptly take the actions
described in this Section 4.7(a)

 

(b)                                             Regulatory
Meetings and Correspondence.   

 

(i)                                     Incyte shall be
responsible for interfacing, corresponding and meeting with the FDA with
respect to JAK Licensed Products in the JAK Field in the Incyte Territory.  Novartis shall be responsible for
interfacing, corresponding and meeting with: 
(i) the EMEA, MHLW and other Regulatory Authorities with respect to
the JAK Licensed Products in the JAK Field in the Novartis JAK Territory and (ii) FDA,
EMEA, MHLW and other Regulatory Authorities with respect to the c-MET Licensed
Products in the c-MET Field in the Novartis Territory.

 

39

 

*** Confidential material redacted and filed separately with the
Commission.

 

(ii)                                  The Party not
responsible for interfacing, corresponding and meeting with the applicable
Regulatory Authorities in a country with respect to the JAK Licensed Products
in the JAK Field shall have the right to have a senior, experienced employee
reasonably acceptable to the responsible Party, participate as an observer in
material or scheduled face-to-face meetings, video conferences and any
teleconferences, involving participation of personnel beyond regulatory
experts, with the FDA, EMEA, and MHLW, and shall be provided with advance
access to the responsible Party’s material documentation prepared for such
meetings.  Prior to submission of
material correspondence to the applicable Regulatory Authority, the responsible
Party shall, sufficiently in advance for the other Party to review and comment,
provide the other Party any material correspondence with the FDA, EMEA and MHLW
related to such meetings.  The
responsible Party shall also provide the other Party with copies of any
material correspondence with the FDA, EMEA, and MHLW relating to Development
of, or the process of obtaining Regulatory Approval for, JAK Licensed Products
in the JAK Field, and respond within a reasonable time frame to all reasonable
inquiries by the other Party with respect thereto.

 

(c)                                              Global Safety
Database; Pharmacovigilance Agreement.  Contemporaneous with Novartis’ assumption of
responsibility for study 352, Novartis shall establish, hold and maintain the
global safety databases for each Licensed Product (the “Global Safety
Database”) into which it shall enter information on all adverse events
concerning the Licensed Product occurring anywhere in the world and reported to
either of the Parties in accordance with a pharmacovigilance agreement for each
Licensed Product in substantially the same form as the draft agreements
attached in Exhibit I (each, “Pharmacovigilance Agreement”), which
the Parties shall execute on the Effective Date.  Pursuant to the terms of the
Pharmacovigilance Agreement, such database shall comply in all material
respects with all Laws reasonably applicable to pharmacovigilance anywhere
where the Licensed Products are being or have been Developed or Commercialized.
The Pharmacovigilance Agreement shall, among other things, govern cooperation
between the Parties that will enable each of them to comply with its respective
obligations under applicable Laws with regard to adverse event data collection,
analysis and reporting and to enable each Party to satisfy its duty of care,
and to govern the Global Safety Database.

 

ARTICLE
V

CLINICAL
AND COMMERCIAL SUPPLY

 

5.1                                 Clinical Supply.

 

(a)                                              Manufacture and
Supply of JAK Licensed Product for Study 352.  Except as
specifically provided in that letter agreement dated November 13, 2009,
Incyte shall remain responsible for the supply of preclinical and clinical
material of JAK Licensed Product for use in the conduct of study 352, until
such time as the JAK JDC determines that Novartis should assume responsibility
for study 352.  Within *** after the
Effective Date, Novartis shall reimburse Incyte the Out-of-Pocket Costs for the
supply of Drug Substance and Drug Product for JAK Licensed Compounds and JAK
Licensed Products as described in Exhibit C-1 and that have been
incurred as of the Effective Date.

 

40

 

*** Confidential material redacted and filed separately with the
Commission.

 

(b)                                             On-Going
Clinical Supply by Incyte.  In
the event that Novartis determines that Incyte should provide the supply of
Drug Substance and Drug Product for Licensed Product for Novartis Development
activities, the Parties shall enter into a clinical supply agreement in the
form attached as Exhibit C-2 (the “Clinical Supply Agreement”),
under which Incyte shall:

 

(i)                                     use
Commercially Reasonable Efforts to supply Novartis with such Drug Substance or
Drug Product as requested in writing from Novartis, including API, Formulation,
CMC and blister formulation work. 
Novartis shall reimburse Incyte’s Out-of-Pocket Costs, subject to an
agreed upon budget and payment schedule by the Parties;

 

(ii)                                  use
Commercially Reasonable Efforts to manufacture, handle and
supply, and shall use Commercially Reasonable Efforts to cause its Third
Party supplier(s), as applicable, to manufacture, handle and supply, all such Drug Substance
or Drug Product for Licensed Compound and Licensed Product supplied by
Incyte or its Affiliate to Novartis pursuant to the Clinical Supply Agreement (A) in
accordance with then-current Good Manufacturing Practices, as defined in any
applicable Regulatory Authority’s rules and regulations, as the same may
be amended from time to time (“GMP”); (B) in compliance with all
applicable Laws; (C) in conformance with all specifications for such Drug Substance
or Drug Product as determined by the Parties and as required by
Regulatory Authorities, including specifications pertaining to manufacturing
methods, testing, materials, facilities, release, labeling, packaging, storage,
shipment, and shelf-life.

 

(iii)                               provide
Novartis with access to all suppliers in Incyte’s supply chain, as permitted
under Incyte’s agreement(s) with such parties, for the purposes of
auditing and ensuring compliance with GMPs and HSE issues; and

 

(iv)                              at Novartis’
request, Incyte shall use reasonable efforts to facilitate negotiations between
Novartis and Incyte’s Third Party manufacturer(s) that manufacture such
Drug Product or Drug Substance to enable Novartis to discuss with such Third
Party manufacturer(s) the direct supply of Drug Product or Drug Substance
to Novartis.

 

5.2                                 Commercial
Supply by Incyte.  If
requested by Novartis and agreed to by Incyte, Incyte shall provide commercial
supply of Drug Product for Licensed Product to Novartis under the terms of a
commercial quality and supply agreement. 
The Parties shall commence negotiations on the terms of such agreement
*** prior to the anticipated filing date and shall make a good faith effort to
have an executable agreement no later than *** prior to the anticipated date of
first supply.

 

5.3                                 Supply by
Novartis to Incyte.  If
requested by Incyte and agreed to by Novartis, Novartis shall supply bulk Drug
Product to Incyte under the terms of a clinical supply agreement or under a
commercial quality and supply agreement. 
The Parties shall commence negotiations on the terms of such agreement
*** prior to the anticipated filing date and shall make a good faith effort to
have an executable agreement no later than *** of prior to the anticipated date
of first supply.

 

41

 

*** Confidential material redacted and filed separately with the
Commission.

 

ARTICLE
VI

COMMERCIALIZATION
AND CO-DETAILING OPTION

 

6.1                                 Commercialization
Diligence.  Novartis
shall use Commercially Reasonable Efforts, at its expense, to Commercialize
Licensed Products in the Field in the Novartis Territory after receipt of
Regulatory Approval therefor.

 

6.2                                 Marketing
Responsibilities For Licensed Products.

 

(a)                                              c-MET Licensed
Products.  Subject to
the provisions of Section 6.1, all business decisions regarding
Commercialization of c-MET Licensed Products in the c-MET Field in the Novartis
Territory, including the design, sale, pricing, and promotion of c-MET Licensed
Products in the c-MET Field in the Novartis Territory under this Agreement,
shall be within the sole discretion of Novartis and its Affiliates.  All materials used in the promotion of all
c-MET Licensed Products in the c-MET Field in the Novartis Territory, including
product packaging, materials used in detailing doctors, product messaging and
content used in the promotion of such c-MET Licensed Products, shall be
approved solely by Novartis.

 

(b)                                             JAK Licensed
Products.  All
business decisions regarding Commercialization of JAK Licensed Products in the
JAK Field, including the design, sale, pricing, and promotion of JAK Licensed
Products in the JAK Field under this Agreement, shall be within Incyte’s
discretion in the Incyte Territory and within Novartis’ discretion in the
Novartis Territory, both subject to JCC oversight pursuant to Section 3.2(d);
provided that, to the extent commercially reasonable, Novartis and its
Affiliates shall maintain separate sales forces for the Commercialization of
any product that directly competes on the same Indications with the JAK
Licensed Product in the EU Major Market Countries and Japan.  All materials used in the promotion of all
JAK Licensed Products in the JAK Field, including product packaging, materials
used in detailing doctors, product messaging and content used in the promotion
of such JAK Licensed Products, shall be within Incyte’s discretion in the
Incyte Territory and within Novartis’ discretion in the Novartis Territory,
both subject to JCC oversight pursuant to Section 3.2(d).

 

6.3                                 Incyte
Co-Detailing Option.

 

(a)                                              Co-Detailing
Right.  Incyte shall have a
non-exclusive right to Detail the first c-MET Licensed Product in the first
Indication which is marketed in the United States on the terms and conditions
set forth in this Section 6.3 (“Co-Detailing Right”).  Novartis shall notify Incyte at least ***
prior to the anticipated launch of the first c-MET Licensed Product in the
United States and shall provide Incyte with the following information:  Novartis’ then-current Commercialization plans
(“Promotional Plan”) with respect to such c-MET Licensed Product.  Incyte’s Co-Detailing Right is limited to
specialists outlined in the Promotional Plan. 
Incyte may exercise its Co-Detailing Right by providing Novartis written
notice at any time not later than *** or earlier than *** prior to the initial
anticipated launch of such c-MET Licensed Product in the United States.

 

42

 

*** Confidential material redacted and filed separately with the
Commission.

 

(b)                                             Effects of
Exercise of Co-Detailing Right.  If Incyte exercises its Co-Detailing Right:

 

(i)                                     The Parties shall, no later than four (4) months prior to the initial anticipated
launch of such c-MET Licensed Product in the United States, set out the number of FTE sales representatives Primary Detailing such
c-MET Licensed Product in the United States.  In no event
shall Incyte be responsible for a number of FTE sales representatives Primary
Detailing such c-MET Licensed Product which exceeds *** of Novartis’ total FTEs
for such c-MET Licensed Product in the United States.

 

(ii)                                  Incyte shall be
responsible for its costs in conducting co-Detailing activities as well as all
incremental training and meeting costs in accordance with Section 6.3(b)(iv);
provided  that Novartis shall reimburse Incyte at *** of the FTE
Rate for each Incyte sale representative conducting
the co-Detailing.  Incyte
shall provide an invoice to Novartis for such expense on a quarterly basis, and
Novartis shall pay such invoice within *** after receipt.

 

(iii)                               The Parties
shall establish a joint U.S. Commercialization  Committee (“UCC”)
to oversee the Detailing of the relevant c-MET Licensed Product in the
U.S.  Incyte shall be entitled to have
one (1) representative sit on the UCC or any group carrying out the UCC’s
function after the Effective Date but prior to the UCC’s establishment.  The UCC shall have responsibility for general
oversight of all promotion and Detailing activities with respect to such c-MET
Licensed Product in the United States. 
The UCC (or any group carrying out the UCC’s function after the exercise
of the Co-Detailing Right but prior to the UCC’s establishment) will meet
quarterly or more frequently as agreed by the JSC.  The term of the UCC will be determined by the
JSC.

 

(iv)                              Incyte’s sales
representatives will be included in training programs with respect to the
applicable c-MET Licensed Product that Novartis provides to its own sales
representatives Detailing such c-MET Licensed Product. Such training shall be
provided by Novartis to Incyte free of charge, provided  that
Incyte shall be responsible for meeting and training costs incremental to that
provided to Novartis’ sales representatives, including any travel, lodging or
other similar expenses that may be incurred by Incyte in connection with the
training.

 

(v)                                 Incyte’s sales
representatives shall be provided, at Novartis’ expense, with the same
promotional materials, including literature and samples, as Novartis provides
to its own similarly-situated representatives.

 

(vi)                              Novartis shall
approve all training and promotional materials for such c-MET Licensed Product
(including messaging) and shall present this information to the UCC.  Incyte shall promote such c-MET Licensed
Product in accordance with the standards reasonably established by Novartis for
such c-MET Licensed Product; provided  that if the standards
Incyte normally uses are more stringent that the standards established by
Novartis, Incyte may use its own standards, subject to Novartis’ approval.

 

6.4                                 Novartis
Co-Detailing Option.

 

43

 

*** Confidential material redacted and filed separately with the
Commission.

 

(a)                                              If at any time
during the Term, Incyte, or any of its Affiliates, desires to commence negotiations
with one or more Third Parties (other than a contract sales organization) to
co-detail or co-promote JAK Licensed Products in the United States, Incyte
shall promptly notify Novartis of its intent to commence negotiations and shall
provide Novartis a summary of the proposed terms.

 

(b)                                             Within ***
after receipt of such notification, Novartis shall notify Incyte in writing either that (i) Novartis is
interested in negotiating an agreement with Incyte with respect to such
transaction or (ii) Novartis has no interest and therefore waives such
right of first offer.  If Novartis
notifies Incyte within such ***
period that Novartis desires to negotiate an agreement with respect to such
transaction, then Incyte shall in good faith negotiate exclusively with Novartis
for up to *** from the date of such notification from
Novartis, or such longer period as agreed between the Parties, regarding the
terms pursuant to which the Parties would enter into such transaction.

 

(c)                                              Failure by Novartis to give notice of its interest or lack of interest
in negotiating for such agreement within *** after receipt of written notice from Incyte as described in the first
sentence of this Section 6.4 shall be deemed to constitute a waiver by
Novartis of its right of first offer with respect to such transaction.  In addition, failure of the Parties to agree
within such ***
negotiation period (or such longer period as agreed between the Parties) shall
result in the termination of such right of first offer.

 

(d)                                             If Novartis waives its right of first offer or such right of first offer
terminates with respect to any such transaction, then Incyte shall be free to
enter into a transaction for such JAK Licensed Product with a Third Party; provided
that if Novartis has notified Incyte in writing of its interest in
negotiating an agreement but the Parties have failed to reach agreement, then
for a period of ***;
provided  further  that if, ***.

 

(e)                                              Should Novartis exercise the co-detailing option under this Section 6.4,
and the Parties reach agreement on terms for such transaction, the terms of
such transaction shall be reflected in a separate U.S. commercialization
agreement entered into by the Parties or their Affiliates.

 

6.5                                 Global
Branding; Trademarks. 

 

(a)                                              Global Branding
Strategy.  The JCC
shall have the right, from time to time during the Term, to implement (and
thereafter modify and update) a global branding strategy, including global
positioning, for JAK Licensed Products for use in the Field throughout the
world (the “Global Branding Strategy”). 
To the extent the JCC determines to utilize such Global

 

44

 

Branding Strategy, each Party shall adhere to the Global Branding
Strategy in its Commercialization of the Licensed Product in its territory.

 

(b)                                             Trademarks.

 

(i)                                     Novartis and its Affiliates
shall select their own trademarks under which they will market Licensed
Products (provided  that no such trademark shall contain the word “Incyte”)
and shall own such trademarks.  Incyte
and its Affiliates shall select their own trademarks under which they will
market Licensed Products (provided  that no such trademark shall
contain the word “Novartis”) and shall own such trademarks.

 

(ii)                                  Notwithstanding
Section 6.5(b)(i), consistent with the Global Branding Strategy, each
Party shall, to the extent permitted by applicable regulatory and legal
authorities, utilize the trademark or trademarks selected by the JCC in
connection with the marketing and sale of the JAK Licensed Products in such
Party’s territory (each, a “JAK Mark” and collectively, the “JAK
Marks”).  Incyte shall own and shall
be responsible for registering and maintaining the JAK Marks in the Incyte
Territory. Novartis shall own and shall be responsible for registering and
maintaining the JAK Marks in the Novartis Territory. As the owner of the JAK
Marks in the Incyte Territory, Incyte shall be solely responsible for
determining what, if any, action to take in response to any alleged
infringement of such trademarks by Third Parties in the Incyte Territory.  As the owner of the JAK Marks in the Novartis
JAK Territory, Novartis shall be solely responsible for determining what, if
any, action to take in response to any alleged infringement of such trademarks
by Third Parties in the Novartis JAK Territory.

 

(c)                                              Novartis shall
use, in connection with all packaging, literature, labels and other printed
matters, to the extent permitted by Law, and where reasonably practicable in
light of space limitations, an expression to the effect that the Licensed Products
were developed under license from Incyte, together with the Incyte logo.  The provisions of this Section 6.5 shall
not apply to primary packaging of the Licensed Products.  Primary packaging shall mean packaging that
is in direct contact with the Licensed Products or the Licensed Products
themselves, including but not limited to vials, blister packs, tablets and
capsules.

 

ARTICLE
VII

INTELLECTUAL PROPERTY OWNERSHIP,

PROTECTION AND RELATED MATTERS

 

7.1                                 Inventorship;
Ownership.

 

(a)                                              Inventorship.  Inventorship of Inventions conceived or
reduced to practice during the course of the performance of activities pursuant
to this Agreement shall be determined in accordance with the patent Laws of the
United States; provided  however, that in the event that determining
inventorship in accordance with such Laws would render any Patent Right that
Covers such Invention invalid, inventorship shall be determined in accordance
with the Laws of the jurisdiction where such Patent Right is filed.

 

45

 

*** Confidential material redacted and filed separately with the
Commission.

 

(b)                                             Ownership.  As between the Parties, all Inventions made
or information created, by a Party’s or any of its Affiliates’ employees,
independent contractors or consultants, in the course of conducting activities
under this Agreement, together with all Intellectual Property Rights therein,
shall be owned by such Party.  All
inventions or discoveries made, or information created, jointly by each Party’s
(or any of its Affiliates’) employees, independent contractors or consultants,
in the course of conducting activities under this Agreement, together with all
Intellectual Property Rights therein, shall be jointly owned by the Parties and
are “Joint IP”.  Joint IP shall be
owned jointly by Incyte and Novartis on the basis of an undivided interest
without a duty to account to the other Party and shall be deemed to be
Controlled by each Party. 
Notwithstanding anything to the contrary herein, each Party shall have
the right to use such Joint IP, or license such Joint IP to its Affiliates or
any Third Party, or sell or otherwise transfer its interest in such Joint IP to
its Affiliates or a Third Party, in each case without the consent of the other
Party, so long as such use, sale, license or transfer is subject to the
licenses granted pursuant to this Agreement and is otherwise consistent with
this Agreement. The Parties, through the JSC and in accordance with Section 7.2,
shall determine which Party shall be responsible for the filing, prosecution
and maintenance of Joint IP on a case-by-case basis.  Each Party hereby authorizes and grants the
other Party its permission and consent to assume, directly or through its authorized
agents, attorneys, or representatives, the responsibilities set forth in Section 7.2.

 

7.2                                 Prosecution and
Maintenance of Patent Rights.

 

(a)                                              Novartis Patent
Rights.  At Novartis’ expense, Novartis
shall have the sole right to file, prosecute and maintain Novartis Patent
Rights.

 

(b)                                             c-MET Patent
Rights.  *** shall have the initial
right to file, prosecute and maintain c-MET Patent Rights and Joint IP that
Covers c-MET Licensed Compounds or c-MET Licensed Products (the “Joint c-MET
IP”), at *** expense.  If ***
declines to file, prosecute or maintain any c-MET Patent Rights or Joint c-MET
IP in any country of the world, or desires to allow any c-MET Patent Rights or
Joint c-MET IP to lapse in any country of the world, or desires to abandon any
c-MET Patent Rights or Joint c-MET IP in any country of the world before all
appeals within the respective jurisdiction have been exhausted, then:

 

(i)                                     *** shall
provide *** with reasonable written notice of such decision so as to permit ***
to decide whether to file, prosecute or maintain such c-MET Patent Rights or
Joint c-MET IP and to take any necessary action.

 

(ii)                                  Following
notice from *** pursuant to subclause (i), *** may, by providing prompt written
notice thereof to ***, assume control of the filing, prosecution and/or
maintenance of such c-MET Patent Rights or Joint c-MET IP in the name of the
owner(s) of such c-MET Patent Rights or Joint c-MET IP, at ***
expense.  Any such c-MET Patent Rights in
such country shall no longer be exclusively licensed to *** and its Affiliates
under Section 2.1 and instead shall be licensed on a non-exclusive basis,
but otherwise shall remain *** Patent Right hereunder for all purposes.

 

(c)                                              JAK Patent
Rights.

 

46

 

*** Confidential material redacted and filed separately with the
Commission.

 

(i)                                     *** shall have
the initial right to file, prosecute and maintain, at *** expense, the (x) Secondary
Patent Rights in the *** and (y) the INCY0039 Patent Rights worldwide; provided
that *** shall use a Third Party law firm selected by *** and reasonably
acceptable to *** to conduct such filing, prosecution and maintenance; and
provided further, that *** shall act promptly with respect to decisions *** on
the filing and prosecution of priority applications.  If *** determines to change the Third Party
law firm initially selected to conduct such filing, prosecution and
maintenance, *** shall select a replacement Third Party law firm reasonably
acceptable to ***.  If *** declines to
file, prosecute or maintain any INCY0039 Patent Rights in ***, desires to allow
to lapse any INCY0039 Patent Rights in ***, or desires to abandon any INCY0039
Patent Rights in *** before all appeals within the respective jurisdiction have
been exhausted, then:

 

A.                                   *** shall
provide *** with reasonable written notice of such decision so as to permit ***
to decide whether to file, prosecute or maintain such INCY0039 Patent Rights in
*** and to take any necessary action.

 

B.                                     Following
notice from *** pursuant to clause (A), *** may, by providing prompt written
notice thereof to ***, assume control of the filing, prosecution and/or
maintenance of such INCY0039 Patent Rights in *** in the name of the owner(s) of
such INCY0039 Patent Rights, at *** expense.

 

(ii)                                  *** shall have
the initial right to file, prosecute and maintain, at *** expense, the
Secondary JAK Patent Rights in the ***. 
If *** declines to file, prosecute or maintain any Secondary JAK Patent
Rights in ***, desires to allow any Secondary
JAK Patent Rights to lapse in ***, or desires to abandon any Secondary JAK
Patent Rights in *** before all appeals within the respective jurisdiction have
been exhausted, then:

 

A.                                   *** shall
provide *** with reasonable written notice of such decision so as to permit ***
to decide whether to file, prosecute or maintain such Secondary JAK Patent
Right in *** and to take any necessary action.

 

B.                                     Following
notice from *** pursuant to clause (A), *** may, by providing prompt written
notice thereof to ***, assume control of the filing, prosecution and/or
maintenance of such Secondary JAK Patent Right in ***, at *** expense.

 

(d)                                             Cooperation.  Solely with respect to the rights and
obligations described in Section 7.2(c), an individual Party responsible
for the filing, prosecution and maintenance of a Patent Right will be referred
to as the “Controlling Party” and the other Party will be referred to as
the “Non-Controlling Party”.

 

(i)                                     The
Non-Controlling Party shall, at the Controlling Party’s expense and reasonable
request, assist and cooperate in the filing, prosecution and maintenance

 

47

 

*** Confidential material redacted and filed separately with the
Commission.

 

of or any related necessary action for, as
applicable, the Novartis Patent Rights or Incyte Patent Rights.

 

(ii)                                  The Controlling
Party shall provide the Non-Controlling Party sufficiently in advance, where
reasonable, for the Non-Controlling Party to comment, with copies of all patent
applications and other material submissions and communications (including oral communications)
with any patent counsel or patent authorities pertaining to the Incyte Patent
Rights and, within the Incyte Territory, the Novartis Patent Rights.

 

(iii)                               Upon a request
by the Non-Controlling Party, the Parties will discuss and consider in good
faith filing separate Patent Rights for claims that Cover Licensed Products
(e.g., methods of manufacturing and uses of such Licensed Product) specifically
or generically and claims that Cover only other compounds and methods of making
and using such other compounds.

 

(iv)                              The Controlling
Party shall give due consideration to the Non-Controlling Party’s comments, but
shall have the final say in determining whether or not to incorporate such
comments.

 

(v)                                 Each Party
shall provide the other with copies of all material communications received
from any patent counsel or patent authorities pertaining to such Incyte Patent
Rights.

 

(vi)                              “Material”
for the purposes of this Section 7.2(d) means that the submission or
communication could affect the patentability or scope of the patents Covering
the Licensed Compounds or Products.

 

(e)                                              Patent Term
Extensions.  *** may
select which, if any, c-MET Patent Rights for which a Patent Term Extension is
to be sought or obtained.  *** may, in
consultation with ***, select which, if any, JAK Patent Rights for which a
Patent Term Extension is to be sought or obtained with respect to JAK Licensed
Products in the ***.  Except as set forth
in the preceding sentence, *** may select which, if any, JAK Patent Rights for
which a Patent Term Extension is to be sought or obtained.

 

7.3                                 Third Party
Infringement.

 

(a)                                              Notice.  Each Party shall promptly provide the other
Party with written notice reasonably detailing any known or alleged
infringement by a Third Party of Joint IP, Incyte IP or any Novartis IP,
including any “patent certification” filed in the United States under 21 U.S.C.
§355(b)(2) or 21 U.S.C. §355(j)(2) or similar provisions in other
jurisdictions, and of any declaratory judgment, opposition, or similar action
alleging the invalidity, unenforceability or non-infringement of any such
Intellectual Property Rights (collectively “Third-Party Infringement”).  Within *** after receipt of such notice, the
Parties shall consult via the JSC to determine the response to any Third Party
Infringement.

 

(b)                                             Enforcement.

 

48

 

*** Confidential material redacted and filed separately with the
Commission.

 

(i)                                     If within ***
after receipt of the notice set forth in Section 7.3(a) the JSC fails
to agree on a joint course of action with respect to a Third Party
Infringement, *** will have the initial right to determine and control a course
of action designed to curtail such Third Party Infringement, whether legal or
commercial in the *** in connection with the Third Party Infringement against a
Third Party which is infringing the relevant Intellectual Property Rights by
making, using or selling a product that competes with a Licensed Product in the
Field in the ***, at its own expense as it reasonably determines
appropriate.  In the event such course of
action includes litigation, *** may choose, at its own expense, to be
represented in such action by counsel of its own choice; provided, however,
that if *** is required as a necessary party to such action, *** shall pay ***
reasonable expenses associated therewith. 
*** shall keep *** reasonably informed as to any legal or commercial
courses of action it pursues pursuant to this subsection (i).  At the request and expense of ***, *** shall
provide reasonable assistance to *** in connection therewith, including by
executing reasonably appropriate documents, cooperating in discovery and
joining as a party to the action.  In
connection with any such proceeding, *** shall not enter into any settlement admitting
the invalidity of, or otherwise impairing *** rights in, *** or Joint IP
without the prior written consent of ***. 
Any recoveries resulting from such an action relating to a claim of
Third Party Infringement shall be applied as follows:

 

A.                                   First, to
reimburse each Party for all Out-of-Pocket Costs in connection with such
proceeding (on a pro rata basis, based on each Party’s respective litigation
costs, to the extent the recovery was less than all such litigation costs); and

 

B.                                     Second, ***.

 

(ii)                                  If within ***
after *** receipt of a notice of a Third Party Infringement with respect to
Joint IP or ***, *** does not take any action as described in Section 7.3(b)(i) and
permitted hereunder against a Third Party who is infringing such Intellectual
Property Rights by making, using or selling a product that competes with a
Licensed Product in the ***, *** may, subject to the following sentence, in its
sole discretion, bring and control any legal action in connection therewith at
its sole expense.  If *** intends to
bring any such legal action, it shall first notify *** in writing of such
intent and the reasons therefor and provide *** with an opportunity to indicate
to *** its reasons for not bringing such legal action; and if *** provides
either a reasonable (x) legal basis for *** not bringing such legal
action, or (y) explanation of how *** is taking commercial steps to
curtail the Third Party Infringement, *** shall not bring such legal
action.  *** shall keep *** reasonably
informed as to any legal or commercial courses of action it pursues pursuant to
this subsection (ii).  At the request and
expense of ***, *** shall provide reasonable assistance to *** in connection
therewith, including by executing reasonably appropriate documents, and
cooperating in discovery; provided, however, that nothing herein
shall require *** to join as a party or otherwise participate in such legal
action, if in *** reasonable opinion such participation will damage any of ***
commercial relationships. *** may
choose, at its own expense, to be represented in any such action by counsel of
its own choice; provided, however, that if *** is required as a necessary party to such
action, *** shall pay *** reasonable expenses associated

 

49

 

*** Confidential material redacted and filed separately with the
Commission.

 

therewith. In connection
with any such proceeding, *** shall not enter into any settlement admitting the
invalidity of or otherwise impairing *** rights under the Joint IP or such ***
without the prior written consent of ***. 
Any recoveries resulting from such an action relating to a claim of
Third Party Infringement (after payment of each Party’s costs and expenses)
will be retained by ***.

 

(iii)                               In the event of
a Third Party Infringement of JAK Patent Rights that occurs only in the ***,
***, at its own expense, will have the right to bring and control any legal
action in the *** in connection with such Third Party Infringement.

 

7.4                                 Patent Marking.  If permitted and to the extent that Novartis
does so with respect to its other products in the same geographic market,
Novartis shall, and shall cause its Affiliates, distributors and licensees, to (a) mark
the Licensed Products with the number of each issued patent under the Incyte
Patent Rights that apply to the Licensed Product and (b) comply with the
patent marking statutes in each country in which the Licensed Product is
manufactured by or on behalf of Novartis or its Affiliates.

 

7.5                                 Third Party
Licenses.

 

(a)                                              If *** in good
faith believes that it is necessary to obtain a license under any Patent Rights
of a Third Party that would be infringed by the making, using, selling,
offering for sale or importing by *** of a Licensed Compound in the Field in
any country in the ***, then prior to commencing negotiations or entering into
an agreement with respect to any such Third Party Patent Rights, *** shall
promptly notify ***.  The Parties shall
thereafter conduct good faith discussions regarding whether such Third Party
Patent Rights are necessary to make, use, sell, offer for sale or import
Licensed Compound in the Field in any country in the ***.  If the Parties agree that such Third Party
Patent Rights are necessary to make, use, sell, offer for sale or import
Licensed Compound in the Field in any country in the ***, the Parties shall
meet to discuss and determine which Party will be primarily responsible for the
negotiation and execution of the corresponding license agreement; provided,
however, that *** shall have the first right to obtain a license and
negotiate and execute a license agreement, in connection with the manufacture
of Licensed Compounds and Licensed Products or with respect to any intellectual
property applicable to the Licensed Compounds and Licensed Product.  In the event the Parties agree that *** shall
have the right to negotiate and execute such a license agreement, at the
request of ***, any such license from a Third Party shall include a license to
*** and its sublicensees with respect to the Licensed Compound in the *** in
and/or outside the Field.  
Notwithstanding the foregoing, neither Party shall enter into a
definitive license agreement with regard to such rights in the other Party’s
territory without the other Party’s written consent.  In the event that the Parties cannot agree on
whether a license from a Third Party is necessary, *** shall make the final
decision with respect to licenses covering all or part of the ***.

 

(b)                                             To the extent
the Parties have agreed or *** has determined in accordance with Section 7.5(a) that
a license under such Third Party Patent Rights is necessary to avoid
infringement based on the making, using, selling, offering for sale or
importing of JAK Licensed Compound in the Field and such license agreement
relates to worldwide rights for JAK

 

50

 

*** Confidential material redacted and filed separately with the
Commission.

 

Licensed Compounds or JAK Licensed Products, *** of any up-front
license fee or other acquisition cost and milestones based on the principle
that such rights in the Incyte Territory  constitute *** of such cost and such rights in the Novartis JAK Territory constitute ***
of such cost.  If such Third Party
license rights are available only in one Party’s territory, such Party shall be
responsible for one hundred percent (100%) of such costs subject to the
deductions permitted under Section 7.5(c) and (d).

 

(c)                                              Regardless of
which Party licenses such rights, (i) each Party shall pay to the
applicable Third Party licensor (or as applicable, to the licensing Party for
delivery to such Third Party) all royalties payable in respect of sales of
products by such Party, its Affiliates, or sublicensees and (ii) to the
extent the Parties agree or *** has determined in accordance with Section 7.5(a) that
such in-licensed rights are necessary to make, use, sell, offer for sale or
import Licensed Compound in the Field in any country in the *** without
infringing such Third Party Patent Rights, *** shall be entitled to deduct up to
*** of the royalties paid or payable to such Third Party (pursuant to a license
under such Third Party’s issued Valid Claim(s) that Cover the making,
using, selling, offering for sale or importing of the applicable Licensed
Compound in the Field in such country in the ***) with respect to sales of a
Licensed Product that contains such Licensed Compound in such country in the
*** from the royalties payable by *** to *** hereunder with respect to Net
Sales of such Licensed Product in such country; provided, however,
that in no event shall the royalties payable under Section 8.3(a) be
reduced in the aggregate pursuant to this Section 7.5(c) by more than
*** of the amounts set forth in Section 8.3(a).

 

(d)                                             Notwithstanding
the foregoing, solely with respect to patent application no. ***, Novartis
shall be entitled to deduct up to *** of the royalties paid or payable to such
Third Party (pursuant to a license under such Third Party’s issued Valid Claim(s) that
Cover the making, using, selling, offering for sale or importing by Novartis of
the applicable c-MET Licensed Compound in the Field in any country in the
Novartis Territory) with respect to sales of a c-MET Licensed Product that
contains such c-MET Licensed Compound in such country in the Novartis Territory
from the royalties payable by Novartis to Incyte hereunder with respect to Net
Sales of such c-MET Licensed Product in such country; provided, however,
that in no event shall the royalties payable under Section 8.3(a) be
reduced in the aggregate pursuant to this Section 7.5(d) by more than
*** of the amounts set forth in Section 8.3(a).

 

ARTICLE
VIII

FINANCIAL PROVISIONS

 

8.1                                 License Fee.  Within *** after the Effective Date, Incyte
shall submit an invoice to Novartis for a one-time, non-creditable, non-refundable
license fee of One Hundred Fifty Million U.S. Dollars (US$150,000,000), which Novartis shall pay within *** after receipt.

 

8.2                                 Milestone
Payments.  Novartis
shall pay Incyte the following amounts after the first achievement by Novartis,
its Affiliates or its sublicensees of the corresponding milestone events set
forth below:

 

51

 

***
Confidential material redacted and filed separately with the Commission.

 

(a)              c-MET Development Milestones.

 

	
  c-MET
  Development

  Milestones

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

* For purposes of clarity, a study conducted by
Incyte pursuant to this Agreement shall qualify for the milestone set forth in
this Section 8.2(a)(i)with respect to the *** for a c-MET Licensed
Product.

 

(b)               c-MET Regulatory Milestones.

 

	
  c-MET
  Regulatory Milestones

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
   

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

52

 

***
Confidential material redacted and filed separately with the Commission.

 

(c)               JAK Development Milestones.

 

	
  JAK
  Development Milestones

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  (ii) FPFV in a Phase III Study that is a
  Novartis Sponsored Study *

  	
   

  	
  US$60,000,000

  	
   

  	
  ***

  	
   

  	
  ***

  

 

* For purposes of clarity, Study 352 as described in
Exhibit F-1 shall qualify for the milestone set forth in this Section 8.2(c)(ii) with
respect to the *** for a JAK Licensed Product.

 

(d)               JAK Regulatory Milestones.

 

	
  JAK
  Regulatory Milestones

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
   

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

53

 

***
Confidential material redacted and filed separately with the Commission.

 

(e)               Sales Milestones.

 

(i)            c-MET Licensed Product Sales Milestones.  Novartis shall make the non-refundable,
non-creditable, one-time payments to Incyte of as set forth below upon the
first achievement of aggregate Annual Net Sales of c-MET Licensed Products that
meet or exceed the thresholds set forth below.

 

	
  c-MET
  Licensed Product Annual Net Sales

  Threshold

  	
   

  	
  Milestone Payment

  
	
  (A)  Annual Net Sales of c-MET Licensed
  Products equal to or greater than ***

  	
   

  	
  ***

  
	
  (B)  Annual Net Sales of c-MET Licensed
  Products equal to or greater than ***

  	
   

  	
  ***

  
	
  (C)  Annual Net Sales of c-MET Licensed
  Products equal to or greater than ***

  	
   

  	
  ***

  
	
  (D)  Annual Net Sales of c-MET Licensed
  Products equal to or greater than ***

  	
   

  	
  ***

  
	
  (E)  Annual Net Sales of c-MET Licensed
  Products equal to or greater than ***

  	
   

  	
  ***

  

 

(ii)           JAK Licensed Product Sales Milestones.  Novartis shall make the non-refundable,
non-creditable, one-time payments to Incyte of as set forth below upon the
first achievement of aggregate Annual Net Sales of JAK Licensed Products in the
Novartis JAK Territory that meet or exceed the thresholds set forth below.

 

	
  JAK
  Licensed Product Annual Net Sales

  Threshold

  	
   

  	
  Milestone Payment

  
	
  (A) 
  Annual Net Sales of JAK Licensed Products equal to or greater than ***

  	
   

  	
  ***

  
	
  (B) 
  Annual Net Sales of JAK Licensed Products equal to or greater than ***

  	
   

  	
  ***

  
	
  (C) 
  Annual Net Sales of JAK Licensed Products equal to or greater than ***

  	
   

  	
  ***

  
	
  (D) 
  Annual Net Sales of JAK Licensed Products equal to or greater than ***

  	
   

  	
  ***

  

 

54

 

***
Confidential material redacted and filed separately with the Commission.

 

(iii)          Achievement of the milestone events above in this Section 8.2(e) shall
be determined based on Annual Net Sales of the Licensed Products made by
Novartis and its Affiliates and sublicensees throughout the Novartis
Territory.  More than one of the sales milestone payments may be earned
concurrently based on the same Annual Net Sales of the Licensed Products. 
By way of example, if in the first Calendar Year following the First Commercial
Sale of a JAK Licensed Product, the Annual Net Sales for JAK Licensed Products
is equal to or exceeds ***, then Novartis shall pay Incyte the milestone
payments set forth in both Sections 8.2(e)(ii)(A) and (B) (total
***).

 

(f)                Except as otherwise specified, none of the payments
listed in this Section 8.2 shall be payable more than once, and each shall
be payable at the first achievement of a milestone event for a Licensed Product
and shall not be payable again if subsequently another Licensed Product
achieves the same milestone event.  ***.

 

(g)               If a foreseen Development activity described in Section 8.2(a)(i),
(a)(ii) or (c)(i) is not conducted in the course of accelerating the
Development activities for an Indication, then, effective upon achievement of
the later milestone with respect to the same Indication set forth in Section 8.2(a)(ii),
(a)(iii) or (c)(ii) as the case may be, the previously unpaid
payments that would be due for the preceding milestones shall also become due
and payable even though the missing milestone has not been achieved.

 

(h)               For purposes of clarity, the milestone payment set
forth in Sections 8.2(b)(ii)(B) and 8.2(d)(ii)(B) shall be in addition to the
milestone payment set forth in Sections 8.2(b)(ii)(A) and 8.2(d)(ii)(A).

 

(i)                Novartis shall provide Incyte written notice of the
achievement of each milestone event: (A) within *** after achievement of the
milestone event set forth in Section 8.2(a), (b), (c) or (d); and (B) within
*** after the end of any Calendar Quarter in which a milestone set forth in Section 8.2(e) is achieved.  Incyte shall provide Novartis written notice
of the achievement of the milestone event set forth in Section 8.2(d)(i) within
*** after the achievement of such milestone. 
Novartis shall pay to Incyte, by wire transfer to an account designated
by Incyte, the applicable non-refundable, non-creditable milestone payment listed
above: (1) with respect to milestone events set forth in Section 8.2(a), (b), (c)
or (d), within *** after Novartis’ receipt of invoice and (2) with respect to
all milestone events set forth in Section 8.2(e), within *** after the end of
the applicable Calendar Quarter; provided that
Incyte has issued the relevant invoice for such sales milestones within ***
after Incyte’s receipt of notice from Novartis of the achievement of such sales
milestones.  In the event Incyte fails to
issue an invoice within such *** period as described above, Novartis’s
obligation to pay such amount within*** after the end of the applicable
Calendar Quarter shall be extended by the

 

55

 

***
Confidential material redacted and filed separately with the Commission.

 

number of days that lapse between the date Incyte should have invoiced
Novartis and the date Incyte actually invoices Novartis.

 

8.3           Royalties.

 

(a)               Novartis Royalties to Incyte.  Novartis shall pay to Incyte royalties on
aggregate Net Sales of each Licensed Product, on a Licensed Product-by-Licensed
Product basis, at the following rates:

 

(i)            c-MET Licensed Products.  Subject to Section 4.4(c), on a c-MET
Licensed Product-by-c-MET Licensed Product basis, Novartis shall pay to Incyte
royalties on Net Sales of each c-MET Licensed Product in the Novartis Territory
as follows:

 

	
  Annual Net Sales of c-MET Licensed Product

  	
   

  	
  Royalty Rate

  	
   

  
	
  On Annual Net Sales less than or equal to ***

  	
   

  	
  ***%

  	
   

  
	
  On Annual Net Sales greater than *** and less than
  or equal to ***

  	
   

  	
  ***%

  	
   

  
	
  On Annual Net Sales greater than ***

  	
   

  	
  ***%

  	
   

  

 

(ii)           JAK Licensed Products.  On a JAK Licensed Product-by-JAK Licensed
Product basis, Novartis shall pay to Incyte royalties on Net Sales of each JAK
Licensed Product in the JAK Field in the Novartis JAK Territory as follows:

 

	
  Annual
  Net Sales of such JAK Licensed Product

  	
   

  	
  Royalty Rate

  	
   

  
	
  On
  Annual Net Sales less than or equal to ***

  	
   

  	
  ***%

  	
   

  
	
  On
  Annual Net Sales greater than *** and less than or equal to ***

  	
   

  	
  ***%

  	
   

  
	
  On
  Annual Net Sales greater than *** and less than or equal to ***

  	
   

  	
  ***%

  	
   

  
	
  On
  Annual Net Sales greater than ***

  	
   

  	
  ***%

  	
   

  

 

56

 

***
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(b)               ***.

 

(i)            ***.

 

(ii)           ***.

 

(c)               Royalties payable under this Section 8.3 shall be
paid by the applicable Party on a Licensed Product-by-Licensed Product and
country-by-country basis from the date of First Commercial Sale of each
Licensed Product with respect to which royalty payments are due for a period
which is the longer of:  (i) the
last to expire of any Valid Claim of Licensed Patent Rights Covering such
Licensed Product in such country; (ii) *** following the date of First
Commercial Sale in such country; and (iii) the expiration of Regulatory
Exclusivity for such Licensed Product in such country (each such term with
respect to a Licensed Product and a country, a “Royalty Term”).
Notwithstanding the foregoing, in the event that either (A) the Royalty
Term continues solely due to clause (ii) (i.e. in a specific country the
Licensed Product is neither Covered by a Valid Claim of Licensed Patent Rights
nor is such Licensed Product subject to Regulatory Exclusivity) or (B) Generic
Competition exists with respect to a Licensed Product in a country with respect
to a royalty-reporting period, then the royalty rates in such country for such
Licensed Product (for such royalty-reporting period, if applicable) will be ***
the applicable rate in Section 8.3(a) ***, based on the weighted
average annual royalty rate in the Novartis Territory or the Incyte Territory,
as the case may be, beginning on January 1st of the Calendar Year
following the first Calendar Year in which there exists a situation described
in (A) or (B) of this sentence in the applicable country.

 

(d)               Upon the expiration of the Royalty Term with respect
to a Licensed Product in a country, (i) the licenses granted by Incyte to
Novartis pursuant to Section 2.1 shall be deemed to be fully paid-up,
irrevocable and perpetual with respect to such Licensed Product

 

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in such country; and (ii) the licenses granted by Novartis to
Incyte pursuant to Section 2.2 shall be deemed to be fully paid-up,
irrevocable and perpetual with respect to such JAK Licensed Product in such
country.

 

8.4           Royalty Reports; Payments.  Within *** after the end of any Calendar
Quarter, the Royalty Paying Party shall provide the Royalty Receiving Party
with a report stating the sales in units and in value of the Licensed Product
made by the Royalty Paying Party, its Affiliates, licensees and sublicensees,
as applicable, in the Royalty Paying Party’s territory, on a country-by-country
basis, together with the calculation of the royalties due to the Royalty
Receiving Party, including the method used to calculate the royalties and the
exchange rates used.  Royalty payments
shall be made by the Royalty Paying Party to the bank account indicated by the
Royalty Receiving Party within *** after the end of the applicable Calendar
Quarter; provided that the Royalty Receiving Party has issued the relevant
invoice for royalty payment within *** after the Royalty Receiving Party’s
receipt of the royalty report from the Royalty Paying Party.  In the event the Royalty Receiving Party
fails to issue an invoice within such *** period as described above, the
Royalty Paying Party’s obligation to pay such amounts within *** after the end
of the applicable Calendar Quarter shall be extended by the number of days that
lapse between the date the Royalty Receiving Party should have invoiced the
Royalty Paying Party and the date the Royalty Receiving Party actually invoices
the Royalty Paying Party.

 

8.5           Financial Records.  The Parties shall keep complete and accurate
books and records in accordance with the defined Accounting Standards. The
parties will keep such books and records for at least *** following the end of
the Calendar Year to which they pertain. Such books of accounts shall be kept
at the principal place of business of the financial personnel with
responsibility for preparing and maintaining such records.  With respect to royalties, such records shall
be in sufficient detail to support calculations of royalties due to either
Party.  Novartis and Incyte shall also
keep complete and accurate records and books of accounts containing all data
reasonably required for the calculation and verification of Development Costs,
including internal FTEs utilized by either Party in jointly funded Clinical
Trials or other Development activities and any amounts that are subject to
reimbursement pursuant to Section 6.3(b)(ii).

 

8.6           Audits.

 

(a)               Each Party may, upon request and at its expense
(except as provided for herein), cause an internationally-recognized
independent accounting firm selected by it (except one to whom the Auditee has
a reasonable objection), (the “Audit Team”) to audit during ordinary
business hours the books and records of the other Party and the correctness of
any payment made or required to be made to or by such Party, and any report
underlying such payment (or lack thereof), pursuant to the terms of this
Agreement. Prior to commencing its work pursuant to this agreement, the Audit
Team shall enter into an appropriate confidentiality agreement with the
Auditee.

 

(b)               In respect of each audit of the Auditee’s books and
records: (i) the Auditee may be audited only ***, (ii) no records for
any given year for an Auditee may be audited more than ***; provided  that
the Auditee’s records shall still be made available if such

 

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records impact another financial year which is being audited, (iii) the
Audit Rights Holder shall only be entitled to audit books and records of an
Auditee from the *** prior to the Calendar Year in which the audit request is
made.

 

(c)               In order to initiate an audit for a particular
Calendar Year, the Audit Right Holder must provide written notice to the
Auditee. The Audit Rights Holder exercising its audit rights shall provide the
Auditee with notice of one or more proposed dates of the audit not less than
*** prior to the first proposed date. 
The Auditee will reasonably accommodate the scheduling of such
audit.  The Auditee shall provide such
Audit Team(s) with full and complete access to the applicable books and
records and otherwise reasonably cooperate with such audit.

 

(d)               The audit report and basis for any determination by an
Audit Team shall be made available first for review and comment by the Auditee,
and the Auditee shall have the right, at its expense, to request a further
determination by such Audit Team as to matters which the Auditee disputes (to
be completed no more than *** after the first determination is provided to such
Auditee and to be limited to the disputed matters).  If the Parties disagree as to such further
determination, the Audit Right Holder and the Auditee shall mutually select an
internationally-recognized independent accounting firm that shall make a final
determination as to the remaining matters in dispute that shall be binding upon
the Parties.  Such accountants shall not
disclose to the Audit Rights Holder any information relating to the business of
the Auditee except that which should properly have been contained in any report
required hereunder or otherwise required to be disclosed to such Party to the
extent necessary to verify the payments required to be made pursuant to the
terms of this Agreement.

 

(e)               If the audit shows any under-reporting or
underpayment, or overcharging by any Party, that under-reporting, underpayment
or overcharging shall be reported to the Audit Rights Holder and the
underpaying or overcharging Party shall remit such underpayment or reimburse
such overcompensation (together with interest at the annual interest rate of
*** as published in the *** or its successor on the last business day of the
applicable calendar quarter prior to the audit) to the underpaid or overcharged
Party within *** after receiving the audit report.  Further, if the audit for an annual period
shows an under-reporting or underpayment or an overcharge by any Party for that
period in excess of *** of the amounts properly determined, the underpaying or
overcharging Party, as the case may be, shall reimburse the applicable
underpaid or overcharged Audit Rights Holder conducting the audit, for its
respective audit fees and reasonable Out-of-Pocket Costs in connection with
said audit, which reimbursement shall be made within *** after receiving
appropriate invoices and other support for such audit-related costs.

 

(f)                For the purposes of the audit rights described
herein, an individual Party subject to an audit in any given year will be
referred to as the “Auditee” and the other Party who has certain and
respective rights to audit the books and records of the Auditee will be
referred to as the “Audit Rights Holder”.

 

8.7           Tax Matters.  The royalties, milestones and other amounts
payable by Novartis to Incyte pursuant to this Agreement (“Payments”)
shall not be reduced on account of any taxes

 

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unless required by Law.  Incyte alone shall be responsible for paying
any and all taxes (other than withholding taxes required by Law to be deducted
and paid on Incyte’s behalf by Novartis) levied on account of, or measured in
whole or in part by reference to, any Payments it receives.  The Parties will cooperate in good faith to
obtain the benefit of any relevant tax treaties to minimize as far as
reasonably possible any taxes which may be levied on any Payments.  Novartis shall deduct or withhold from the
Payments any taxes that it is required by Law to deduct or withhold.  Notwithstanding the foregoing, if Incyte is
entitled under any applicable tax treaty to a reduction of the rate of, or the
elimination of, applicable withholding tax, it may deliver to Novartis or the
appropriate governmental authority (with the assistance of Novartis 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 Novartis of its obligation to withhold tax, and Novartis shall apply
the reduced rate of withholding tax, or dispense with withholding tax, as the
case may be, provided  that Novartis has received evidence of
Incyte’s delivery of all applicable forms (and, if necessary, its receipt of
appropriate governmental authorization) *** prior to the time that the Payment
is due.  If, in accordance with the
foregoing, Novartis withholds any amount, it shall make timely payment to the
proper taxing authority of the withheld amount, and send to Incyte proof of
such payment within *** following that latter payment.  Notwithstanding the foregoing, Novartis
represents that the payments to be paid by Novartis to Incyte pursuant to
Sections 8.1, 8.2 and 8.3 hereof shall not be subject to withholding tax under
conditions less favorable to Incyte than those applicable to treaty-eligible
residents under the income tax treaty between the United States and Switzerland
in force at the point of time such payments are paid.

 

8.8           Currency Exchange.

 

(a)               Sales and Royalty Calculations. The currency
exchange method set out in this Section 8.8(a) shall be applied for
calculations of amounts for sales and royalties.  With respect to amounts invoiced in United
States Dollars, all such amounts shall be expressed in United States
Dollars.  With respect to amounts
invoiced in a currency other than United States Dollars, all such amounts shall
be expressed both in the currency in which the amount was invoiced and in the
United States Dollar equivalent.  The
United States Dollar equivalent shall be calculated using the Novartis Standard
Exchange Rate Methodology for the conversion of foreign currency sales into
United States Dollars.

 

(b)               Development Cost Calculations. The currency
exchange method set out in this Section 8.8(b) shall be applied for
calculations of amounts for Development Costs. 
For purposes of any Development cost sharing between the Parties under
this Agreement, such costs shall be calculated on a quarterly basis.  With respect to amounts invoiced in United
States Dollars, all such amounts shall be expressed in United States
Dollars.  With respect to amounts
invoiced in a currency other than United States Dollars, all such amounts shall
be expressed both in the currency in which the amount was invoiced and in the
United States Dollar equivalent.  The
United States Dollar equivalent shall be calculated using the average of the
last (bid) U.S. dollar/foreign currency rates for the last Business Day of each
month in the calendar quarter for which Development Costs are being reported,
as reported by The Wall Street Journal, for the conversion of foreign
currency sales into United States Dollars.

 

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8.9           Late Payments.  The paying Party shall pay interest to the
receiving Party on the aggregate amount of any payments that are not paid on or
before the date such payments are due under this Agreement at a rate per annum
equal to the lesser of the ***, as reported by The Wall Street Journal,
*** or the highest rate permitted by applicable Law, calculated on the number
of days such payments are paid after the date such payments are due; provided,
that with respect to any disputed payments, no interest payment shall be
due until such dispute is resolved and the interest which shall be payable
thereon shall be based on the finally-resolved amount of such payment,
calculated from the original date on which the disputed payment was due through
the date on which payment is actually made.

 

ARTICLE
IX

TERM AND TERMINATION

 

9.1           Agreement Term.  The term of this Agreement shall commence on
the Effective Date and shall continue on a Program-by-Program basis until the
earlier of (i) the termination of this Agreement or any program in
accordance with Section 9.2; or (ii) following the First Commercial
Sale of any Licensed Product, the expiration of the last-to-expire of all
Royalty Terms with respect to all Licensed Compounds and Licensed Products
within such Program (the “Term”). Notwithstanding the above, if there
are any ongoing disputes at the end of the Term as set forth above, this
Agreement shall remain in full force and effect until all such disputes are
resolved.

 

9.2           Termination.

 

(a)               Termination for Convenience.  Novartis shall have the right to terminate
this Agreement, in its entirety or on a Program-by-Program basis, for
convenience upon *** prior written notice to Incyte.

 

(b)               Termination for Material Breach.  If either Party (the “Non-Breaching Party”)
believes that the other Party (the “Breaching Party”) is in material
breach of this Agreement, then the Non-Breaching Party may deliver notice of
such breach to the Breaching Party. If the Breaching Party fails to cure such
breach, or take such steps as would be considered reasonable to effectively
cure such breach, within the *** period after delivery of such notice, the
Non-Breaching Party may terminate this Agreement upon written notice to the
Breaching Party, which termination shall apply (x) solely with respect to
a Program (and all Licensed Compounds and Licensed Products for such Program)
if such breach is related solely to such Program, or (y) either on a
Program-by-Program basis or to the Agreement in its entirety at the discretion
of the Non-Breaching Party if such breach is not related solely to a Program.

 

(c)               Termination if Novartis Challenges Incyte IP.  If Novartis or any of its Affiliates,
directly or indirectly, (i) initiates or requests an interference or
opposition proceeding with respect to any Incyte Patent Right, (ii) makes,
files or maintains any claim, demand, lawsuit, or cause of action to challenge
the validity or enforceability of any Incyte Patent Right in a tribunal or
forum, or (iii) opposes any extension of, or the grant of a supplementary
protection certificate with respect to, any Incyte Patent Right, Incyte shall
have the right to terminate this

 

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Agreement upon *** written notice to Novartis.  Any such termination shall only become
effective if Novartis or its Affiliate, as applicable, has not withdrawn such
action before the end of the above notice period.

 

(d)               Termination if Novartis Abandons Program.  If Incyte believes that Novartis has
Abandoned either the JAK Program or the c-MET Program, Incyte may deliver
written notice to Novartis setting out in reasonable detail the basis for
Incyte’s belief.  Novartis shall have ***
from receipt of such notice to take such steps as would be considered
reasonably likely to result in Novartis not being deemed to have Abandoned such
Program within a reasonable period following such actions.  If Novartis fails to take such action and
fails to dispute the facts giving rise to such notice within such *** period,
then Incyte may within *** following the expiration of such *** period elect to
terminate such Program by providing Novartis written notice of such
termination, such termination to be effective immediately and otherwise
effected in accordance with Section 9.3(a).

 

(e)               Termination Disputes.  If a Party gives notice of termination under
this Section 9.2(b) or 9.2(d), and the other Party disputes whether
such notice was proper, then the issue of whether or not this Agreement was
properly terminated shall be resolved in accordance with ARTICLE XIII, and the
Agreement shall remain in full force and effect until such dispute is
resolved.  If as a result of such dispute
resolution process it is determined that the notice of termination was proper,
then such termination shall be deemed to be effective on the date on which such
notice was first provided.  On the other
hand, if as a result of the dispute resolution process it is determined that the
notice of termination was improper, then no termination shall have occurred and
this Agreement shall remain in full force and effect.

 

9.3           Effects Of Termination.

 

(a)               Upon termination of this Agreement in whole or with
respect to a Terminated Program in accordance with Section 9.2(a) or
by Incyte under 9.2(b), 9.2(c) or 9.2(d):

 

(i)            all licenses granted by Incyte to Novartis hereunder with
respect to such Terminated Program(s) shall terminate and Novartis shall
not have any rights to use or exercise any rights under the Incyte IP;

 

(ii)           Novartis shall be released from its Development and
Commercialization obligations with respect to such Terminated Program(s);

 

(iii)          Novartis shall provide to Incyte a fair and accurate
summary report of the status of the Development and Commercialization of the
Licensed Products in such Terminated Program(s) in each country in the
Novartis Territory through the effective date of termination within *** after
such termination;

 

(iv)          Incyte shall have no further obligation to *** if the
Terminated Program is the JAK Program or if the Agreement is terminated in its
entirety;

 

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(v)                                 if Incyte
elects to continue such license, (A) the license granted to Incyte
pursuant to Section 2.2(a) shall remain in effect and automatically
be expanded to include, with respect to the Terminated Program(s) the
right to research, Develop, make, have made, use, offer for sale, sell and
import all applicable Licensed Products that formed a part of the Terminated
Program(s) in the Novartis Territory, ***, and (B) the license
granted to Incyte pursuant to Section 2.2(b) shall remain in effect
***;

 

(vi)                              in the event
that Incyte terminates a Program pursuant to Section 9.2(d), then,
irrespective of whether Incyte elects to continue the license granted to Incyte
pursuant to Section 2.2(a), ***, and ***; provided that if subclause (v) and
this subclause (vi) both apply, then *** either subclause (v) or this
(vi) ***;

 

(vii)                           Novartis shall
promptly transfer and assign to Incyte all of Novartis’ and its Affiliates’
rights, title and interests in and to the product trademark(s) (but not
any Novartis house marks) owned by Novartis and used for the Licensed Products
in the Terminated Program(s) in the Novartis Territory, in exchange for a
payment to Novartis in an amount equal to reimbursement of Novartis’ reasonable
accumulated costs related to the development, clearance, registration,
enforcement and maintenance of the applicable trademark throughout the Novartis
Territory;

 

(viii)                        Novartis shall
as soon as reasonably practicable transfer and assign to Incyte all Regulatory
Documentation, the data comprising the Global Safety Database and other
documented technical and other information or materials Controlled by Novartis’
which are necessary or useful for the Development, manufacture and
Commercialization of the Licensed Compounds or Licensed Products in Terminated
Program(s) in the Novartis Territory; provided  that Novartis
may retain a single copy of such items for its records.  Within *** after Incyte’s receipt of an
invoice therefor, Incyte shall reimburse Novartis for Novartis’ and its
Affiliates’ reasonable Out-of-Pocket Costs incurred in connection with such
transfers and assignment (but not the generation, creation or development of
such information and materials);

 

(ix)                                Incyte shall
have the option, exercisable within *** following the effective date of such
termination, to obtain Novartis inventory of Licensed Products manufactured by
a Third Party with respect to such Terminated Program(s) ***

 

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for such inventory of Licensed Product.  Incyte may exercise such option by written
notice to Novartis during such *** period; provided  that in the
event Incyte exercises such right to purchase such inventory, Novartis shall
grant, and hereby does grant, a royalty-free right and license to any
trademarks, names and logos of Novartis contained therein *** to permit the
orderly sale of such inventory;

 

(x)                                   the provisions
of ARTICLE VII (other than Section 7.1 and Section 7.2(a))shall be
terminated with respect to such Terminated Program, provided that Novartis
shall provide reasonable assistance to Incyte and cooperation in connection
with the transition of prosecution, maintenance and enforcement
responsibilities to Incyte, including execution of such documents as may be
necessary to effect such transition; and

 

(xi)                                to the extent that Novartis is responsible for
manufacturing a Licensed Product prior to termination of this Agreement for a
Terminated Program, Novartis shall:

 

A.                                   in accordance with the terms of the Supply
Agreement, and in exchange for a payment equal to *** of Novartis’ costs, including allocated
overhead for the supply of product, and if Regulatory Approval has been
obtained for such Licensed Product, use Commercially Reasonable Efforts to
supply Incyte and its Affiliates with comparable quantities of the applicable
Licensed Products in the dosage strength, formulation and presentation as were
being Commercialized as of the effective date of termination until the earlier
of *** after the
effective date of the termination or establishment by Incyte of an alternative
supply for such Licensed Product; provided that Incyte shall use its
Commercially Reasonable Efforts to establish an alternative supply as promptly
as reasonably practicable;

 

B.                                     cooperate with
Incyte in reasonable respects to transfer manufacturing documents and materials
which are used (at the time of the termination) by Novartis in the Manufacture
of the applicable Licensed Products; and

 

C.                                     cooperate with
Incyte in reasonable respects to transfer to Incyte, or Incyte’s designated
contract manufacturer, the manufacturing technologies (including all relevant
Know-How) that are used and necessary (at the time of the termination) and
Controlled by Novartis in the manufacture of the applicable Licensed Products,
provided that Incyte shall reimburse Novartis for Novartis’s reasonable
Out-of-Pocket Costs to provide such requested assistance.

 

(b)                                             Upon
termination of this Agreement by Novartis in whole or with respect to a
Terminated Program in accordance with Section 9.2(b):

 

(i)                                     all licenses
granted by Novartis to Incyte hereunder with respect to such Terminated Program(s) shall
terminate and Incyte
shall not have any rights to use or exercise any rights under the Novartis IP;

 

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(ii)                                  Novartis shall
be released from its Development and Commercialization obligations with respect
to such Terminated Program(s) and any exclusivity and non-compete
obligations pertaining solely to such Terminated Program(s);

 

(iii)                               Incyte shall
provide to Novartis a fair and accurate summary report of the status of the
Development and Commercialization of the Licensed Products in such Terminated
Program(s) in the Incyte Territory through the effective date of
termination within *** after such termination;

 

(iv)                              ***;

 

(v)                                 with respect to
the Terminated Program(s), the license granted to Novartis pursuant to Section 2.1
shall remain in effect and all payment obligations under ARTICLE VIII shall
remain in effect; provided  that with respect to royalties arising
after the effective date of termination, Novartis *** payable under Section 8.3(a) as
they become due;

 

(vi)                              Novartis’
rights and Incyte’s obligations pursuant to Sections 7.2 and 7.3 shall survive;
and

 

(vii)                           the provisions
of Section 3.2(e) (Joint Intellectual Property Committee) shall remain
in effect solely with respect to the INCY0039 Patent Rights; provided that if
the JIPC fails to reach unanimous agreement on a matter before it for decision
for a period in excess of thirty (30) days, the JIPC representatives appointed
by Incyte shall have the deciding vote on such matter.

 

(c)                                              ARTICLES I
(Definitions), IX (Term and Termination), X (Indemnification and Limitation of
Liability), XII (Confidentiality), XIII (Dispute Resolution) and XIV
(Miscellaneous) and Sections 2.6(a)(iii), 7.1 (Inventorship; Ownership), 8.5
(Financial Records), 8.6 (Audits), 11.5) (Disclaimer of Warranty) and 11.6
(Standstill) shall survive termination or expiration (in accordance with Section 9.1
(Agreement Term) of this Agreement).

 

(d)                                             Termination of
this Agreement shall be in addition to, and shall not prejudice, the Parties’
remedies at law or in equity, including the Parties’ ability to receive legal
damages and/or equitable relief with respect to any breach of this Agreement
(including a breach of a representation or warranty set forth in ARTICLE XI),
regardless of whether or not such breach was the reason for the termination.

 

ARTICLE X

 

INDEMNIFICATION;
LIMITATION OF LIABILITY

 

10.1                           By Novartis.

 

(a)                                              Novartis
agrees, at Novartis’s cost and expense, to defend, indemnify and hold harmless
Incyte and its Affiliates and their respective directors, officers, employees
and

 

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agents (the “Incyte Indemnified Parties”) from and against any
losses, costs, damages, fees or expenses arising out of any Third Party claim
relating to (a) any breach by Novartis of any of its representations,
warranties or obligations pursuant to this Agreement, (b) the gross
negligence or willful misconduct of Novartis, and (c) the
Development, manufacture, Commercialization, use, sale or other disposition by
Novartis, its Affiliates or sublicensees of any Licensed Compound or Licensed
Product; ***.

 

(b)                                             In the event of
any such claim against the Incyte Indemnified Parties by any Third Party,
Incyte shall promptly, ***, notify Novartis in writing of the claim.  Novartis shall have the right, exercisable by
notice to Incyte within *** after receipt of notice from Incyte of the claim,
to assume direction and control of the defense, litigation, settlement, appeal
or other disposition of the claim (including the right to settle the claim
solely for monetary consideration) with counsel selected by Novartis and
reasonably acceptable to Incyte; ***. 
The Incyte Indemnified Parties shall cooperate with Novartis and may, at
their option and expense, be separately represented in any such action or
proceeding.  Novartis shall not be liable
for any litigation costs or expenses incurred by the Incyte Indemnified Parties
without Novartis’s prior written authorization. 
In addition, Novartis shall not be responsible for the indemnification
or defense of any Incyte Indemnified Party to the extent arising from any
negligent or intentional acts by any Incyte Indemnified Party or the breach by
Incyte of any obligation or warranty under this Agreement, or any claims
compromised or settled without its prior written consent.

 

(c)                                              Notwithstanding
anything to the contrary above, in the event of any such claim against the
Incyte Indemnified Parties by a governmental or criminal action seeking an
injunction against Incyte, Incyte shall have the right to control the defense,
litigation, settlement, appeal or other disposition of the claim at Novartis’ expense.

 

10.2                           By Incyte.

 

(a)                                              Incyte agrees,
at Incyte’s cost and expense, to defend, indemnify and hold harmless Novartis
and its Affiliates and their respective directors, officers, employees and
agents (the “Novartis Indemnified Parties”) from and against any losses,
costs, damages, fees or expenses arising out of any Third Party claim relating
to (a) any breach by Incyte of any of its representations, warranties or
obligations pursuant to this Agreement, or (b) the gross negligence or
willful misconduct of Incyte, and (c) the
Development, manufacture, Commercialization, use, sale or other disposition by
Incyte, its Affiliates or sublicensees of any JAK Licensed
Compound,  JAK Licensed
Product, c-MET Licensed Compound or c-MET Licensed
Product; provided, however, that Incyte shall not defend, indemnify nor
hold harmless Novartis Indemnified Parties from and against any losses,
costs, damages, fees or expenses arising out of any Third Party claims pertaining directly to the Novartis IP.

 

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(b)                                             In the event of
any such claim against the Novartis Indemnified Parties by any Third Party,
Novartis shall promptly, and in any event within ***, notify Incyte in writing
of the claim. Incyte shall have the right, exercisable by notice to Novartis
within *** after receipt of notice from Novartis of the claim, to assume
direction and control of the defense, litigation, settlement, appeal or other
disposition of the claim (including the right to settle the claim solely for
monetary consideration) with counsel selected by Incyte and reasonably
acceptable to Novartis; provided that the failure to provide timely
notice of a claim by a Third Party shall not limit a Novartis Indemnified Party’s
right for indemnification hereunder except to the extent such failure results
in actual prejudice to Incyte; and provided  further that before
entering into a settlement, Incyte shall provide Novartis with a bond, or other
evidence reasonably satisfactory to Novartis that Incyte has readily available
funds, in either case in an amount sufficient to indemnify Novartis in full
promptly thereafter. The Novartis Indemnified Parties shall cooperate with
Incyte and may, at their option and expense, be separately represented in any
such action or proceeding.  Incyte shall
not be liable for any litigation costs or expenses incurred by the Novartis
Indemnified Parties without Incyte’s prior written authorization.  In addition, Incyte shall not be responsible
for the indemnification or defense of any Novartis Indemnified Party to the
extent arising from any negligent or intentional acts by any Novartis
Indemnified Party, or the breach by Novartis of any representation, obligation
or warranty under this Agreement, or any claims compromised or settled without
its prior written consent.

 

(c)                                              Notwithstanding
anything to the contrary above: (i) in the event of any such claim against
the Novartis Indemnified Parties by a governmental or criminal action seeking
an injunction against Novartis, or
(ii) if at the time that a claim for which indemnification may be
sought under this Section 10.2, or at any time thereafter prior to the
final resolution of such claim, a Bankruptcy Event of Incyte has occurred,
Novartis shall have the right to control the defense, litigation, settlement,
appeal or other disposition of the claim at Incyte’s expense.

 

10.3                           Limitation of
Liability.  EXCEPT WITH
RESPECT TO A BREACH OF ARTICLE XII OR A PARTY’S LIABILITY PURSUANT TO ARTICLE
X, NEITHER PARTY SHALL BE LIABLE FOR SPECIAL, CONSEQUENTIAL, EXEMPLARY,
PUNITIVE OR OTHER INDIRECT OR REMOTE DAMAGES, OR, EXCEPT WITH RESPECT TO A
BREACH OF ARTICLE II OR SECTION 4.1(A) OR (B), FOR LOSS OF PROFITS,
LOSS OF DATA OR LOSS OF USE DAMAGES, IN EACH CASE ARISING IN ANY WAY OUT OF
THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, WHETHER BASED UPON
WARRANTY, CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSS.

 

10.4                           Insurance.  Each Party shall use all commercially
reasonable efforts to maintain Third Party insurance and/or self-insurance, as
applicable, including product liability insurance, with respect to its
activities hereunder in amounts customary to such insurance and sufficient to
meet its obligations under this Agreement, and shall claim upon such insurance
policy according to such policy’s relevant terms and conditions before relying
upon indemnification from the other Party.

 

67

 

ARTICLE XI

 

REPRESENTATIONS
AND WARRANTIES AND COVENANTS

 

11.1                           Representation
Of Authority; Consents. 
Incyte and Novartis each represents and warrants to the other Party
that:

 

(a)                                              as of the
Effective Date, it has full right, power and authority to enter into this
Agreement;  

 

(b)                                             as of the
Effective Date, this Agreement has been duly executed by such Party and
constitutes a legal, valid and binding obligation of such Party, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other Laws relating to or affecting creditors’ rights generally and by general
equitable principles and public policy constraints (including those pertaining
to limitations and/or exclusions of liability, competition Laws, penalties and
jurisdictional issues including conflicts of Laws); and

 

(c)                                              as of the
Effective Date, all necessary consents, approvals and authorizations of all
government authorities and other persons required to be obtained by such Party
in connection with the execution, delivery and performance of this Agreement
have been and shall be obtained.

 

11.2                           No Conflict.  Each Party represents and warrants to the
other Party that the execution and delivery of this Agreement and the
performance of such Party’s obligations hereunder (a) do not conflict with
or violate such Party’s corporate charter and bylaws or any requirement of
applicable Laws and (b) do not and shall not conflict with, violate or
breach or constitute a default or require any consent under, any oral or
written contractual obligation of such Party. 
Each Party agrees that it shall not during the term of this Agreement grant
any right,  license, consent or privilege
to any Third Party or otherwise undertake any action, either directly or
indirectly, that would conflict with the rights granted to the other Party or
interfere with any obligations of such Party set forth in this Agreement.

 

11.3                           Additional
Incyte Representations and Warranties.  Incyte represents and warrants that, as of
the Effective Date, except as disclosed in Schedule 11.3:

 

(a)                                              Neither it nor
any of its Affiliates or any of its or their sublicensees has received written
notice of any claim or litigation which alleges any Intellectual Property
Rights of a Third Party are infringed by a Licensed Compound or the Development
or Commercialization of any Licensed Compound; to the knowledge of Incyte and
its Affiliates, none of Incyte or any of its Affiliates has in the past
infringed or is currently infringing any Third Party Intellectual Property
Rights through activities related to the Licensed Compounds; and to the
knowledge of Incyte and its Affiliates, the Development and Commercialization
activities contemplated by Incyte under this Agreement, will not infringe the
Intellectual Property Rights of any Third Party;

 

(b)                                             there are no
claims, judgments or settlements against or owed by Incyte or any of its
Affiliates, nor, to the knowledge of Incyte or any of its Affiliates, any
pending reissue,

 

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*** Confidential material redacted and filed separately with the
Commission.

 

reexamination, interference, opposition or
similar proceedings, with respect to any Licensed Compounds or Incyte IP, and
Incyte has not received written notice of any threatened claims or litigation
or any reissue, reexamination, interference, opposition or similar proceedings
seeking to invalidate or otherwise challenge any Incyte IP;

 

(c)                                              to the
knowledge of Incyte and its Affiliates, no Third Party is infringing any Incyte
Patent Rights;

 

(d)                                             (i) Incyte
is the legal and beneficial owner or has the right to grant to Novartis the
rights granted herein, to all Incyte IP, (ii) no Third Party has any
right, interest or claim in or to such rights that would limit the rights
granted to Novartis under this Agreement and (iii) all assignments to
Incyte of inventorship rights relating to the Incyte Patent Rights Controlled
by Incyte are valid and enforceable;

 

(e)                                              all fees due to
date that are required to maintain the Incyte IP have been paid in full and to
Incyte’s knowledge, the Incyte IP is valid and enforceable;

 

(f)                                                Incyte has not
granted to any Third Party rights that are inconsistent with Novartis’ rights
hereunder, including a grant of rights that removed Incyte IP from Incyte’s
Control and limited the rights granted to Novartis under this Agreement, and
there are no agreements or arrangements to which Incyte or any of its
Affiliates is a party relating to Licensed Compounds or Incyte IP that would
limit the rights granted to Novartis under this Agreement; and

 

(g)                                             Incyte has
disclosed to Novartis all material information known to it and its Affiliates
with respect to the safety and efficacy of each of the Licensed Compounds.  

 

11.4                           Incyte Covenant.  Incyte shall not grant to any Third Party
rights that would be inconsistent with Novartis’ rights hereunder, including a
grant of rights that would remove Incyte IP from Incyte’s Control and limit the
rights granted to Novartis under this Agreement.

 

11.5                           Disclaimer of
Warranty.  Nothing in
this Agreement shall be construed as a representation made or warranty given by
either Party that either Party will be successful in obtaining any Patent
Rights, that any patents will issue based on pending applications or that any
such pending applications or patents issued thereon will be valid.  ALL INCYTE IP TRANSFERRED PURSUANT TO THIS
AGREEMENT SHALL BE PROVIDED ON AN “AS IS” BASIS.  EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, EACH PARTY EXPRESSLY DISCLAIMS, WAIVES, RELEASES AND RENOUNCES ANY
WARRANTY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT.

 

11.6                           Standstill.  Novartis agrees that, for a period commencing
on the Effective Date and ending *** after the Effective Date, unless
specifically invited in writing to do so by Incyte, Novartis and each of its
Affiliates (as that term is defined in Rule 12b-2 under the Securities
Exchange Act of 1934 (the “Exchange Act”) will not in any manner,
directly or indirectly:

 

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*** Confidential material redacted and filed separately with the
Commission.

 

(a)                                              effect, or
seek, offer or propose to effect (whether publicly or otherwise) or cause or
participate in, (i) any acquisition of (A) any Voting Stock of
Incyte, (B) direct or indirect rights or options to acquire any Voting
Stock of Incyte, or (C) assets or securities of Incyte or any of its
subsidiaries, (ii) any merger, consolidation, tender or exchange offer, or
other business combination involving Incyte or any Affiliate thereof, (iii) any
restructuring, recapitalization, liquidation, dissolution or similar
transaction with respect to Incyte or any Affiliate thereof, or (iv) any “solicitation”
of “proxies” (as such terms are defined or used in Regulation 14A under the
Exchange Act) or consents with respect to any Voting Stock of Incyte, any “election
contest” (as such term is defined or used in Rule 14a-11 of the Exchange
Act) with respect to Incyte, or any demand for a copy of Incyte’s stock ledger,
list of its stockholders, or other books and records;

 

(b)                                             form, join,
participate in or encourage the formation of any “group” (within the meaning of
Section 13(d)(3) of the Exchange Act) (“13D Group”) with
respect to any Voting Stock of Incyte;

 

(c)                                              otherwise act
(other than as contemplated under this Agreement), alone or in concert with
others (including by providing financing for another party), to seek or offer
to control or influence, in any manner, the management, Board of Directors or
policies of Incyte;

 

(d)                                             take any action
that might force Incyte to make a public announcement regarding any of the
types of matters set forth in Section 11.6(a) above;

 

(e)                                              make (publicly
or to Incyte, or its directors, officers, employees, agents or security
holders, directly or indirectly) any request or proposal to amend, waive or
terminate any provision of this Agreement or any inquiry or statement relating
thereto; or 

 

(f)                                                instigate,
encourage or assist any Third Party to do any of the foregoing; provided
that Novartis and its Affiliates may acquire, hold or sell, through
their respective treasury departments, an aggregate amount not to exceed *** of
the voting power represented by Incyte’s Voting Stock solely for the purposes
of investment in the ordinary course of business (so long as any decision to
make such acquisition or sale is in compliance with United States securities
law), *** and provided  further that the restrictions set forth in
this Section 11.6 shall terminate immediately if: (i) a Person or 13D
Group not including Novartis or its Affiliates ***, either (x) Incyte
publicly announces its

 

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*** Confidential material redacted and filed separately with the
Commission.

 

willingness to consider such proposal or alternative proposals for a
transaction described in clause (ii)(A) or (B) below, or (y) the
Board of Directors of Incyte determines to engage in negotiations with such
Person or 13D Group or any other party other than Novartis or its Affiliates
with respect to a transaction described in clause (ii)(A) or (B) below
***, (ii) Incyte or its Affiliates enters in to a letter of intent or
definitive agreement with any party other than Novartis or its Affiliates (A) ***;
or (B) which would result in all or substantially all of Incyte’s assets
being sold to any Person or 13D Group not including Novartis or its Affiliates;
(iii) Incyte announces its determination to pursue (w) a transaction
described in clause (ii)(A) or (B) above, (x) *** that
represents more than *** of the voting power of the outstanding Voting Stock of
Incyte, (y) the sale, transfer or disposition of all or substantially all
of Incyte’s assets or *** with any party other than Novartis or its Affiliates;
***; or (vi) the sale, transfer or disposition to ***; provided, however,
that any termination pursuant to clause (i)(B) above shall not permit
Novartis or its Affiliates to take any action described in Section 11.6(a)(iv),
Section 11.6(b) or Section 11.6(f).  In the event that the transactions
contemplated by clauses (i), (ii) and/or (iii) shall have been
terminated or abandoned, and such termination or abandonment is demonstrable by
a press release issued by Incyte (or, in the case of clause ***), then this Section 11.6
shall again be applicable for the remainder of the period specified herein.

 

Further, nothing in this Section 11.6 shall
obligate Novartis or its Affiliates to cause Novartis’ or its Affiliates’
advisors (including financial advisors, attorneys, accountants and consultants)
to comply with the terms of this Section 11.6 when acting on their own
behalf or on behalf of Third Parties.

 

ARTICLE
XII

 

CONFIDENTIALITY

 

12.1                           Confidential Information.  All Confidential Information of a Party (“Disclosing
Party”) shall not be used by the other Party (the “Receiving Party”)
except in performing its obligations or exercising rights explicitly granted
under this Agreement and shall be maintained 

 

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*** Confidential material redacted and filed separately with the
Commission.

 

in confidence by the
Receiving Party and shall not otherwise be disclosed by the Receiving Party to
any Third Party, without the prior written consent of the Disclosing Party with
respect to such Confidential Information, except to the extent that the
Confidential Information:

 

(a)                                              was known by
the Receiving Party or its Affiliates prior to its date of disclosure to the Receiving
Party; or

 

(b)                                             is lawfully
disclosed to the Receiving Party or its Affiliates by sources other than the
Disclosing Party rightfully in possession of the Confidential Information; or 

 

(c)                                              becomes
published or generally known to the public through no fault or omission on the
part of the Receiving Party, its Affiliates or its sublicensees; or

 

(d)                                             is
independently developed by or for the Receiving Party or its Affiliates without
reference to or reliance upon such Confidential Information, as established by
written records.

 

Specific information shall not be deemed to
be within any of the foregoing exclusions merely because it is embraced by more
general information falling within those exclusions.

 

12.2                           Permitted
Disclosure.  The Receiving
Party may provide the Disclosing Party’s Confidential Information:

 

(a)                                              to the
Receiving Party’s respective employees, consultants and advisors, and to the
employees, consultants and advisors of such Party’s Affiliates, who have a need
to know such information and materials for performing obligations or exercising
rights expressly granted under this Agreement and have an obligation to treat
such information and materials as confidential;

 

(b)                                             to patent
offices in order to seek or obtain Patent Rights or to Regulatory Authorities
in order to seek or obtain approval to conduct Clinical Trials or to gain
Regulatory Approval with respect to the Licensed Product as contemplated by
this Agreement; provided, that such disclosure may be made only
following reasonable notice to the Disclosing Party and to the extent
reasonably necessary to seek or obtain such Patent Rights or approvals; or

 

(c)                                              if such
disclosure is required by Law or to defend or prosecute litigation or
arbitration; provided, that prior to such disclosure, to the extent
permitted by Law, the Receiving Party promptly notifies the Disclosing Party of
such requirement and furnishes only that portion of the Disclosing Party’s
Confidential Information that the Receiving Party is legally required to
furnish. 

 

12.3                           Publicity;
Attribution; Terms of this Agreement; Non-Use of Names.

 

(a)                                              Except as
required by judicial order or applicable Law or as set forth below, neither
Party shall make any public announcement concerning this Agreement without the
prior written consent of the other Party, which consent shall not be
unreasonably withheld or delayed.  The
Party preparing any such public announcement shall provide the other Party with
a draft thereof at least *** prior to the date on which such Party would like

 

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*** Confidential material redacted and filed separately with the
Commission.

 

to make the public announcement. 
Notwithstanding the foregoing, the Parties shall each issue a separate
press release, in the forms attached as Exhibit G, within one (1) Business
Day after the Effective Date to announce the execution of this Agreement and
describe the material financial and operational terms of this Agreement.  Neither Party shall use the name, trademark,
trade name or logo of the other Party or its employees in any publicity or news
release relating to this Agreement or its subject matter, without the prior
express written permission of the other Party.

 

(b)                                             Notwithstanding the terms of this ARTICLE XII, 

 

(i)                                     either Party shall be permitted to disclose the existence and terms of this
Agreement to the extent required, in the reasonable opinion of such Party’s
legal counsel, to comply with applicable Laws, including the rules and
regulations promulgated by the SEC or any other governmental authority.  Notwithstanding the foregoing, before
disclosing this Agreement or any of the terms hereof pursuant to this Section 12.3(b), the Parties will coordinate in advance with each
other in connection with the redaction of certain provisions of this Agreement
with respect to any filings with the SEC,
London Stock Exchange, the UK Listing Authority, NYSE, the NASDAQ Stock Market
or any other stock exchange on which securities issued by a Party or a Party’s
Affiliate are traded, and each
Party will use Commercially Reasonable Efforts to seek confidential treatment
for such terms as may be reasonably requested by
the other Party; provided that each
Party will ultimately retain control over what information that Party discloses
to their relevant exchange, and provided further that the Parties will use
their Commercially Reasonable Efforts to file redacted versions with any
governing bodies which are consistent with redacted versions previously filed
with any other governing bodies.  Other than
such obligation, neither Party (nor its Affiliates) will be obligated to
consult with or obtain approval from the other Party with respect to any
filings to the SEC, London Stock Exchange, the UK Listing Authority, NYSE, the
NASDAQ Stock Market or any other stock exchange

 

(ii)                                  Either Party may disclose the existence and terms of this Agreement in
confidence to its attorneys and advisors, and to potential acquirers (and their
respective professional attorneys and advisors), in connection with a potential
merger, acquisition or reorganization and to existing and potential investors
or lenders of such Party, as a part of their due diligence investigations, or
to existing and potential licensees or sublicensees or to permitted assignees,
in each case under an agreement to keep the terms of confidentiality and
non-use substantially no less rigorous than the terms contained in this
Agreement and to use such information solely for the purpose permitted pursuant
to this Section 12.3(b).

 

(iii)                               Either Party
may issue a press release or make a public disclosure relating to this
Agreement or the Supply Agreement or the Parties’ activities under this
Agreement to the extent that such disclosure describes the commencement and/or “top-line”
results of Clinical Trials of the Licensed Product, the achievement of any
Development events with respect to the Licensed Product or the filing for or
receipt of Regulatory Approval with respect to the Licensed Product, amounts
paid to either Party in respect of the achievement of any milestone events, or
the termination of this Agreement.  Prior
to making any such disclosure, the Party making the disclosure shall provide
the other Party with a draft of such proposed disclosure at least *** (or, to the extent
timely disclosure of a material event is required by Law or stock exchange or
stock market rules, such period of time sufficiently in advance of the
disclosure so that the other Party will have the opportunity to comment upon
the

 

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*** Confidential material redacted and filed separately with the
Commission.

 

disclosure)  prior to making
any such disclosure, for the other Party’s review and comment, which shall be
considered in good faith by the disclosing Party.

 

(c)                                              For purposes of clarity, either Party may issue a press release or
public announcement or make such other disclosure relating to this Agreement if
the contents of such press release, public announcement or disclosure (i) has
previously been made public other than through a breach of this Agreement by
the issuing Party or its Affiliates or (ii) is contained in such Party’s
financial statements prepared in accordance with Accounting Standards. 

 

12.4                           Publications.  Each Party and its Affiliates shall have the
right to make disclosures pertaining to Licensed Compound or Licensed Product
to Third Parties in Publications in accordance with the following
procedure:  The publishing Party shall
provide the non-publishing Party with an advance copy of the proposed
Publication, and each Party shall then have *** prior to submission for any
Publication in which to recommend any changes it reasonably believes are
necessary to preserve any Patent Rights or Know-How belonging in whole or in
part to the non-publishing Party.  If the
non-publishing Party informs the publishing Party that such Publication, in the
non-publishing Party’s reasonable judgment, could be expected to have a
material adverse effect on any patentable invention owned by or licensed, in
whole or in part, to the non-publishing Party (other than pursuant to a license
granted under this Agreement), or on any Know-How which is Confidential
Information of the non-publishing Party, the publishing Party shall delay or
prevent such Publication as follows:  (i) with
respect to a patentable invention, such Publication shall be delayed
sufficiently long (not to exceed ***) to permit the timely preparation and
filing of a patent application; and (ii) with respect to Know-How which is
Confidential Information of such non-publishing Party, such Know-How shall be
deleted from the Publication. Each Party shall have the right to present its
Publications, which Publications shall be subject to the requirements in this Section 12.4,
at scientific conferences, including at any conferences in any country in the
world.

 

12.5                           Term.  All obligations under this ARTICLE XII shall
expire (i) *** following expiration of this Agreement pursuant to Section 9.1,
(ii) *** following termination of this Agreement pursuant to Section 9.2(b),
or (iii) *** following termination of this Agreement pursuant to Section 9.2(a) or
9.2(c).

 

12.6                           Return of
Confidential Information.  Upon
the expiration or termination of this Agreement, the Receiving Party shall
return to the Disclosing Party all Confidential Information received by the
Receiving Party from the Disclosing Party (and all copies and reproductions
thereof).  In addition, the Receiving
Party shall destroy:  (a) any notes,
reports or other documents prepared by the Receiving Party which contain
Confidential Information of the Disclosing Party; and (b) any Confidential
Information of the Disclosing Party (and all copies and reproductions thereof)
which is in electronic form or cannot otherwise be returned to the Disclosing
Party.  Alternatively, upon written request
of the Disclosing Party, the Receiving Party shall destroy all Confidential
Information received by the Receiving Party from the Disclosing Party (and all
copies and reproductions thereof) and any notes, reports or other documents
prepared by the Receiving Party which contain Confidential Information of the
Disclosing Party.  Nothing in this Section 12.6
shall require the alteration, modification, deletion or destruction of archival
tapes or other electronic back-up media made in the ordinary course of
business; provided that the Receiving Party shall continue to be bound by its
obligations of

 

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*** Confidential material redacted and filed separately with the
Commission.

 

confidentiality and other obligations under
this ARTICLE XII with respect to any Confidential Information contained in such
archival tapes or other electronic back-up media.  Any requested destruction of Confidential
Information shall be certified in writing to the Disclosing Party by an
authorized officer of the Receiving Party supervising such destruction.  Notwithstanding the foregoing, (i) the
Receiving Party’s legal counsel may retain one copy of the Disclosing Party’s
Confidential Information solely for the purpose of determining the Receiving
Party’s continuing obligations under this ARTICLE XII and (ii) the
Receiving Party may retain the Disclosing Party’s Confidential Information and
its own notes, reports and other documents (A) to the extent reasonably
required (i) to exercise the rights and licenses of the Receiving Party
expressly surviving expiration or termination of this Agreement; (ii) to
perform the obligations of the Receiving Party expressly surviving expiration
or termination of this Agreement; or (B) to the extent it is impracticable
to do so without incurring disproportionate cost.  Notwithstanding the return or destruction of
the Disclosing Party’s Confidential Information, the Receiving Party shall
continue to be bound by its obligations of confidentiality and other
obligations under this ARTICLE XII.

 

ARTICLE
XIII

 

DISPUTE
RESOLUTION

 

13.1                           Dispute
Resolution Process.  Matters
before the JSC and subcommittees shall be governed by the process specified in Section 3.5.  Any controversy, claim or dispute arising out
of or relating to this Agreement that is not subject to Section 3.5, shall
be settled, if possible, through good faith negotiations between the Parties.  If the Parties are unable to
settle such dispute within ***, and
a Party wishes to pursue the matter, the matter may be referred by
either Party to the Executive Officers, who shall meet
to attempt to resolve the dispute in good faith.  Such resolution, if any, of a referred issue
shall be final and binding on the Parties. 
All negotiations pursuant to this Section 13.1 are confidential and
shall be treated as compromise and settlement negotiations for purposes of
applicable rules of evidence.  If
the Executive Officers are unable to settle the dispute within *** after
referral thereto pursuant to Section 13.1, then each Party reserves its
right to any and all remedies available under law or equity with respect to the
dispute, subject to Section 13.2.

 

13.2                           Injunctive
Relief.  Notwithstanding anything to
the contrary in this ARTICLE XIII, any Party may seek immediate injunctive or
other interim relief from any court of competent jurisdiction as necessary to
enforce the provisions of Section 11.6 or ARTICLE XII and to enforce and
prevent infringement or misappropriation of the Patent Rights, Know-How or
Confidential Information Controlled by such Party.

 

ARTICLE
XIV

 

MISCELLANEOUS

 

14.1                           Governing Law.  This Agreement (and any claims or disputes
arising out of or related thereto or to the transactions contemplated thereby
or to the inducement of any party to enter therein, whether for breach of
contract, tortious conduct, or otherwise and whether predicated on common law,
statute or otherwise) shall in all respects be governed by and 

 

75

 

construed in accordance with
the laws of the State of New York, including all matters of construction,
validity and performance, in each case without reference to any conflict of law
rules that might lead to the application of the laws of any other
jurisdiction.

 

14.2                           Consent to Jurisdiction.  Each Party irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Southern
District of New York or the United States District Court for the District of
Delaware, for the purposes of any suit, action or other proceeding arising out
of the Transaction.  Each Party agrees to
commence any such action, suit or proceeding either in the United States
District Court for the Southern District of New York or the United States District
Court for the District of Delaware or if such suit, action or other proceeding
may not be brought in such court for jurisdictional reasons, in the Supreme
Court of the State of New York, New York County.  Each Party further agrees that service of any
process, summons, notice or document by U.S. registered mail to such Party’s
respective address set forth in Section 14.6 shall be effective service of
process for any action, suit or proceeding in New York or Delaware with respect
to any matters to which it has submitted to jurisdiction in this Section 14.2.
Each Party irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement in (i) the
United States District Court for the Southern District of New York or (ii) the
United States District Court for the District of Delaware, and hereby and
thereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.

 

14.3                           Assignment.

 

(a)                                              Neither Party
may assign its rights and obligations under this Agreement without the prior
written consent of the other Party, except that without prior written consent
of the other Party (A) Novartis may make such assignment to a Novartis
Group Member, (B) Incyte may make such assignment to an Incyte Group
Member, and (C) either Party may make such assignment to a Third Party to
whom a Party is required to, or reasonably believes that it will be required
to, divest any Novartis IP or Incyte IP, as the case may be, to the extent
necessary to comply with Law or the order of any governmental authority as a
result of such transaction (so long as in each such case such Party shall
remain jointly and severally liable with such assignee with respect to all
obligations so assigned).  Any request
for consent to assignment shall not be unreasonably withheld or delayed.  Any purported assignment in contravention of
this Section 14.3 shall, at the option of the non-assigning Party, be null
and void and of no effect.  No assignment
shall release either Party from responsibility for the performance of any
accrued obligation of such Party hereunder. 
This Agreement shall be binding upon and enforceable against the
successor to or any permitted assignee from either of the Parties.  

 

(b)                                             Each Party
agrees that, notwithstanding any provisions of this Agreement to the contrary:

 

(i)                                     either Party
may assign this Agreement and the rights, obligations and licenses granted
hereunder to a Third Party in connection with a sale or transfer of all or
substantially all of the assigning Party’s business to which this Agreement
relates or if a Party merges or consolidates with a Third Party.

 

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Commission.

 

(ii)           in the event that this Agreement is assigned by either
Party in connection with a sale or transfer of all or substantially all of the
assigning Party’s business to which this Agreement relates, such assignment
shall not provide (A) the non-assigning Party with rights or access to
Intellectual Property Rights of the assignee or acquirer of such Party, nor (B) the
assignee or acquirer with rights or access to Intellectual Property Rights of
the non-assigning Party.

 

14.4         Change of Control.

 

(a)               In the event
of any Change of Control of Incyte, Incyte shall notify Novartis promptly, but
in no event later than ***
following such Change of Control. Novartis shall have the right, by providing
written notice within ***
following any such notice of Change of Control, to elect to terminate any or
all of Incyte’s rights under, or delete, in whole or in part, from this
Agreement: Sections ***
and ***. 
If Novartis makes any election as provided in this Section 14.4 to
delete any Section, the Parties agree to adopt the replacement provisions set
forth in Exhibit H in place of the relevant Sections in this Agreement,
and no Party shall have any further obligations with respect to any such deleted
Section.  For the avoidance of doubt,
Novartis shall be entitled, in its sole discretion, to make the elections
provided for in this Section 14.4(a) upon each occurrence of a Change
of Control.

 

(b)               In the event
of any Change of Control of Novartis, Novartis shall notify Incyte promptly,
but in no event later than ***
following such Change of Control. Incyte shall have the right, by providing
written notice within***
following any such notice of Change of Control, to elect to terminate
any or all of Novartis’ rights under, or delete, in whole or in part, from this
Agreement: Sections *** and ***.  If Incyte makes any election as provided in this Section 14.4 to
delete any Section, the Parties agree to adopt the replacement provisions set
forth in Exhibit H in place of the relevant Sections in this Agreement,
and no Party shall have any further obligations with respect to any such
deleted Section.  For the avoidance of
doubt, Incyte shall be entitled, in its sole discretion, to make the elections
provided for in this Section 14.4(b) upon each occurrence of a Change
of Control.

 

(c)               In the event of a Change of Control of a Party, the
Development or Commercialization of a compound or product that, as of the date
of such Change of Control, is being Developed or Commercialized by the acquirer
of such Party or any Affiliate controlled by (as “controlled by” is defined in Section 1.3)
such acquirer, shall not constitute a breach of this Agreement; provided that (i) such
acquirer or Affiliate keeps such Development or Commercialization program for
such other product separate from the Development and Commercialization programs
for Licensed Products and (ii) the Party that experienced the Change of
Control continues to meet its obligations hereunder.

 

(d)               In the event that any Group Company of a Party enters
into an agreement with any Person pursuant to which a Change of Control would
occur upon the closing of the transactions contemplated by such agreement, then
during the period between entry into such agreement and the occurrence of the
related Change of Control, the Party not entering into such agreement may elect
to suspend the sharing of information and conduct of meetings

 

77

 

*** Confidential material redacted and filed separately with the
Commission.

 

contemplated
in Sections *** and ***, in whole or in part, provided that if such agreement
is subsequently terminated without the occurrence of the related Change of
Control, then the Party not entering into such agreement may no longer elect to
suspend such sharing of information and conduct of meetings.

 

14.5         Entire Agreement; Amendments.  This Agreement, the Supply Agreement and the
Exhibits referred to in this Agreement constitute the entire agreement between
the Parties with respect to the subject matter hereof, and supersede all
previous arrangements with respect to the subject matter hereof, whether
written or oral, including the Prior Confidentiality Agreement.  Any amendment or modification to this Agreement
shall be made in writing signed by both Parties.

 

14.6         Notices.  Notices to Incyte shall be addressed to:

 

Incyte Corporation

Experimental Station, Route 141 & Henry
Clay Road

Wilmington, Delaware 19880

Attention: Chief Commercial Officer

Facsimile No.: ***

 

with a copy to:

 

Incyte Corporation

Experimental Station, Route 141 & Henry
Clay Road

Building E336

Wilmington, Delaware 19880

Attention: General Counsel

Facsimile No.: ***

 

Notices to Novartis shall be addressed to:

 

Novartis International Pharmaceutical Ltd.

Attention: Board of Directors

 

Physical Address:

 

131 Front Street, Hamilton HM12 

Bermuda

 

Mailing Address:

P.O.Box 2899

Hamilton HM LX

Bermuda 

Facsimile No.: ***

 

78

 

*** Confidential material redacted and filed separately with the
Commission.

 

with a copy to:

 

Allen & Overy LLP

1221 Avenue of the Americas

New York, New York 10020

Attention: Eric Shube

Facsimile No.: ***

 

Either Party may change its address to which notices
shall be sent by giving notice to the other Party in the manner herein
provided.  All reports, approvals, and
notices required or permitted by this Agreement to be given to a Party (each a “Notice”)
shall be given in writing, by personal delivery, telecopy or overnight courier,
to the Party concerned at its address as set forth above (or at such other
address as a Party may specify by written notice pursuant to this Section 14.6
to the other). All Notices shall be deemed effective, delivered and received (a) if
given by personal delivery, or by overnight courier, when actually delivered
and signed for, or (b) if given by facsimile, when such facsimile is
transmitted to the facsimile number specified above and receipt therefor is
confirmed.

 

14.7         Force Majeure.  No failure or omission by either Party in the
performance of any obligation of this Agreement shall be deemed a breach of
this Agreement or create any liability if the same shall arise from any Force
Majeure Event; provided  that the Party affected by such Force
Majeure Event promptly notifies the other Party and uses diligent efforts to
cure such failure or omission as soon as is practicable after the occurrence of
one or more Force Majeure Events.

 

14.8         Compliance With Laws.  Each Party shall perform its obligations
under this Agreement in compliance with all applicable Laws.

 

14.9         Use Of Names, Logos Or Symbols.  Subject to Sections 6.5 and 12.3, no Party
shall use the name, trademarks, logos, physical likeness, employee names or
owner symbol of the other Party for any purpose, including private or public
securities placements, without the prior written consent of the affected
Party.  Nothing contained in this
Agreement shall be construed as granting either Party any rights or license to
use any of the other Party’s trademarks or trade names or the names of any
employees thereof, without separate, express written permission of the owner of
such trademark or trade name or name.

 

14.10       Independent
Contractors.  It is understood and
agreed that the relationship between the Parties is that of independent
contractors and that nothing in this Agreement shall be construed to create a
joint venture or any relationship of employment, agency or partnership between
the Parties to this Agreement.  Neither
Party is authorized to make any representations, commitments, or statements of
any kind on behalf of the other Party or to take any action that would bind the
other Party except as explicitly provided in this Agreement.  Furthermore, none of the transactions
contemplated by this Agreement shall be construed as a partnership for any tax
purposes. 

 

79

 

14.11       Headings.  The captions or headings of the sections or
other subdivisions hereof are inserted only as a matter of convenience or for
reference and shall have no effect on the meaning of the provisions hereof.

 

14.12       No Implied Waivers; Rights Cumulative.  No failure on the part of Incyte or Novartis
to exercise, and no delay by either Party in exercising, any right, power,
remedy or privilege under this Agreement, or provided by statute or at law or
in equity or otherwise, shall impair, prejudice or constitute a waiver of any
such right, power, remedy or privilege by such Party or be construed as a
waiver of any breach of this Agreement or as an acquiescence therein by such
Party, nor shall any single or partial exercise of any such right, power,
remedy or privilege by a Party preclude any other or further exercise thereof
or the exercise of any other right, power, remedy or privilege.

 

14.13       Severability.  If, under applicable Laws, any provision of
this Agreement is invalid or unenforceable, or otherwise directly or indirectly
affects the validity of any other material provision(s) of this Agreement
(such invalid or unenforceable provision, a “Severed Clause”), this
Agreement shall endure except for the Severed Clause.  The Parties shall consult one another and use
good faith efforts to agree upon a valid and enforceable provision that is a
reasonable substitute for the Severed Clause in view of the intent of this
Agreement.

 

14.14       Execution In Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.  Signatures provided by facsimile transmission
or in AdobeTM Portable Document Format (PDF) sent by electronic mail shall be
deemed to be original signatures.

 

14.15       No Third Party Beneficiaries.  No Person other than Novartis and Incyte (and
their respective assignees) shall be deemed an intended beneficiary hereunder
or have any right to enforce any obligation of this Agreement.

 

14.16       Exhibits.  In the event of inconsistencies between this
Agreement and any exhibits or attachments hereto, the terms of this Agreement
shall control.

 

[THE REMAINDER OF THIS PAGE
HAS BEEN INTENTIONALLY LEFT BLANK]

 

80

 

IN WITNESS WHEREOF, the Parties have caused
their duly authorized officers to execute and acknowledge this Agreement as of
the date first written above.

 

 

	
  NOVARTIS
  INTERNATIONAL PHARMACEUTICAL LTD.

  	
   

  	
  INCYTE
  CORPORATION

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
  /s/
  Simon Zivi

  	
   

  	
  By:
  

  	
  /s/
  Paul A. Friedman

  
	
  Name:
  Simon Zivi

  	
   

  	
  Name:
  Paul A. Friedman

  
	
  Title:
  Director

  	
   

  	
  Title:
  CEO

  
					

 

 

	
  NOVARTIS
  INTERNATIONAL PHARMACEUTICAL LTD.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Michael Jones

  	
   

  	
   

  
	
  Name:
  Michael Jones

  	
   

  	
   

  
	
  Title:
  Director

  	
   

  	
   

  
				

 

81

 

Exhibit A

 

Incyte Patent Rights

 

1

 

*** Confidential material redacted and filed separately with the
Commission.

 

A-1

 

c-MET Patent Rights

 

	
  ***

  	
   

  	
  ***

  	
   

  	
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2

 

***
Confidential material redacted and filed separately with the Commission.

 

	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
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  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

3

 

***
Confidential material redacted and filed separately with the Commission.

 

A-2

 

JAK Patent Rights

 

INCY0039

 

	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  
	
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4

 

***
Confidential material redacted and filed separately with the Commission.

 

	
  ***

  	
   

  	
  ***

  

 

***

	
  ***

  	
   

  	
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***

	
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***

	
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  ***

  	
   

  	
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***

	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  

 

5

 

Exhibit B

 

Initial Information Transfer
to Novartis

 

Described
below are the items to be provided to Novartis by Incyte pursuant to Section 4.1(a)(i) of
the Agreement, which include the material documents, information and data
listed in this Exhibit B that are recorded in tangible form that are
Incyte Know-How for c-MET Licensed Products and JAK Licensed Products, to the
extent each of which exists as of the Effective Date and has not already been
provided to Novartis.  Within sixty (60)
days after the Effective Date, Novartis will confirm in writing to Incyte
whether Incyte’s initial data transfer obligations, as described in Section 4.1(a)(i) of
the Agreement, have been achieved. 
Subject to Section 4.3(c) of the Agreement, additional data
may be requested by Novartis, and such requests as reasonably agreed will be
addressed by Incyte in a timely fashion.

 

Clinical &
Regulatory Documents and Information

 

·                  Clinical study related
documents, information and data that are recorded in tangible form, including
those currently possessed by CROs and other third party vendors

·                  Regulatory Authority
submissions, correspondence and all communications, including minutes from
teleconferences and contact reports (US and ex-US)

·                  Regulatory Authority meeting
briefing documents and related minutes (US and ex-US)

·                  Pre-IND submissions

·                  IND submissions

·                  Annual reports to IND(s)

·                  CTA/IMPD submissions

·                  Annual Safety Reports
submissions

·                  Investigator’s Brochures and
any updates thereto

·                  Safety reports (CIOMSs and/or
Medwatch reports)

·                  Documents related to serious
adverse events (“SAEs”)

·                  Investigator Safety Letters,
actions taken for safety reasons, and other relevant safety information

·                  Safety pharmacology and
toxicology study related documents, information and data that are recorded in
tangible form

·                  Pharmacology and Absorption,
Distribution, Metabolism, and Excretion (ADME) related documents, information
and data that are recorded in tangible form

 

c-MET Licensed Compound Documents

 

Incyte
may retain (x) copies of all documents, information and data, including
regulatory submissions, correspondence, and clinical trial data; (y) originals
of regulatory submissions, correspondence, and clinical trial data until
fifteen (15) Business Days after responsibility for the relevant regulatory
filing or clinical trial has been transferred to Novartis in accordance with
the Agreement and this Exhibit B, and (z) any other original
documents, information and data to the extent, and only for as long as,
required by Incyte to carry out its research and Development responsibilities
under the Agreement, including Incyte’s conduct of the Phase I study for
INCB-28060 (“Study 28060-101”).  Incyte
will provide both a shared electronic depository and paper copies of all
requested documents, information and data where both electronic and paper
versions are currently available.

 

1

 

JAK Licensed Compound Documents

 

Incyte
may retain (x) originals of all documents, information and data, including
regulatory submissions, correspondence, and clinical trial data and (y) originals
of regulatory submissions, correspondence, and clinical trial data directly
related to Study 352 until fifteen (15) Business Days after responsibility for
the relevant regulatory filing or clinical trial has been transferred to
Novartis in accordance with the Agreement and this Exhibit B.  Incyte will provide both a shared electronic
depository and paper copies of all requested documents, information and data
where both electronic and paper versions are currently available.

 

Manufacturing
Know-How

 

Incyte
will prepare and compile an inventory of relevant documents and transfer all
Incyte Know-How for manufacturing c-MET Licensed Products and JAK Licensed
Products including, but not limited to: laboratory notebook data, batch
records, process data, stability data, summary reports, formulation folders,
analytical methods, development reports, quality and regulatory documentation,
validation reports and other material data related to the development,
manufacturing, and/or distribution of Drug Substance and Drug Product. As part
of the Know-How transfer, Incyte shall cooperate with Novartis to establish a
transfer protocol and make resources available at Incyte’s cost to enable the
successful execution of the transfer protocol. 
Additionally, Incyte will disclose and transfer as necessary, any vendor
sourcing and/or contracting information that Novartis may request.

 

2

 

Exhibit C

 

1

 

*** Confidential material
redacted and filed separately with the Commission.

 

C-1

 

Out-of-Pocket Costs

 

***

	
  ***

  	
   

  	
  ****

  	
   

  	
  *****

  	
   

  	
  ***

  
	
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  ***

  	
   

  	
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  ***

  	
   

  	
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  ***

  

 

****

 

*****

 

2

 

C-2

 

Clinical Supply Agreement

 

This Clinical Supply Agreement (this “Supply
Agreement”) is entered into as of [   ]
between Incyte Corporation, a Delaware corporation having an office at
Experimental Station, Route 141 & Henry Clay Road, Wilmington,
Delaware (“Incyte”), and [Novartis
International Pharmaceuticals Ltd.], a [          ] having an office at [                ] (“Novartis”). Novartis
and Incyte are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.

 

WHEREAS, Incyte and Novartis have entered
into a Collaboration and License Agreement, dated
                ,
2009 (“Collaboration and License Agreement”); and

 

WHEREAS, Pursuant to the Collaboration and
License Agreement, Incyte (or its designees) has agreed to manufacture, handle and
supply the Drug Substance or the Drug Substance intermediate and Drug Product
required by Novartis for use in Clinical Trials in accordance with the
Development Plan on the terms and conditions set out in (i) this Supply
Agreement and (ii) the Collaboration and License Agreement.

 

NOW THEREFORE, the Parties hereby agree
as follows:

 

1.                                      Defined Terms

 

Terms defined in the Collaboration and
License Agreement shall have the same meaning when used in this Supply
Agreement, unless expressly stated otherwise.

 

2.                                      Supply and Packaging

 

2.1                                 In accordance
with Section 5.1(b) of the Collaboration and License Agreement,
Incyte agrees to use Commercially Reasonable Efforts to supply Novartis with
any agreed Drug Substance intermediate, the Drug Substance and the Drug Product
for use in the Clinical Trials on and subject to the terms and conditions of: (a) this
Supply Agreement and (b) the Collaboration and License Agreement.

 

2.2                                 The Drug
Substance intermediate, the Drug Substance and Drug Product delivered by Incyte
pursuant to this Supply Agreement shall have attached an agreed form of label.

 

2.3                                 Incyte may
either itself package the Drug Substance and Drug Product (“Clinical
Supplies”), or use a Third Party or Affiliate subcontractor.  The Out-of-Pocket cost and expense of
packaging will be charged by Incyte to Novartis.  Alternatively, Novartis may undertake the
packaging itself or through a Third Party contractor at its own expense

 

2.4                                 For Clinical
Supplies other than for Study 352, Incyte (or alternatively, Novartis) shall
manufacture or purchase from a Third Party or Affiliate subcontractor the
labels and packaging materials for the Clinical Supplies, in accordance with
specifications to be agreed between the Parties in writing, and shall conduct
quality assurance testing as 

 

3

 

*** Confidential material redacted and filed separately with the
Commission.

 

stipulated in a separate SOP agreed between
the Parties.  Both Parties shall be
responsible for the design of all art work for such labels and packaging
materials.

 

2.5                                 Each Party
shall at all times comply with all Laws applicable to it in connection with the
importation, supply and use of the Clinical Supplies.

 

3.                                      Forecasts and Orders

 

3.1                                 Incyte and
Novartis will mutually agree, on a monthly basis, to a rolling forecast of the
quantities of Clinical Supplies required to carry out the Clinical Trials in
accordance with the relevant Development Plan (each a “Clinical
Trial Forecast”).

 

3.2                                 Incyte and
Novartis will mutually agree in the applicable JDC on a Clinical Supply plan
for the Drug Substance intermediate, Drug Substance, and Drug Product and on
the responsibilities of each Party in implementing the Clinical Supply plan,
including a delivery date for each batch of Clinical Supplies to be delivered
by Incyte to Novartis in accordance with paragraph 4.2.  Based on this agreed Clinical Supply plan,
Novartis will provide Incyte with a written signed request for Clinical
Supplies, which shall constitute a binding order by Novartis (a “Clinical Trial Order”). 
The JDC shall track the actual use of the Clinical Supplies in
accordance with the Development Plan to determine if any significant deviation
occurs between the quantity used in the Clinical Trials and the Clinical Trial
Forecast.  If mutually agreed by Incyte
and Novartis, Novartis may request changes to the delivery date(s), and the
quantities of Clinical Supplies to be delivered on each delivery date, provided
it gives Incyte at least *** written notice in advance of the agreed delivery
date.

 

3.3                                 Incyte shall
use Commercially Reasonable Efforts to meet all orders placed by Novartis which
are within the Clinical Trial Forecast by the delivery dates agreed on by the
Parties, in accordance with Incyte’s standard terms of delivery.  Novartis agrees to purchase from Incyte all
Clinical Supplies manufactured for Novartis by Incyte according to the Clinical
Trial Orders, and use the Drug Substance intermediate, Drug Substance and Drug
Product supplied by Incyte for the Clinical Trials.

 

3.4                                 Where a
shortage in Clinical Supplies occurs while clinical trials in the Novartis
Territory are ongoing, Incyte shall use Commercially Reasonable Efforts to
supply Clinical Supplies as necessary for the conduct of all ongoing Clinical
Trials of the Clinical Supplies.

 

4.                                      Allocation, delivery and acceptance testing

 

4.1                                 Incyte shall be
responsible for and shall conduct either by itself or by assigning a Third
Party or Affiliate subcontractor the allocation of Clinical Supplies before
delivery to Novartis.  All costs and
expenses relating to the allocation of Clinical Supplies shall be charged by
Incyte to Novartis in accordance with paragraph 6.

 

4.2                                 Incyte (or any
of its Affiliates) shall deliver the Clinical Supplies to Novartis, at Novartis’s
cost and expense.  For the avoidance of
doubt, Novartis shall be responsible for delivery of the Clinical Supplies to
the site(s) of the Clinical Trials, and for all costs 

 

4

 

*** Confidential material redacted and filed separately with the
Commission.

 

and expenses relating thereto.  Incyte shall use Commercially Reasonable
Efforts to deliver the Clinical Supplies specified in Novartis’s firm order to
meet the requirements of the Development Plan.

 

4.3                                 Incyte shall
conduct at Novartis’s cost and expense appropriate release tests for the Drug
Substance intermediate, Drug Substance and Drug Product as agreed between the
Parties in a Quality Agreement.

 

4.4                                 Before delivery
to Novartis, Incyte shall at its cost and expense conduct an acceptance test to
check the quality of the Clinical Trial Order in order to determine whether the
Clinical Trial Order has any observable defects.  Incyte shall not package or deliver to
Novartis any Clinical Supplies which have observable defects.

 

5.                                      Clinical Products Standards

 

Incyte shall manufacture,
handle and supply, or shall require its Third Party or Affiliate manufacturer,
as applicable, to manufacture, handle and supply, all Clinical Supplies
supplied by Incyte or its Affiliate to Novartis pursuant to this Supply
Agreement and in conformance with appropriate international and country
specific regulatory standards for cGMP compliance.

 

6.                                      Fees, costs and expenses

 

6.1                                 Incyte (or
Incyte Affiliate) shall invoice Novartis upon each delivery of the Clinical
Supplies, for Incyte’s *** for the supply of Clinical Supplies under this
Supply Agreement, which Novartis shall pay in full within *** after receipt.

 

7.                                      Duration and Termination

 

7.1                                 Without
prejudice to paragraph 7.2, this Supply Agreement shall commence on the date of
this Supply Agreement and shall continue in force until the earlier of: (i) Novartis’
written notice of a termination of this Supply Agreement for convenience; (ii) the
completion of all Clinical Trials and completion of performance of the
obligations of both Parties hereunder; (iii) commercial launch of a JAK
Licensed Product in the Novartis Territory for a myeloproliferative disease; or
(iv) termination or the expiry of the Collaboration and License Agreement,
whereupon it shall terminate.

 

7.2                                 If this Supply
Agreement terminates as a result of (i) paragraph 7.1(i) or (ii) termination
(but not expiry) of the Collaboration and License Agreement, the terms of this
Supply Agreement shall continue to apply to all outstanding orders for Clinical
Supplies that have been accepted by Incyte and Novartis shall pay Incyte in
accordance with the terms of this Supply Agreement for all Clinical Supplies
delivered to it in accordance with such outstanding orders.

 

8.                                      General

 

ARTICLE XI (Representations
and Warranties), Section 12.1 (Confidential Information), Section 12.2
(Permitted Disclosure), Section 12.6 (Return of Confidential Information),

 

5

 

ARTICLE XIII (Dispute
Resolution) and ARTICLE XIV (Miscellaneous) of the Collaboration and License
Agreement shall be incorporated into this Supply Agreement, mutatis mutandis.

 

6

 

IN WITNESS WHEREOF, the Parties have caused
their duly authorized officers to execute and acknowledge this Supply Agreement
as of the date first written above.

 

	
  NOVARTIS
  INTERNATIONAL PHARMACEUTICAL LTD.

  	
   

  	
  INCYTE
  CORPORATION

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
   

  	
   

  	
  By:
  

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
  Title:

  
					

 

7

 

Exhibit D

 

Initial Development Plans

 

1

 

Exhibit D-1

 

c-MET Development Plan

 

Conduct
of study in accordance with the protocol existing as of the Effective Date for
c-MET Licensed Compound INCB28060, Study 101. 

 

2

 

*** Confidential material redacted and filed separately with the
Commission.

 

Exhibit D-2

 

JAK Development Plan

 

A.                                   Conduct of
study in accordance with the protocol existing as of the Effective Date for JAK
Licensed Compound INCB018424, Study 352.

 

B.                                     ***.

 

C.                                     ***.

 

3

 

Exhibit E

 

c-MET Studies

 

A.                                   Initial Phase I
Study in cancer patients, such study to be conducted in accordance with a
mutually agreeable protocol.  Incyte
shall be responsible for all decisions with respect to the conduct of such
Phase 1 Study and shall pay all costs in connection with such study until
achievement of (i) plasma IC90, (ii) demonstrated IC90 tumor
inhibition in at least three (3) subjects and (iii) completion of the
food effect portion of the study as outlined in the protocol for study INCB28060
101.  Thereafter, Novartis shall become
responsible for any further Development as well as any additional costs.

 

B.                                     3-month
toxicology study in rat, such study to be conducted in accordance with a
mutually agreeable protocol

 

1

 

Exhibit F

 

Study 351 and Study 352

 

1

 

*** Confidential material redacted and filed separately with the
Commission.

 

Exhibit F-1

 

Out-of-Pocket Costs for
Toxicology Studies

 

	
  ***

  	
   

  	
  ****

  	
   

  	
  *****

  	
   

  	
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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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****

 

*****

 

2

 

*** Confidential material redacted and filed separately with the
Commission.

 

Exhibit F-2

 

Study 352

 

Out-of-Pocket
Costs for EMEA Registration Study

 

	
  *****

  	
   

  	
  ***

  	
   

  	
  ****

  	
   

  	
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  ***

  	
   

  	
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  ***

  	
   

  	
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  ***

  	
   

  	
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3

 

*** Confidential material redacted and filed separately with the
Commission.

 

 

	
  ***

  	
   

  	
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****

 

*****

 

******

 

***

 

4

 

Exhibit G

 

Press Release

 

Pamela M. Murphy

Vice President, Investor
Relations/Corporate Communications

302/498-6944

 

Incyte Announces Major Collaboration and License Agreement for Two
Hematology-Oncology Programs

 

Novartis to Develop and Commercialize Incyte’s Lead JAK1/JAK2
Inhibitor, INCB18424, for Territories Outside the US and Incyte’s cMET
inhibitor, INCB28060, Worldwide

 

Incyte May Receive Over $1 Billion in Payments, including $150
Million Upfront Plus an Immediate $60 Million Development Milestone in Addition
to Future Potential Milestones and Royalties

 

WILMINGTON,
DE, November 25, 2009 — Incyte Corporation (NASDAQ: INCY) announced today
that it has entered into a collaboration and license agreement with Novartis
for two of its investigational hematology-oncology therapies: INCB18424, an
oral JAK1/JAK2 inhibitor that is in Phase III development for myelofibrosis, a
serious life-threatening neoplastic condition characterized by varying degrees
of bone marrow failure, splenic enlargement and debilitating constitutional
symptoms, and INCB28060, an oral cMET inhibitor that is about to enter Phase I
development as a potential treatment for multiple cancers.

 

Paul
A. Friedman, Incyte’s president and CEO, stated, “This agreement reflects our
objective to retain US rights to INCB18424 and puts us in a strong position to
transition Incyte into a successful commercial company with sufficient
resources to continue to advance other promising compounds in our pipeline.
Additionally, the appreciation from Novartis for INCB18424’s potential to treat
the unmet patient need in myelofibrosis and other cancers, and their proven
success in rapidly commercializing new targeted oncology treatments, were
determining factors in our decision to choose Novartis as our collaborative
partner.”

 

Under
the terms of the agreement, Incyte will retain exclusive rights for the
development and potential commercialization of INCB18424 in the US. Novartis
will have responsibility for the future development and commercialization of
INCB18424 in all hematology—oncology indications outside of the US. Novartis
will also be responsible for the future worldwide development of INCB28060.

 

Novartis
will make an upfront payment of $150 million to Incyte plus an immediate $60
million milestone payment for the initiation of the European Phase III trial of
INCB18424, COMFORT-II, that began in July of this year. Novartis will
receive ex-US commercialization rights for Incyte’s lead JAK inhibitor and
global commercialization rights for the cMET inhibitor. Each company will be
responsible for costs in their respective territories for the JAK inhibitor,
with costs of collaborative studies shared 

 

1

 

equally.
Incyte may also be eligible over time for additional payments of up to
approximately $1.1 billion if future contingent development and
commercialization milestones are achieved. Incyte is also eligible to receive
tiered, double-digit royalty payments on future ex-US INCB18424 sales. Novartis
will be responsible for all costs and activities for the cMET inhibitor after
the Phase I clinical trial. Incyte is eligible to receive royalties on future
sales of INCB28060 and has retained an option to co-develop and co-promote
INCB28060.

 

About
Myeloproliferative Neoplasms (MPNs)

 

MPNs
are a related group of hematological neoplasms characterized by dysfunction of
the bone marrow resulting in either over production of blood cells or
ineffective hematopoiesis leading to production of blood cells in the spleen
and resulting in massive splenomegaly. The three main MPNs are polycythemia
vera (PV), essential thrombocythemia (ET) and myelofibrosis (MF). Approximately
10 to 20% of patients with PV and ET progress to MF and MF can also develop
without a prior history of PV or ET. There are no adequately effective
therapies to treat these disorders.

 

About
INCB18424

 

INCB18424
is Incyte’s lead internally developed JAK1/JAK2 inhibitor that has shown
positive clinical activity in a number of hematology and inflammatory
conditions. The compound is currently in Phase III for patients with MF and
Phase II for patients with advanced PV and ET. Incyte has retained rights to
develop a topical formulation of INCB18424 which has demonstrated positive
clinical results in a recently completed Phase IIb trial in patients with mild
to moderate psoriasis.

 

About
INCB28060

 

cMET
is a validated target with significant potential in multiple major oncology
indications. INCB28060 is a potent cMET inhibitor that has demonstrated
favorable pharmacologic activity in relevant cell and animal models and has
demonstrated in those models that it can be dosed safely to achieve levels of
cMET inhibition that are associated with tumor regression in multiple solid
tumors. The investigational new drug application has been cleared by the US
Food and Drug Administration.

 

About
Incyte

 

Incyte
Corporation is a Wilmington, Delaware-based drug discovery and development
company focused on developing proprietary small molecule drugs for oncology,
inflammation and diabetes.  Incyte’s most advanced compound, INCB18424, is
in Phase III development for myelofibrosis.  For additional information on
Incyte, visit the Company’s web site at www.incyte.com.

 

Forward-Looking
Statements

 

Except
for the historical information contained herein, the matters set forth in this
press release, including statements with respect to the potential to receive up
to approximately $1.1 billion in future contingent milestone payments, plans
and timing for 

 

2

 

INCB28060
to enter Phase I development as a potential treatment for multiple cancers,
statements regarding being put in a strong position to transition into a
successful commercial company with sufficient resources to continue to advance
other promising compounds in the pipeline, the potential indications and
benefits of INCB18424 and INCB28060, and the potential benefits from and
payments under the agreement, are all forward-looking statements within
the meaning of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject to
risks and uncertainties that may cause the parties not to achieve some or all
of the commercial and developmental milestones set forth in the collaboration
agreement and that may otherwise cause Incyte’s actual results and timing to
differ materially, including the high degree of risk and uncertainty
associated with drug development and clinical trials, the uncertainty
associated with the regulatory approval processes, risks related to the timing
of and patient enrollment in clinical trials, risks related to the potential
failure of INCB18424 and INCB28060 to demonstrate safety and efficacy in
clinical testing; risks and uncertainty associated with the therapeutic and
commercial value of INCB18424 and INCB28060; risks relating to market
competition, risks associated with Incyte’s dependence on its relationship with
its collaboration partners, and other risks detailed from time to time in
Incyte’s filings with the Securities and Exchange Commission, including its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2009. Incyte
disclaims any intent or obligation to update these forward-looking statements. 

 

3

 

Novartis gains rights to two oral targeted investigational
therapies focusing on patients with life-threatening blood disorders and
cancers

 

·                  Ex-US
rights acquired for JAK inhibitor INCB18424 in Phase III development as
first-in-class treatment for myelofibrosis, a life-threatening blood
disorder

 

·                  Global rights acquired for early-stage cMET inhibitor
INCB28060 targeting tumor invasion and drug resistance in certain cancers
including gastric, kidney and lung

 

·                  Novartis to make payments of USD 150 million upfront and
first milestone of USD 60 million; Incyte eligible for milestone payments and
royalties on future sales

 

Basel, November 25, 2009 — Novartis has gained exclusive rights to two oral
targeted investigational therapies for patients with a range of
life-threatening blood disorders and cancers that currently do not have
effective treatment options.

 

Under a licensing agreement with Incyte
Corporation, Novartis will have responsibility for the future development of
Incyte’s investigational JAK inhibitor outside the US and for future
development of an early-stage cMET inhibitor globally.

 

·                  The lead compound is a Janus kinase (JAK)
inhibitor with the investigational name INCB18424. This oral targeted therapy
is in Phase III clinical trials for the treatment of myelofibrosis, a
life-threatening neoplastic condition with no effective medical treatment(1) that
is characterized by varying degrees of bone marrow failure, splenomegaly
(enlarged spleen) and debilitating symptoms. INCB18424 has the potential of becoming a
first-in-class therapeutic agent for the treatment of this and other
hematologic diseases.

 

·                  The second compound covered in the licensing
agreement, a mesenchymal-epithelial transition factor kinase (cMET) inhibitor
with the investigational name INCB28060, is entering Phase I development.
Compounds in this class are envisioned to become effective cancer therapies
through their ability to block molecular signals leading to tumor cell
angiogenesis, proliferation, survival, invasion and metastasis. Multiple
cancers have shown to be dependent on activation of molecular signals by
genetic alterations of the cMET  gene(2).  Emerging evidence indicates that cMET inhibition
may be useful in the treatment of certain cancers, including gastric and kidney
cancer(2), and may help to overcome resistance to some targeted therapies, such
as gefitinib in non-small cell lung cancer(3).

 

“A
key Novartis priority is to bring innovative medicines to patients as quickly
as possible,” said David Epstein, President and CEO, Novartis Oncology and
Novartis Molecular Diagnostics. “This agreement leverages these two promising
investigational drugs with Novartis Oncology’s global development and
commercialization expertise and our wide range of multi-targeted approaches to
cancer treatment.”

 

4

 

Terms of the agreement

 

Novartis will make an
upfront payment of USD 150 million to Incyte and a first milestone
payment of USD 60 million for initiation of the European Phase III trial of the
JAK inhibitor INCB18424 that began in July of this year.  The agreement covers ex-US commercialization
rights for the JAK inhibitor and global commercialization rights for the cMET
inhibitor INCB28060. Each company will be responsible for costs
in their respective territories for the JAK inhibitor, with costs of
collaborative studies shared equally. 
Novartis will be responsible for all costs and activities for the cMET
inhibitor after the Phase I clinical trial. After the first milestone, Incyte will be eligible for
additional payments based on achieving defined development and
commercialization milestones and to receive royalties on future sales. Incyte also has an option to
co-promote the cMET inhibitor in the US and to participate in the cMET
inhibitor’s global development.

 

Disclaimer

 

This release contains certain forward-looking
statements relating to the exclusive agreement concluded between Novartis and
Incyte. Such forward-looking statements are not historical facts and can
generally be identified by the use of forward-looking terminology such as “to
make,” “eligible,” “will,” “potential,” “about to enter,” “envisioned to
become,” “may,” “promising,” or similar expressions, or by express or implied
discussions regarding potential future sales or earnings of Novartis; or by
discussions of strategy, plans, expectations or intentions or potential
synergies, strategic benefits or opportunities that may result from the
proposed acquisition. Such forward-looking statements reflect the current
plans, expectations, objectives, intentions or views of Novartis with respect
to future events and involve known and unknown risks, uncertainties and other
factors that may cause actual results to be materially different from any
future results, performance or achievements expressed or implied by such
statements. In particular, there can be no guarantee that the proposed
acquisition will be completed in the expected form or within the expected time
frame or at all. Nor can there be any guarantee that Novartis will achieve any
particular future financial results or future growth rates or that Novartis
will be able to realize any of the potential synergies, strategic benefits or
opportunities as a result of the proposed acquisition. Among other things, the expectations
of Novartis could be affected by unexpected regulatory actions or delays or
government regulation generally, as well as other risks and factors referred to
in Novartis AG’s Forms 20-F on file with the US Securities and Exchange
Commission. Novartis is providing the information in this release as of this
date and does not undertake any obligation to update any forward-looking
statements as a result of new information, future events or otherwise.

 

About Novartis

 

Novartis provides healthcare solutions that address
the evolving needs of patients and societies. Focused solely on healthcare,
Novartis offers a diversified portfolio to best meet these needs: innovative
medicines, cost-saving generic pharmaceuticals, preventive vaccines, diagnostic
tools and consumer health products. Novartis is the only company with leading
positions in each of these areas. In 2008, the Group’s continuing operations
achieved net sales of USD 41.5 billion and net income of USD 8.2 billion.
Approximately USD 7.2 billion was invested in R&D activities throughout the
Group. Headquartered in Basel, Switzerland, Novartis Group companies employ
approximately 99,000 full-time-equivalent associates and operate in more than
140 countries around the world. For more information, please visit
http://www.novartis.com.

 

# # #

 

References:

 

5

 

(1)          Hellman AJ.
Myeloproliferative syndromes: diagnosis and therapeutic options. Pol Arch Med
Wewn. 2008;118:756-759.

(2)          Gentile A, Trusolino L, Comoglio PM. The Met tyrosine kinase
receptor in development and cancer. Cancer Metastasis Rev. 2008
Mar;27(1):85-94.

(3)          Zucali PA, Ruiz MG, Giovannetti E, et al. Role of cMET expression in
non-small-cell lung cancer patients treated with EGFR tyrosine kinase
inhibitors. Ann Oncol. 2008 Sep;19(9):1605-12.

 

Novartis Media Relations

 

Central media line : +41
61 324 2200

 

	
  Eric Althoff

  Novartis
  Global Media Relations

  +41 61 324 7999 (direct)

  +41 79 593 4202 (mobile)

  eric.althoff@novartis.com

  	
  Kim Fox

  Novartis
  Oncology

  +1 862 778-7692 (direct)

  kim.fox@novartis.com

  

 

e-mail: media.relations@novartis.com

 

Novartis Investor Relations

 

	
  Central phone:

  	
   

  	
  +41 61 324 7944

  	
   

  	
   

  	
   

  	
   

  
	
  Ruth Metzler-Arnold

  	
   

  	
  +41 61 324 9980

  	
   

  	
  North America:

  	
   

  	
   

  
	
  Pierre-Michel Bringer

  	
   

  	
  +41 61 324 1065

  	
   

  	
  Richard Jarvis

  	
   

  	
  +1 212 830 2433

  
	
  John Gilardi

  	
   

  	
  +41 61 324 3018

  	
   

  	
  Jill Pozarek

  	
   

  	
  +1 212 830 2445

  
	
  Thomas Hungerbuehler

  	
   

  	
  +41 61 324 8425

  	
   

  	
  Edwin Valeriano

  	
   

  	
  +1 212 830 2456

  
	
  Isabella Zinck

  	
   

  	
  +41 61 324 7188

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  e-mail: investor.relations@novartis.com

  	
   

  	
  e-mail:
  investor.relations@novartis.com

  

 

6

 

Exhibit H

 

Replacement Provisions

 

1. The following shall replace the entirety of ARTICLE III upon a Change of Control (with the Party
experiencing the Change of Control referred to as the “CoC Party” and
the other Party being referred to as the “Non-CoC Party”):

 

“GOVERNANCE

 

1.1           Joint Steering Committee.

 

(a)           Establishment.  The joint steering
committee (“JSC”) will have the responsibility for the overall
coordination and oversight of the Parties’ activities under this
Agreement.  Each Party’s representatives
and any substitute for a representative shall be bound by the obligations of
confidentiality set forth in ARTICLE XII.
A representative from the Non-CoC Party shall act as the chairperson of the
JSC.  The chairperson shall not have any
greater authority than any other representative on the JSC and shall conduct
the following activities of the JSC: (i) calling meetings of the JSC; (ii) preparing
and issuing minutes of each such meeting within thirty (30) days thereafter; (iii) ensuring
that any decision-making delegated to the JSC is carried out in accordance with
Section 3.5; and (iv) preparing and circulating an agenda for the
upcoming meeting; provided that the chairperson shall
include any agenda items proposed by the CoC Party.  Each Party shall be free to
change its representatives on notice to the other or to send a substitute
representative to any JSC meeting; provided, however, that each Party shall ensure
that at all times during the existence of the JSC, its representatives on the
JSC are appropriate in terms of expertise and seniority (including at least one
member of senior management) for the then-current stage of Development and
Commercialization of the Licensed Products and have the authority to bind such
Party with respect to matters within the purview of the JSC.

 

(b)            Responsibilities.  The JSC shall have responsibility for the
ongoing exchange of information and cooperation necessary after the Change of
Control.

 

1.2           Subcommittees.  The
JSC may establish and disband such
subcommittees as deemed necessary by the JSC;
provided, however, that the JIPC shall continue its
responsibilities at least with respect to the INCY0039 Patent Rights in the
Novartis Territory.  Each Party
shall be free to change its representatives on notice to the other or to send a
substitute representative to any subcommittee meeting; provided, however,
that each Party shall ensure that at all times during the existence of
any subcommittee, its representatives on such subcommittee are appropriate in
terms of expertise and seniority for the then-current stage of Development and
Commercialization of the Licensed Product in the Field in the Territory and
have the authority to bind such Party with respect to matters within the
purview of the relevant subcommittee. Each Party’s representatives and any
substitute for a representative shall be bound by the obligations of
confidentiality set forth in ARTICLE XII. 
Except as expressly provided in this Agreement, no subcommittee shall
have the authority to bind the Parties hereunder and each subcommittee shall
report to, and any decisions shall be made by, the JSC.

 

1

 

1.3           Committee
Meetings.  Except where a
Party fails to appoint a member or members to the JSC or its subcommittees or
fails to participate in meetings of the JSC or its subcommittees pursuant to Section 3.6, meetings of the JSC and the subcommittees, respectively, shall be
effective only if at least one (1) representative of each Party is present
or participating.  The JSC and its
subcommittees may meet either (i) in person at either Party’s facilities
or at such locations as the Parties may otherwise agree or (ii) by audio
or video teleconference; provided  that no less than one (1) meeting
during each Calendar Year shall be conducted in person.  Other representatives of each Party involved
with the Licensed Product may attend meetings as non-voting participants,
subject to the confidentiality provisions set forth in ARTICLE XII.  Each Party shall be responsible for all of
its own expenses incurred in connection with participating in all such
meetings.

 

1.4           Authority.  The JSC and any subcommittee
shall have only the powers assigned expressly to it in this ARTICLE III and
elsewhere in this Agreement, and shall not have any power to amend, modify or
waive compliance with this Agreement.  In
furtherance thereof, each Party shall retain the rights, powers and discretion
granted to it under this Agreement and no such rights, powers or discretion
shall be delegated or vested in the JSC or any subcommittee unless such
delegation or vesting of rights is expressly provided for in this Agreement or
the Parties expressly so agree in writing.”

 

1.                                       The following
shall replace Section 4.3 upon a Change of Control:

 

“4.3         Development
Activities.

 

(a)               Termination of
Joint Development Activities.  The Non-CoC Party shall, in its sole
discretion, have the option to terminate any ongoing Joint Development Activities.  In the event any ongoing Joint Development
Activities are terminated,

 

(i)            Each Party shall have the
right to possess, retain and use all clinical and non-clinical data and related
Regulatory Documentation Controlled by either Party and generated in the course
of Joint Development Activities prior to the termination of such Joint
Development Activity in order to Develop, obtain Regulatory Approval for and
Commercialize JAK Licensed Products in the JAK Field in such Party’s territory
in accordance with the terms of this Agreement; and

 

(ii)           each Party hereby grants to
the other Party a Right of Reference or Use to any and all such Regulatory
Documentation, and agrees to sign, and cause its Affiliates to sign, from time
to time, promptly upon request, any instruments reasonably requested by such
other Party in order to effect such grant.

 

(b)               Ongoing Joint
Development Activities.  With
respect to ongoing Joint Development Activities which are not terminated
pursuant to 4.3(a),

 

(i)            Each Party shall have the
right to possess, retain and use all clinical and non-clinical data and related
Regulatory Documentation Controlled by either Party and generated in the course
of Joint Development Activities in order to Develop, obtain Regulatory Approval
for and Commercialize JAK 

 

2

 

Licensed
Products in the JAK Field in such Party’s territory in accordance with the
terms of this Agreement.

 

(ii)           each Party hereby grants to
the other Party a Right of Reference or Use to any and all such Regulatory
Documentation, and agrees to sign, and cause its Affiliates to sign, from time
to time, promptly upon request, any instruments reasonably requested by such
other Party in order to effect such grant;

 

(iii)          each Party shall maintain
complete and accurate records of all results, data, and developments made
pursuant to its efforts under the Development Plan.  Such records shall appropriately reflect all
work done and results achieved in the performance of Development activities in
sufficient detail and in good scientific manner appropriate for patent and
regulatory purposes; and

 

(iv)          in any agreement between
either Party and a clinical research organization related to a Joint
Development Activity, the contracting Party shall use reasonable efforts to
name the other Party as a third party beneficiary for the purpose of receiving
data derived from Clinical Trials related to such Joint Development Activity
from such clinical research organization in the event of a Bankruptcy Event of
such Party.”

 

3

 

Exhibit I

 

Pharmacovigilance Agreement 

 

1

 

 

Pharmacovigilance
Agreement for c-MET and JAK Licensed Products

 

PHARMACOVIGILANCE AGREEMENT

 

[  ] November 2009

 

between

 

Incyte Corporation

Experimental Station,

Route 141 & Henry Clay Road

Wilmington, Delaware

USA

(“Incyte”)

 

and

 

Novartis Pharma AG

Lichtstrasse 35

4056 Basel

Switzerland

(“Novartis”)

 

	
  relating to Product(s):

  	
  c-MET Licensed Products

  
	
   

  	
  JAK Licensed Products

  
	
   

  	
  (together “the Product”)

  

 

 

Confidential

 

	
  Table of contents

  	
   

  
	
   

  	
   

  
	
   

  	
  Table
  of contents

  	
  2

  
	
   

  	
   

  	
   

  
	
  1

  	
  Purpose

  	
  3

  
	
   

  	
   

  	
   

  
	
  2

  	
  Term

  	
  3

  
	
   

  	
   

  	
   

  
	
  3

  	
  Definitions
  and Abbreviations

  	
  3

  
	
   

  	
   

  	
   

  
	
  4

  	
  Databases

  	
  4

  
	
   

  	
   

  	
   

  
	
  5

  	
  Detailed
  Description of the Pharmacovigilance System (DDPS)

  	
  4

  
	
   

  	
   

  	
   

  
	
  6

  	
  Signal
  Detection (internally identified safety issues)

  	
  5

  
	
   

  	
   

  	
   

  
	
  7

  	
  Maintenance
  of Labeling Documents

  	
  5

  
	
   

  	
   

  	
   

  
	
  8

  	
  Exchange
  of Individual Case Reports

  	
  5

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Scope

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Format

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Unblinding

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  Follow-up

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5

  	
  Timelines

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  9

  	
  Individual
  Report Assessment

  	
  7

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Labelling

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Requirement
  for Study Protocols:

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  10

  	
  Regulatory
  Reporting Responsibilities

  	
  8

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Individual
  Case Safety Reports

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2

  	
  Investigator
  Notifications

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.3

  	
  Preparation
  and Submission of Annual Reports from Clinical Trials and other Cumulative
  Safety Reports

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.4

  	
  Periodic
  SUSAR Reports

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.5

  	
  Responses
  to Regulatory Authority Questions

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.6

  	
  Risk
  Management Plans

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.7

  	
  PSUR

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  11

  	
  SOPs

  	
  10

  
	
   

  	
   

  	
   

  
	
  12

  	
  Audits

  	
  10

  
	
   

  	
   

  	
   

  
	
  13

  	
  Dispute
  Resolution

  	
  11

  
	
   

  	
   

  	
   

  
	
  14

  	
  Contact
  Persons

  	
  11

  
	
   

  	
   

  	
   

  
	
  15

  	
  Miscellaneous

  	
  11

  
	
   

  	
   

  	
   

  
	
  16

  	
  APPENDIX
  1 - Definitions and Abbreviations

  	
  12

  
	
   

  	
   

  	
   

  
	
   

  	
  16.1

  	
  Definitions

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.2

  	
  Acronyms

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  17

  	
  APPENDIX 2 — Contact Persons

  	
  15

  

 

2

 

1                                                            Purpose

 

WHEREAS,
Incyte and Novartis International Pharmaceutical Ltd. (“NIP”) entered into a
Collaboration and License Agreement dated as of November         ,
2009 (the “Collaboration Agreement”);

 

WHEREAS,
the Collaboration Agreement required that Incyte enter into this
Pharmacovigilance Agreement with Novartis;

 

WHEREAS,
the purpose of this Phamacovigilance Agreement is to define how the Parties are
to cooperate to enable each of them to comply with its respective obligations
under applicable laws, regulations and guidelines with regard to Adverse Event
data collection, analysis and reporting for the Product, and to enable each
Party to satisfy its duty of care;

 

WHEREAS,
under this agreement each Party is
obliged to inform the other Party immediately in case of Pharmacovigilance
issues (such as risk management communication, Dear Doctor Letters,
urgent safety restrictions) to ensure that communication between the Parties is
aligned, especially if any Regulatory Authorities are involved;

 

WHEREAS,
nothing in this Pharmacovigilance Agreement is intended to limit or restrict either
of the Parties’ obligations under applicable laws, regulations and guidelines;
and

 

WHEREAS,
nothing in this Pharmacovigilance Agreement is intended to prevent either of
the Parties from taking any action that it reasonably considers to be necessary
to comply with applicable laws, regulations and guidelines.

 

NOW,
THEREFORE, the Parties hereto hereby agree as follows:

 

2                                                            Term

 

This
Pharmacovigilance Agreement shall become effective on the date hereof and,
unless earlier terminated in accordance with the Collaboration Agreement, shall
continue in force for as long as both of the Parties have a legitimate interest
in receiving the information, reports, and notifications provided for.  This applies to the c-MET program as long as
Incyte holds the relevant c-MET IND and is responsible for the conduct of
clinical studies.

 

At the
latest this Pharmacovigilance Agreement shall be updated before product launch
and in time to meet the requirements for handling and reporting spontaneous
reports from marketed use.

 

3                                                            Definitions
and Abbreviations

 

The
definitions of terms and abbreviations used in this Pharmacovigilance Agreement
are set out in Appendix 1. If any of the relevant regulatory definitions of the
corresponding terms are amended (for example those in the ICH E2A and ICH E2C
Guidelines, or in the US CFR (21 CFR Part 314.80(a) and 312.32(a)),
then the Parties shall assess whether the definitions in this Pharmacovigilance
Agreement need to be amended to make them consistent and, if any 

 

3

 

***Confidential material redacted and
filed separately with the Commission.

 

amendments
are necessary, shall seek to reach written agreement in good faith on such
amendments.

 

The
language of all communications and exchanges under this Pharmacovigilance
Agreement shall be English.

 

4                                                            Databases

 

Novartis
shall establish, hold and maintain the global safety database for the Product,
into which it shall enter information on all SAE/SRs concerning the Product
occurring anywhere in the world and reported to either of the Parties. For the
term of this Pharmacovigilance Agreement, this shall be the reference database
for signal detection. Such database shall comply in all material respects with
all laws reasonably applicable to pharmacovigilance anywhere where the Products
are being or have been Developed or Commercialized (each as defined in the
Collaboration Agreement). Appropriate personnel at Incyte shall have access to
updated data in the database within *** after such data are entered in the
database. Incyte shall be authorized to submit such data to applicable
regulatory authorities as required or permitted by law.

 

The
Parties acknowledge that, prior to signature of this Pharmacovigilance
Agreement, Incyte provided to Novartis all SAEs (including expected, unrelated,
placebo and comparator cases) reported to Incyte for the product as of the date
of such transfer, on CIOMS forms or in another format acceptable to Novartis
allowing Novartis to complete the global safety database.

 

Incyte
may hold and maintain a parallel safety database for the Product as needed or
required according to local laws, regulations and other legal requirements.

 

Each
Party is responsible for ensuring that all applicable reports are dispatched to
the other Party in accordance with this Pharmacovigilance Agreement. Novartis
and Incyte will perform routine verification and reconciliation according to
their respective SOPs to ensure that all adverse event reports, both initial
and follow up, have been exchanged per Section 9 of this Pharmacovigilance
Agreement.

 

If
discrepancies are noted either through the verification process,
reconciliation, or during the course of routine business, both Novartis and
Incyte will work to remediate the discrepancy until resolved to the mutual
satisfaction of both Parties.

 

5                                                            Detailed
Description of the Pharmacovigilance System (DDPS)

 

If
required, Incyte shall provide Novartis, within *** from the date requested,
with a Detailed Description of its Pharmacovigilance System in the format
specified by the EMEA (Volume 9A of Rules Governing Medicinal Products in
the European Union; Section 2.2) which may be submitted to the Regulatory
Authorities as required.  The DDPS should
comprise an overview of Incyte’s Pharmacovigilance System, providing
information on the key elements of the System. 
Such descriptions should include all vendors and contracted third
parties who have direct involvement in the collection of adverse events for the
Product.

 

4

 

***Confidential material redacted and
filed separately with the Commission.

 

Each
Party shall inform the other in a timely manner of any significant changes to
the Pharmacovigilance System as documented.

 

EU-QPPV:
Novartis has an established and dedicated EU-QPPV.  In case of any change, Novartis shall inform
Incyte of the new appointment within ***.

 

6                                                            Signal
Detection (internally identified safety issues)

 

Using
the global safety database, Novartis shall be primarily responsible for signal
detection activities according to its SOP.

 

In
case either of the Parties becomes aware of:

 

a)                                      potential signals for new adverse
reactions;

b)                                     increased incidence of known adverse
reactions;

c)                                      increased severity of known adverse
reactions;

d)                                     major findings from newly completed
animal studies; or 

e)                                      any proposed changes in the labeling
documents,

 

that
Party shall promptly notify the other Party in writing (as soon as possible but
no later than *** after the Party becoming aware of the issue), for discussion and
comment and to agree whether any further action is required.

 

A
safety committee with clinical and safety and regulatory representatives from
each Party shall be established and shall discuss on a regular basis, or as
required, the handling of specific or general safety and process issues (eg.
reviewing safety signals, issuing Dear Doctor Letters, ASR preparation meeting
*** prior to the data lock point, etc.). 
Each Party shall keep the other Party informed of any newly identified
safety signal, which then will be evaluated by the Parties in close
cooperation, including updates to core safety information.  No measures will be taken without prior
consultation and discussion except in situations where immediate action is
required to protect the health of patients.

 

7                                                            Maintenance
of Labeling Documents

 

Investigator’s Brochure: The Parties shall use an Investigator’s Brochure with
a common core safety section.

 

8                                                            Exchange
of Individual Case Reports

 

8.1                                                  Scope

 

Individual
Case Safety Reports concerning the Product which shall be exchanged under this
Pharmacovigilance Agreement include:

 

8.1.1                                        Solicited
Reports:

 

All Serious Adverse Events (SAEs) occurring in
clinical trials which are received by either of the Parties, including blinded,
comparator and placebo cases.

 

5

 

***Confidential material
redacted and filed separately with the Commission.

 

8.1.2                                        Other
including final study reports:

 

In
addition, the Parties shall exchange all other clinical safety-related information
concerning the Product as may be required or reasonably requested by the
Parties to fulfill the purpose of this Pharmacovigilance Agreement, including
the timely exchange of safety information contained in interim or final
clinical study reports.

 

Data
or special arrangements required to fulfill a Risk Management Plan, if
necessary, shall also be included.

 

8.2                                                  Format

 

Individual
Case Reports shall be exchanged on CIOMS forms and sent by fax or secure e-mail
if available and mutually agreed upon.

 

Each
Party shall assign a company case identification number to each case on which
information is exchanged under this Pharmacovigilance Agreement, and shall
identify each piece of information concerning that case with this number.

 

The
receiving Party shall maintain the integrity of the sending Party’s narrative,
but shall add to the case narrative the name of the sending Party and the
sending Party’s case identification number to aid identification of duplicate
reports.

 

8.3                                                  Unblinding

 

Unless otherwise agreed with applicable regulatory
authorities, for company sponsored studies, the blind will be broken for
serious, unexpected suspected/related ADRs on an ongoing basis as reasonably
required for regulatory reporting by the sponsor in real time to meet the
exchange timelines specified below. All other SAE’s (not suspected and/or expected) will
be exchanged as blinded during the ongoing clinical trial. Details of the
treatment given shall be distributed only on a need-to-know basis.

 

In
exceptional circumstances such as upon receipt of a request from a Regulatory
Authority or a safety data monitoring committee to do so, the Party receiving
the request may need to break the code for any case type(s), or request the
Party sponsoring the relevant clinical trial to do so. In such an event,
details of the treatment given shall be distributed only on a need-to-know
basis.

 

At the conclusion of Novartis sponsored clinical trials,
Novartis shall transmit the unblinded ICSRs to Incyte within a
reasonable time frame but no later than *** of receipt of randomization codes by the safety group, unless study size
or complexity requires a longer period, to be notified within *** of receipt of randomization codes.

 

At the conclusion of Incyte sponsored
clinical trials, Incyte  will provide
Novartis with the randomization codes within a reasonable time frame but no
later than *** of receipt of
randomization codes by the safety group. ICRS exchange will not apply in this
situation. 

 

8.4                                                  Follow-up

 

The
Party first receiving the SAE or any other kind of report falling within the
scope of this Pharmacovigilance Agreement shall be responsible for obtaining
any follow-up information 

 

6

 

from
the reporter, which shall be processed as described for the corresponding type
of initial report in this Section 9. 
This shall include any targeted follow up required for risks included in
the Risk Management Plan.

 

Each
Party may request the other Party to contact the reporter and obtain additional
information if necessary, including missing reporter causality. Follow-up
information shall be exchanged with the same company case identification number
as the original report.

 

8.5                                                  Timelines

 

SAEs from clinical
trials received by Novartis:

 

Novartis
shall notify Incyte of all SAEs from clinical trials which are received by
Novartis or its Affiliates according to the following timelines:

 

a)
Causally Suspected and/or study-related fatal or Life-threatening SAEs
(irrespective of labelling) within 4 (four) calendar days of first notification
of the event to any employee of Novartis or its Affiliates;

 

b)
Other Causally Suspected and/or study-related SAEs (irrespective of labelling)
within 8 (eight) calendar days of first notification of the event to any employee
of Novartis or its Affiliates; and

 

c)
Causally Non-suspected SAEs (i.e. there is no suspected connection between the
study and the SAE) within twenty (20) calendar days or more rapidly if required
for the data-lock for the IND annual safety report preparation.

 

SAE reports from
clinical trials received by Incyte:

 

Incyte
shall notify Novartis of all SAEs from clinical trials which are received by
Incyte or its Affiliates according to the following timelines:

 

a)
Causally Suspected and/or study-related fatal or Life-threatening SAEs
(irrespective of labelling) within four (4) calendar days of first
notification of the event to any employee of Incyte or its Affiliates;

 

b)
Other Casually Suspected and/or study-related SAEs (irrespective of labelling)
within 8 (eight) calendar days of first notification of the event to any
employee of Incyte or its Affiliates; and

 

c)
Causally Non-suspected SAEs (i.e. there is no suspected connection between the
Product and the SAE) within twenty (20) calendar days.

 

9                                                            Individual
Report Assessment

 

It is
agreed between the Parties that each will follow its own procedures for
seriousness, causality and expectedness assessment.

 

9.1                                                  Labelling

 

Assessment
of Listedness/Expectedness:  

 

7

 

***Confidential material redacted and
filed separately with the Commission.

 

For
purposes of databasing in the global safety database, the assessment of whether
the SAE or other kind of report is Listed/Expected shall be made by Novartis
against the Investigator’s Brochure.

 

For
the purposes of reporting to the Regulatory Authorities, the assessment of
expectedness shall be made according to the appropriate Investigator’s Brochure
by the Party responsible for submitting the report to the Regulatory Authority.

 

Assessment
of expectedness for comparator and placebo associated reports shall be made by
the Parties according to their respective SOPs.

 

9.2                                                  Requirement
for Study Protocols:

 

Interventional
Trials: At the first occurrence of an SAE in a particular clinical trial at the
latest, the Party reporting the SAE shall make available to the other Party a
copy of the relevant study protocol or summary of the study design. This is to
provide a clear understanding of the nature of the exposure to the Product and
to allow a meaningful interpretation of the SAE.

 

10                                                     Regulatory
Reporting Responsibilities

 

10.1                                           Individual
Case Safety Reports

 

The
Party holding the Regulatory Authority Authorisation for the Product for
clinical trials in a country shall be responsible for submitting SAE reports to
the Regulatory Authority in that country according to the current applicable
laws, regulations and guidelines, regardless of whether the report originated
from that Party or not.  Information on
which Party holds the Regulatory Authority Authorisation for the clinical
trials will be exchanged and updated at the time of the transfer of the reports
to the other Party.

 

The
Party holding the Regulatory Authority Authorisation for clinical trials shall
be responsible for the electronic submission to the EMEA of all reportable
cases for the Product to Clinical Trial Modules, as required.

 

10.2                                           Investigator
Notifications

 

Each
Party shall prepare and distribute Investigator Notifications according to
their respective SOPs and applicable laws, regulations and guidelines. Each
Party shall make reasonable efforts to notify the other Party of an IN,
allowing *** for comment.  Each Party
shall exchange the final Investigator Notifications to the other Party no more
than *** after receipt of the original report which prompted the Investigator
Notification.

 

10.3                                           Preparation
and Submission of Annual Reports from Clinical Trials and other Cumulative
Safety Reports

 

As
long as Incyte holds an IND for the Product, Incyte will have the responsibility
for the compilation of the IND annual safety reports for the Product using its
own data and data provided by Novartis as required.

 

8

 

***Confidential material redacted and
filed separately with the Commission.

 

Novartis
shall prepare a common European Union Annual Safety Report for clinical
studies. All relevant studies, including investigator initiated studies, shall
be included. Upon request to support preparation of these reports for Incyte or
Novartis studies. Incyte or Novartis shall provide data, including

 

·                  A list of studies (including IIT) that are
planned, initiated or ongoing with a synopsis of the study , phase and
the countries involved

 

·                  Planned and total number of patients
enrolled in Incyte or
Novartis sponsored studies (including IIT), the
actual enrollment and number of patients receiving active drug during the
reporting period.

 

·                  A list of Incyte or Novartis studies that have been analyzed during the reporting period, including a
summary of new safety findings

 

·                  Any new study safety results with potential impact on risk-benefit profile

 

The
request for information shall be made at least *** prior to each Data Lock-Point, and be provided so that it is received no
later than *** after the Data Lock-Point.  The final report shall be provided to Incyte
allowing *** for review/ comment.

 

The
same report shall be submitted by both companies, if both companies have study
sponsorship in the EU.

 

10.4                                           Periodic
SUSAR Reports

 

Novartis
will be responsible for the preparation of periodic SUSAR reports and for the
submission of the report to investigators, competent authorities and Ethics
Committees, where and when applicable. Incyte has the right to review and
comment.

 

10.5                                           Responses
to Regulatory Authority Questions

 

Each
Party shall attempt to immediately notify the other (via their respective
appointed pharmacovigilance representatives) upon being contacted by a
Regulatory Authority on any significant regulatory matter pertaining to the safety
profile of the Product or to the subject-matter of this Pharmacovigilance
Agreement, including but not limited to risk management communication, Dear
Doctor Letters, urgent safety restrictions or labelling changes, to ensure that
communication between the Parties is aligned. Each Party shall allow the other
to review its proposed response to any question or request prior to submission
to the Regulatory Authority, unless there is a public health need to respond
immediately.

 

If
requested to do so, Novartis shall assist Incyte to respond to questions or
requests for information by Regulatory Authorities by promptly providing data
from the master safety database.

 

Each
Party shall copy to the other all significant communication regarding clinical
safety information concerning the Product.

 

9

 

***Confidential material redacted and
filed separately with the Commission.

 

10.6                                           Risk
Management Plans

 

The
Parties agree that there will be one Global Risk Management Plan for each
Licensed Product, authored by Novartis. The Global Risk Management Plan will be
prepared by Novartis in collaboration with Incyte. Incyte shall provide
feedback within *** of receipt from Novartis, or such other time as the Parties
mutually agree.

 

If a
REMS (Risk Evaluation and Mitigation Strategy) is required for the Products by
the FDA, Incyte shall be responsible for the authorship and submission. There
shall be no material differences in the description of the important safety
risks between the Global Risk Management Plan and REMS, as the risks are
considered the same in all territories. The REMS will be prepared in
collaboration between Novartis and Incyte. Novartis shall provide feedback
within *** of receipt from Incyte, or such other time as the Parties may
mutually agree.

 

The
Parties will exchange all information reasonably requested by a Party that is
necessary to fulfill regulatory requirements (e.g. mandatory PSUR updates) for
the Global Risk Management Plan.  These
include, but are not limited to, providing updates on: safety studies and other
pharmacovigilance measures, progress in implementing risk minimization
activities, and assessment of the performance of any aspect of risk
management/minimization related to the Products.  Prior to submission of the Global Risk
Management Plan to a Regulatory Authority, Novartis shall provide such plan to
Incyte for review and Incyte shall have *** to provide comments, which Novartis
shall reasonably consider.

 

10.7                                           PSUR

 

The
Parties agree that Novartis will be responsible for the authoring of the PSUR,
the Core Data Sheet and Investigator Brochure. 
Novartis shall provide drafts of such documents to Incyte within ***
after the data lock point, and Incyte shall have *** to review and provide comments,
which Novartis shall reasonably consider.

 

11                                                     SOPs

 

Each Party shall adhere to its own SOPs unless otherwise explicitly
stated here in this Pharmacovigilance Agreement.

 

12                  Audits

 

The Parties  agree that its
pharmacovigilance systems/operations or contracted pharmacovigilance activities
will be audited at reasonable intervals to ensure elements set forth in the
pharmacovigilance agreement are being fulfilled for the appropriate
product.  Both Parties will discuss and agree in good faith on
how such an audit will be conducted (audit plan, duration of audit, audit
report and corrective actions).  Each
Party’s routine audit will be scheduled no more frequently than once every ***,
with a minimum of *** notice.

 

Audits must be reasonable in scope and in relationship to the Product
and must take place during normal business hours.  Parties  will correct audit observations in
a timely manner and communicate those actions to the other Party.

 

10

 

***Confidential material redacted and
filed separately with the Commission.

 

In the case of a serious suspected breach of compliance
with this Pharmacovigilance Agreement, a directed audit will be performed by
either Party or an independent
third party with notification only and a minimum of ***. The possibility of a directed audit for serious
breach is therefore agreed upon by way of execution of this agreement.

 

Parties shall allow foreign
and local health authorities to inspect their pharmacovigilance operations as
it is necessary for either Party to maintain registration in the countries
where the Product is marketed.  A
representative from the other Party may participate in such inspections.

 

Parties
shall communicate urgent or critical issues affecting the other Parties
pharmacovigilance activities within *** of receipt of documented findings cited
during a health authority inspection. 
Once corrective actions are determined, the inspected Party will provide
a summary of the relevant inspection findings with associated corrective
actions where the other Party is impacted.

 

13                                                     Dispute
Resolution

 

In
case of dispute over PSURs, responses to queries or labelling activities, for
example CCSI, every effort will be made to achieve a consensus and resolve the
dispute by the pharmacovigilance department of each Party. If disputes cannot
be resolved they will be referred to upper drug safety management of the
Parties for resolution. If disputes cannot be resolved at the upper management
level they will be resolved in accordance with the Collaboration Agreement.

 

14                                                     Contact
Persons

 

The
contact persons for each Party are identified in Appendix 2.

 

Each
Party may change its contact persons by notifying the other Party in writing in
accordance with Section 15.6 of the Collaboration Agreement.  

 

15                                                     Miscellaneous

 

The
provisions of Sections 15.1-15.3, 15.5 and 15.7-15.16 of the Collaboration
Agreement shall be deemed incorporated into this Pharmacovigilance Agreement to
the same extent as if set forth herein.

 

This
Pharmacovigilance Agreement has been agreed and signed in duplicate by the
following respective Parties.

 

	
  Place/Date:

  	
  Place/Date:
  

  

 

11

 

16                                                     APPENDIX
1 - Definitions and
Abbreviations

 

16.1                                           Definitions

 

16.1.1                                 “Spontaneous Reports” from
Patient Support Programs or Marketing Research Programs includes all Adverse
Reactions reported from any program designed to encourage the HCP or consumer to
voluntarily contact the company for educational material or support.  Any program which does not systematically
include any questions that request safety information in response.

 

16.1.2                                 “Solicited Reports” from Patient
Support Programs or Marketing Research Programs includes all Adverse Reactions
reported from a program where targeted safety questions are systematically
included (in either the script or contact form).

 

16.1.3                                 “Adverse Drug Reaction” means all
noxious and unintended responses to a medicinal product related to any dose. The
‘responses to a medicinal product’ means that a causal relationship between a
medicinal product and an adverse event is at least a reasonable possibility.

 

16.1.4                                 “Adverse Event” means any
untoward medical occurrence in a patient or clinical investigation subject
administered a pharmaceutical product and that does not necessarily have a
causal relationship with this treatment. An adverse event can therefore be any
unfavorable and unintended sign (including an abnormal laboratory finding),
symptom, or disease temporally associated with the use of a medicinal
(investigational) product, whether or not related to the medicinal
(investigational) product.

 

16.1.5                                 “Causally Suspected Adverse Event”
means an Adverse Event (experience) for which a causal relationship between a
medicinal product and itself is at least a reasonable possibility.  In general, all SRs are considered suspected
for expediting purposes.

 

16.1.6                                 “Causally Non-suspected Adverse
Event” means an Adverse Event (experience) for which a causal relationship
between a medicinal product and itself is not a reasonable possibility. In
general, all SRs are considered “suspected” for expediting purposes.

 

16.1.7                                 “Collaboration Agreement” shall
have the meaning set forth in Section 1 of this Pharmacovigilance
Agreement.

 

16.1.8                                 “Company Core Safety Information”
means all relevant safety information
contained in the Company Core Data Sheet prepared by the Marketing
Authorisation Holder and which the Marketing Authorisation Holder
requires to be listed in all countries where the company markets the drug,
except when the local regulatory authority specifically requires a modification.

 

16.1.9                                 “Expected Adverse Event” means an
adverse event (experience), the specificity or severity of which is consistent
with the Investigator’s Brochure for an unapproved investigational product.

 

16.1.10                          “International Birthdate” means
the date of the first marketing authorisation for the drug or product granted
in any country.

 

16.1.11                          “Investigator’s Brochure” means a
compilation of the clinical and non-clinical data about an investigational drug
or product that is relevant to its study in humans.

 

16.1.12                          “Investigator Notification” or “IN”
means a notification for all participating investigators of any Serious Adverse
Event (experience) which is unexpected and suspected or any findings that
suggest a significant risk for the patient.

 

12

 

16.1.13                          “Labelled Adverse Event” means
any Adverse Event (experience), the specificity or severity of which is
consistent with the local package insert for an approved product.

 

16.1.14                          “Life-threatening Adverse Event”
means an Adverse Event (experience) that places the patient or subject in the
view of the Investigator, at immediate risk of death from the event
(experience) as it occurred, i.e. does not include an Adverse Event
(experience) that, had it occurred in a more serious form, might have caused
death. “Life-threatening Serious Adverse Event” shall have the corresponding
meaning in relation to Serious Adverse Events.

 

16.1.15                          “Listed” means any Adverse Event
(experience), the specificity or severity of which is consistent with the
Company Core Safety Information.

 

16.1.16                          “Party” means one of the parties
set forth in the heading to this Pharmacovigilance Agreement, and “Parties”
means both parties.

 

16.1.17                          “Product” means the product
defined in the heading of this Pharmacovigilance Agreement.

 

16.1.18                          “Regulatory Authority” means any
governmental agency responsible for granting health or pricing approvals,
registrations, import permits, and other approvals required before the Product
may be used in a clinical trial or marketed in any country.

 

16.1.19                          “Regulatory Authority
Authorisation” means an approval granted by a Regulatory Authority to conduct a
clinical trial (e.g. IND) or to market a product (NDA) in a particular country.

 

16.1.20                          “Serious Adverse Event” means any
untoward medical occurrence that at, any dose:

(a)     results in death;

(b)     is life-threatening;

(c)     requires inpatient
hospitalization or prolongation of existing hospitalization;

(d)     results in persistent or
significant disability/incapacity; or

(e)     is a congenital anomaly/birth
defect.

 

In
the case of other significant events, medical and scientific judgment should be
exercised in deciding whether expedited reporting is appropriate. Such events
may be important medical events that may not be immediately life-threatening or
result in death or hospitalization but which may jeopardize the patient or may
require intervention to prevent one of the other outcomes listed in the
definition above. Such events should usually be considered Serious Adverse
Events.

 

16.1.21                          “Spontaneous Adverse Event Report”
means any Adverse Event (experience) spontaneously reported by health
professionals, consumers, Health Authorities or other regulatory bodies,
scientific papers, poison centres, pharmacovigilance institutes, lawyers, or
any other source

 

16.1.22                          “Study Protocol” means a document
that describes the objective(s), design, methodology, statistical
considerations, and organization of a trial. The protocol usually also gives
the background and rationale for the trial. This term includes all amendments
to the protocol.

 

16.1.23                          “Unexpected Adverse Event” means
an adverse event (experience), the specificity or severity of which is not
consistent with the Investigator’s Brochure for an unapproved investigational
product.

 

16.1.24                          “Unlabelled” means any Adverse
Event (experience), the specificity or severity of which is not consistent with
the local package insert for an approved product.

 

16.1.25                          “Unlisted” means any Adverse
Event (experience), the specificity or severity of which is/is not consistent
with the Company Core Safety Information.

 

13

 

	
  16.2

  	
  Acronyms

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.1

  	
  ASR

  	
  Annual Safety Report for the EMEA (Clinical Studies)

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.2

  	
  CFR

  	
  Code of Federal Regulations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.3

  	
  CIOMS

  	
  Council for International Organisations of Medical Sciences

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.4

  	
  FDA US

  	
  Food and Drug Administration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.5

  	
  EMEA

  	
  European Medicines Evaluation Agency

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.6

  	
  GCP

  	
  Good Clinical Practice

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.7

  	
  IB

  	
  Investigator’s Brochure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.8

  	
  ICH

  	
  International Conference on Harmonisation of the Technical Requirements
  for Registration of Pharmaceuticals for Human Use

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.9

  	
  IN

  	
  Investigator’s Notification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.10

  	
  IND

  	
  Investigational New Drug

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.11

  	
  NDA

  	
  New Drug Application

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.12

  	
  PSUR

  	
  Periodic Safety Update Report

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.13

  	
  SAE

  	
  Serious Adverse Event

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.14

  	
  SOP

  	
  Standard Operating Procedure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2.15

  	
  SR

  	
  Spontaneous Adverse Event Report

  	
   

  

 

14

 

*** Confidential material
redacted and filed separately with the Commission.

 

17                                                     APPENDIX
2 — Contact Persons

 

Incyte

***

 

15

 

*** Confidential material redacted and filed
separately with the Commission.

 

Novartis

***

 

16

 

*** Confidential material redacted and filed
separately with the Commission.

 

Schedule 1.14

 

c-MET Licensed Back-Up
Compounds

 

***

 

2

 

*** Confidential
material redacted and filed separately with the Commission.

 

Schedule 1.60

 

JAK Licensed Back-Up
Compounds

 

***

 

1

 

*** Confidential
material redacted and filed separately with the Commission.

 

Schedule 4.1

 

***

 

 

*** Confidential
material redacted and filed separately with the Commission.

 

Schedule 4.1(c)(i)

 

***

 

 

*** Confidential
material redacted and filed separately with the Commission.

 

Schedule 11.3

 

Exceptions to
Representations and Warranties

 

***

 

2

 

*** Confidential material
redacted and filed separately with the Commission.

 

***

 

3

 

*** Confidential material
redacted and filed separately with the Commission.

 

***

 

4

 

*** Confidential material
redacted and filed separately with the Commission.

 

***

 

5

 

*** Confidential material
redacted and filed separately with the Commission.

 

***

 

6Exhibit 10.22

 

Confidential Treatment
Requested.  Confidential portions of this
document have been redacted and have been separately filed with the Commission.

 

LICENSE, DEVELOPMENT AND
COMMERCIALIZATION AGREEMENT

 

by and between

 

Incyte Corporation

Experimental Station, Route 141 &
Henry Clay Road

Wilmington, Delaware

 

and

 

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, Indiana 46285

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II Licenses

  	
  13

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Rights
  Granted by Incyte to Lilly

  	
  13

  
	
   

  	
  2.2

  	
  Sublicense
  Rights

  	
  13

  
	
   

  	
  2.3

  	
  Section 365(n) of
  The Bankruptcy Code

  	
  14

  
	
   

  	
  2.4

  	
  Field
  Expansion

  	
  14

  
	
   

  	
  2.5

  	
  Retained
  Rights

  	
  15

  
	
   

  	
  2.6

  	
  Non-Compete

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III Governance

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Joint
  Development Committee.

  	
  17

  
	
   

  	
  3.2

  	
  Subcommittees

  	
  18

  
	
   

  	
  3.3

  	
  Committee
  Meetings

  	
  18

  
	
   

  	
  3.4

  	
  Authority

  	
  18

  
	
   

  	
  3.5

  	
  Decisions.

  	
  18

  
	
   

  	
  3.6

  	
  Committee
  Membership.

  	
  19

  
	
   

  	
  3.7

  	
  Future Adjustments in Governance

  	
  19

  
	
   

  	
   

  
	
  ARTICLE IV Development; Regulatory Matters; Supply

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Initial
  Transfer

  	
  20

  
	
   

  	
  4.2

  	
  Conduct
  of Development Activities

  	
  20

  
	
   

  	
  4.3

  	
  Development
  Reports

  	
  23

  
	
   

  	
  4.4

  	
  Licensed
  Product Co-Development Option

  	
  23

  
	
   

  	
  4.5

  	
  Regulatory
  Matters Related to Licensed Products

  	
  25

  
	
   

  	
  4.6

  	
  Manufacture
  and Supply

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V Commercialization

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Commercialization
  Diligence

  	
  26

  
	
   

  	
  5.2

  	
  Marketing
  Responsibilities For Licensed Products

  	
  28

  
	
   

  	
  5.3

  	
  Trademarks.

  	
  28

  
	
   

  	
  5.4

  	
  Co-Promotion.

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI Intellectual Property Ownership,
  Protection and Related Matters

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Inventorship;
  Ownership

  	
  30

  
	
   

  	
  6.2

  	
  Prosecution
  and Maintenance of Patent Rights

  	
  30

  
	
   

  	
  6.3

  	
  Third
  Party Infringement

  	
  32

  
	
   

  	
  6.4

  	
  Patent Marking

  	
  33

  

 

i

 

	
  ARTICLE VII Financial Provisions

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  License Fee

  	
  33

  
	
   

  	
  7.2

  	
  Milestone Payments

  	
  33

  
	
   

  	
  7.3

  	
  Royalties

  	
  37

  
	
   

  	
  7.4

  	
  Royalty Reports; Payments

  	
  39

  
	
   

  	
  7.5

  	
  Financial Records

  	
  40

  
	
   

  	
  7.6

  	
  Audits

  	
  40

  
	
   

  	
  7.7

  	
  Tax Matters

  	
  40

  
	
   

  	
  7.8

  	
  Currency Exchange

  	
  40

  
	
   

  	
  7.9

  	
  Late Payments

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII Term and Termination

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Agreement Term

  	
  41

  
	
   

  	
  8.2

  	
  Termination.

  	
  41

  
	
   

  	
  8.3

  	
  Effects Of Termination

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX Indemnification;
  Limitation of Liability

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  By Lilly

  	
  45

  
	
   

  	
  9.2

  	
  By Incyte

  	
  45

  
	
   

  	
  9.3

  	
  Limitation of Liability

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X Representations and
  Warranties and Covenants

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Representation Of Authority; Consents

  	
  46

  
	
   

  	
  10.2

  	
  No Conflict

  	
  47

  
	
   

  	
  10.3

  	
  Additional Incyte Representations and Warranties

  	
  47

  
	
   

  	
  10.4

  	
  Disclaimer of Warranty

  	
  48

  
	
   

  	
  10.5

  	
  Standstill

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI Confidentiality

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Confidential Information

  	
  50

  
	
   

  	
  11.2

  	
  Permitted Disclosure

  	
  50

  
	
   

  	
  11.3

  	
  Publicity; Attribution; Terms of this Agreement; Non-Use of
  Names

  	
  51

  
	
   

  	
  11.4

  	
  Publications

  	
  52

  
	
   

  	
  11.5

  	
  Term

  	
  53

  
	
   

  	
  11.6

  	
  Return of Confidential Information

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII Dispute Resolution

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Dispute Resolution Process

  	
  54

  
	
   

  	
  12.2

  	
  Injunctive Relief

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII Miscellaneous

  	
  54

  

 

ii

 

*** Confidential material redacted
and filed separately with the Commission.

 

	
   

  	
  13.1

  	
  Governing Law

  	
  54

  
	
   

  	
  13.2

  	
  Consent to Jurisdiction

  	
  54

  
	
   

  	
  13.3

  	
  Assignment

  	
  55

  
	
   

  	
  13.4

  	
  Entire Agreement; Amendments

  	
  55

  
	
   

  	
  13.5

  	
  Notices

  	
  55

  
	
   

  	
  13.6

  	
  Force Majeure

  	
  56

  
	
   

  	
  13.7

  	
  Compliance With Laws

  	
  56

  
	
   

  	
  13.8

  	
  Use Of Names, Logos Or Symbols

  	
  57

  
	
   

  	
  13.9

  	
  Independent Contractors

  	
  57

  
	
   

  	
  13.10

  	
  Headings

  	
  57

  
	
   

  	
  13.11

  	
  No Implied Waivers; Rights Cumulative

  	
  57

  
	
   

  	
  13.12

  	
  Severability

  	
  57

  
	
   

  	
  13.13

  	
  Execution In Counterparts

  	
  57

  
	
   

  	
  13.14

  	
  No Third Party Beneficiaries

  	
  57

  
	
   

  	
  13.15

  	
  Performance by Affiliates

  	
  58

  
	
   

  	
  13.16

  	
  Exhibits

  	
  58

  

 

Exhibits

 

Exhibit A:  Incyte Patent Rights

Exhibit A-1:
Genus Patent Rights

Exhibit A-2:
Selection Patent Rights

Exhibit B:  Initial Information Transfer

Exhibit C:  Initial Development Plans

Exhibit D:  Initial Press Release

Exhibit E:
Hematology Field and Oncology Field

 

Schedules

 

Schedule
1.43:  ***

Schedule
1.48:  Initial Licensed Back-Up Compounds

 

iii

 

*** Confidential material redacted
and filed separately with the Commission.

 

LICENSE, DEVELOPMENT AND
COMMERCIALIZATION AGREEMENT

 

THIS LICENSE, DEVELOPMENT AND
COMMERCIALIZATION AGREEMENT (the “Agreement”) is entered into as of the
18th day of December, 2009 (“Effective Date”),
by and between Incyte Corporation, a Delaware corporation having an office at
Experimental Station, Route 141 & Henry Clay Road, Wilmington,
Delaware (“Incyte”), and Eli Lilly and Company, an Indiana corporation
having an office at Lilly Corporate Center, Indianapolis, Indiana 46285 (“Lilly”).

 

WHEREAS, Incyte and Lilly are each in the
business of discovering, developing and commercializing pharmaceutical
products;

 

WHEREAS, Incyte has discovered and commenced
Development of the Licensed Compounds (as defined below);

 

WHEREAS, Incyte has agreed to grant to Lilly
a license to develop and commercialize the Licensed Compounds;

 

NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

When used in this Agreement, each of the
following terms shall have the meanings set forth in this ARTICLE I:

 

1.1           “Accounting
Standards” with respect to a Party means that such Party shall maintain
records and books of accounts in accordance with (a) US GAAP (United
States Generally Accepted Accounting Principles) or (b) to the extent
applicable, IFRS (International Financial Reporting Standards).

 

1.2           “Affiliate” means any Person that, directly or
indirectly, controls, is controlled by or is under common control with a
Party.  For the purposes of this Section 1.2,
the word “control” (including, with correlative meaning, the terms “controlled
by” or “under common control with”) means the actual power, either directly or
indirectly through one or more intermediaries, to direct the management and
policies of such entity, whether by the ownership of *** of the Voting Stock of
such entity, by contract or otherwise. The Parties acknowledge that in the case
of certain entities organized under the laws of certain countries outside of
the United States, the maximum percentage ownership permitted by law for a
foreign investor may be less than ***, and that in such case such lower
percentage shall be substituted in the preceding sentence, provided  that
such foreign investor has the power to direct the management and policies of
such entity.

 

1

 

1.3           “Annual Net Sales” means aggregate Net Sales of a
Licensed Product by Lilly or its Affiliates or sublicensees in any Calendar
Year, or in the first and last years of the term of this Agreement, the portion
of such Calendar Year during which this Agreement is in effect.

 

1.4            “Business Day” means a day other than a Saturday
or Sunday or Federal holiday in Wilmington, Delaware or Indianapolis, Indiana.

 

1.5           “Calendar Quarter” means a calendar quarter ending
on the last day of March, June, September or December.

 

1.6           “Calendar Year” means a period of time commencing
on January 1 and ending on the following December 31.

 

1.7           “Clinical Trial” means a Phase I Study, a Phase II
Study, a Phase IIb Study, a Phase III Study, a Phase IV Study or a combination
of two (2) of any of the foregoing studies.

 

1.8           “Commercialization” or “Commercialize” means
any activities directed to obtaining pricing and/or reimbursement approvals,
marketing, promoting, distributing, importing, offering to sell, and/or selling
a product (including establishing the price for such product).

 

1.9           “Commercially Reasonable Efforts” of a Party means,
with respect to an objective, the reasonable, diligent, good faith efforts of a
Party, (including the efforts of its Affiliates, and sublicensees) of the type
to accomplish such objective as a similarly situated (with respect to size,
stage of development, and assets) biotechnology or pharmaceutical company, as
the case may be, would normally use to accomplish a similar objective under
similar circumstances, it being understood and agreed that, with respect to
efforts to be expended in relation to a product (including implementation of
Development and Commercialization strategies to support the pursuit of multiple
Indications in accordance with Exhibit C), such efforts shall be
substantially equivalent to those efforts and resources that a similarly
situated biotechnology or pharmaceutical company, as the case may be, would
typically devote to its own internally discovered compound or product, which
compound or product is at a similar stage in its Development or product life
and is of similar market and economic potential as products expected to result
from the Licensed Compounds at a similar stage in their Development or product
life, taking into account the risks of development, the commercial potential
for the Product, its proprietary position and other relevant factors.

 

1.10         “Confidential Information” means (a) all
confidential or proprietary information relating to Licensed Compounds, and (b) all
other confidential or proprietary documents, technology, Know-How or other
information (whether or not patentable) actually disclosed by one Party to the
other pursuant to this Agreement or the Prior Confidentiality Agreement.

 

1.11         “Control”
or “Controlled” means, with respect to any (a) material, document,
item of information, method, data or other Know-How or (b) Patent Rights
or other Intellectual Property Rights, the possession by a Party or its
Affiliates (whether by ownership or license (other than by a license granted
under this Agreement)), of the ability to grant to the other Party access, a
license and/or a sublicense as provided herein
without requiring the consent of a Third Party or violating the terms of any
agreement or other arrangement with any Third Party, in each 

 

2

 

*** Confidential material redacted
and filed separately with the Commission.

 

case as of the Effective Date, or if any of the same are acquired or
created after the Effective Date, at the date it is acquired or created by the
relevant Party or its Affiliate.

 

1.12         “Cover”, “Covering” or “Covered” with
respect to a product, technology, process or method, means that, but for a
license granted to a Person under a Valid Claim included in the Patent Rights
under which such license is granted, the Development, manufacture,
Commercialization and/or other use of such product or the practice of such
technology, process or method, by such Person 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).

 

1.13         “CPI” means the Consumer Price Index — Urban Wage
Earners and Clerical Workers, U.S. City Average, All Items, 1982-84 = 100,
published by the United States Department of Labor, Bureau of Statistics (or
its successor equivalent index).

 

1.14         “Detail” means face-to-face discussions or other
direct communication (e.g. edetailing)
with physicians and other health care practitioners who are permitted under
applicable Laws to prescribe a Licensed Product for the purpose of promoting a
Licensed Product to such physicians or practitioners.

 

1.15         “Development” or “Develop” means, with respect
to a compound, preclinical and clinical drug development activities, including,
among other things:  the conduct of
Clinical Trials, test method development and stability testing, toxicology,
formulation and delivery system development, process development, pre-clinical
and clinical drug substance and clinical drug product supply, manufacturing
scale-up, development-stage manufacturing, quality assurance/quality control
procedure development and performance with respect to clinical materials,
statistical analysis and report writing and clinical studies, regulatory
affairs, and all other pre-Regulatory Approval activities.  When used as a verb, “Develop” means to
engage in Development.

 

1.16         “Development Costs”
means the costs and expenses incurred by or on behalf of a Party attributable
to, or reasonably allocable to, the Development of Licensed Products and that
are materially consistent, as applicable, with the Development Plan and
Development Budget.  Development Costs
shall not include ***.  “Development
Costs” shall include (a) the costs of Clinical Trials, the preparation,
collation and/or validation of data from such Clinical Trials and the
preparation of medical writing and publishing; (b) the FTE costs of the
relevant Party or its Affiliates; (c) all Out-of-Pocket Costs incurred by
the Parties or their Affiliates, including payments made to Third Parties with
respect to any of the foregoing (except to the extent that such costs have been
included in FTE costs); (d) Out-of-Pocket Costs incurred by or on behalf
of a Party in connection with the preparation and filing of regulatory submissions
for Licensed Product and obtaining of Regulatory Approvals; and (e) the
cost of contract research organizations (CROs) and clinical supply, including: (i) costs,
packaging and distribution of Licensed Products used in Clinical Trials; (ii) expenses
incurred to purchase and/or package comparator drugs; and (iii) costs and
expenses of disposal of clinical samples.

 

1.17         “EMEA” means the European Medicines Agency, or a
successor agency thereto.

 

3

 

*** Confidential material redacted and filed
separately with the Commission.

 

1.18         “Exchange Act” means the Securities Exchange Act of
1934, as amended.

 

1.19         “Excluded Field” means any and all Indications in
humans and animals in the Hematology Field and the Oncology Field.

 

1.20         “Executive Officers” means the Chief Executive
Officer of Incyte (or a senior executive officer of Incyte designated by Incyte’s
Chief Executive Officer) and the Vice President Autoimmune Product Development
of Lilly (or a senior executive officer of Lilly or its Affiliate as designated
by the Vice President Autoimmune Product Development of Lilly).

 

1.21         “FDA” means the United States Food and Drug
Administration, or a successor agency thereto.

 

1.22         “Field” means the treatment, control, management,
mitigation, prevention or cure of any and all Inflammatory Disease Indications
in humans and animals in any formulation or dosage form, process or delivery
method, but not including the Topical Field.

 

1.23         “First Commercial Sale” means, with respect to a
Licensed Product, the first sale of commercially relevant quantities of such
Licensed Product intended for use by a patient, to a Third Party by, as
applicable, Lilly or its Affiliates or sublicensees in a country following
applicable Regulatory Approval (other than applicable governmental price and
reimbursement approvals) of such Licensed Product in such country.  For the avoidance of doubt, sales or
transfers of Licensed Product for Clinical Trial or other Development purposes,
or for compassionate or similar use, shall not be considered a First Commercial
Sale.

 

1.24         “Force Majeure
Event” means an event, act, occurrence, condition or state of facts, in
each case outside the reasonable control of a Party, including acts of God;
acts of any government; any rules, regulations or orders issued by any
governmental authority or by any officer, department, agency or instrumentality
thereof; fire; storm; flood; earthquake; accident; war; rebellion;
insurrection; riot; terrorism and invasion, that interfere with the normal
business operations of such Party.

 

1.25         “FTE” means a full-time equivalent person year
(consisting of a total of *** hours per year) of scientific or technical work
undertaken by a Party’s or its Affiliates’ employees, or a Third Party
licensee/sublicensee to the extent (a) mutually agreed by the Parties and (b) 
permitted and in accordance with the terms and conditions of this Agreement.

 

1.26         “FTE Rate” means the rate per FTE (which may be
prorated on a daily basis as necessary) of *** and ***, with respect to
Development and manufacturing activities conducted pursuant to this Agreement,
subject to annual adjustment by the rate of the Employment Cost Index for total
compensation for the “management, professional and related” occupational group,
as published by the United States Department of Labor, Bureau of Labor
Statistics (or any similar index agreed upon by the Parties if such index
ceases to be compiled and published).

 

4

 

*** Confidential material redacted
and filed separately with the Commission.

 

1.27         “Generic Competition” means, with respect to a
Licensed Product in any country in a given Calendar Year, if, during such
Calendar Year one or more Generic Products shall be commercially available in
such country and such Generic Products shall in the aggregate have a market
share of *** of the aggregate market share of such Licensed Product and Generic
Products (based on data provided by IMS International or, if such data is not
available, such other reliable data source as agreed by the Parties (such
agreement not to be unreasonably withheld)) as measured by unit sales in such
country.

 

1.28         “Generic Product” means any pharmaceutical product
that (a) contains a Licensed Compound; (b) is sold by a Third Party
that is not a licensee or sublicensee of Lilly or its Affiliates, under a
marketing authorization granted by a Regulatory Authority to such Third Party;
***.

 

1.29         “Hematology
Field” means the treatment, control, mitigation, prevention, cure, or
diagnosis of all hematologic Indications as defined in subsections 280 — 289
(Diseases of the blood and blood-forming organs) of the International
Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM),
as set forth in Exhibit E.

 

1.30         “HSR Act”
means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (15
U.S.C. §18a), and the rules and regulations promulgated thereunder.

 

1.31         “Incyte IP” means Incyte Know-How and Incyte Patent
Rights.

 

1.32         “Incyte Know-How” means all Know-How that (a) is
Controlled by Incyte or any of its Affiliates as of the Effective Date or
during the Term; and (b) is necessary or useful to Develop, manufacture or
Commercialize any Licensed Compounds or Licensed Products.

 

1.33         “Incyte Patent Rights” means all Patent Rights that (a) are
Controlled by Incyte or any of its Affiliates as of the Effective Date or
during the Term; and (b) (i) Covers a Licensed Compound or Licensed
Product, a composition containing Licensed Compound, a formulation containing a
Licensed Product or (ii) are otherwise necessary to Develop, manufacture
or Commercialize any Licensed Compounds or Licensed Products.  The Incyte Patent Rights that exist as of the
Effective Date are set forth in Exhibit A (A-1 and A-2).

 

1.34         “IND” means an Investigational New Drug Application
filed with the FDA under 21 C.F.R. Part 312 or similar non-United States
application or submission in any country or group of countries for permission
to conduct human clinical investigations.

 

1.35         “Indication” means any disease, condition or
syndrome.

 

1.36         “Inflammatory Disease” means any inflammatory
disease, including the following Indications: rheumatoid arthritis (and other
arthritides including juvenile RA, ankylosing spondylitis, sero-negative
spondyloarthropathies and psoriatic arthritis), inflammatory bowel disease
(ulcerative colitis and Crohn’s Disease), asthma, chronic obstructive pulmonary
disease, multiple sclerosis, systemic lupus erythmatosus and psoriasis.  Notwithstanding the foregoing, Inflammatory
Disease specifically excludes any Indication included in the Excluded Field.

 

5

 

*** Confidential material redacted
and filed separately with the Commission.

 

1.37         “Intellectual Property Rights” means Patent Rights,
trade secrets, copyrights and other forms of proprietary or industrial rights
pertaining to inventions, Know-How, original works, and other forms of
intellectual property.

 

1.38         “Inventions”
means all patentable inventions, discoveries, improvements and other technology
and any Patent Rights based thereon, that are discovered, made or conceived
during and in connection with the research, Development, manufacture and
Commercialization of Licensed Compounds or Licensed Products.

 

1.39         “JAK” means human Jak Tyrosine Kinase.

 

1.40         “JAK1” means Jak1 Tyrosine Kinase.

 

1.41         “JAK2” means Jak2 Tyrosine Kinase.

 

1.42         “JAK Excluded Compound” means ***.

 

1.43         “JAK2 Inhibitor Compound” means *** in Schedule 1.43.

 

1.44         “Know-How” means any information, ideas, data,
inventions, works of authorship, trade secrets, technology, or materials,
including formulations, molecules, assays, reagents, compounds, compositions,
human or animal tissue, samples or specimens, and combinations or components thereof,
whether or not proprietary or patentable, or public or confidential, and
whether stored or transmitted in oral, documentary, electronic or other form,
including all Regulatory Documentation, but excluding any such information or
materials publicly disclosed in Patent Rights.

 

1.45         “Law” means any law, statute, rule, regulation,
ordinance or other pronouncement having the effect of law, of any federal,
national, multinational, state, provincial, county, city or other political
subdivision, including (a) good clinical practices and adverse event
reporting requirements, guidance from the International Conference on
Harmonization or other generally accepted conventions, and all other rules,
regulations and requirements of the FDA and other applicable Regulatory
Authorities; (b) the Foreign Corrupt Practices Act of 1977, as amended, or
any comparable laws in any country; and (c) all export control laws.

 

1.46         “Lead
Compound” means (a) the Initial Lead Compound or (b) the first
Licensed Back-Up Compound to achieve initiation of a Phase IIb Study (the “Follow-On
Lead Compound”).

 

1.47         “Licensed Back-Up Compounds” means all Licensed
Compounds other than the Initial Lead Compound.

 

1.48         “Licensed Compounds” means (a) the compound
known as INCB28050 (the chemical structure of which has been previously
disclosed to Lilly) (the “Initial Lead

 

6

 

*** Confidential material redacted
and filed separately with the Commission.

 

Compound”); (b) the back-up compounds set forth on Schedule
1.48 (the chemical structures of which have previously been disclosed to
Lilly) (each an “Initial Licensed Back-Up Compounds”); (c) all
other JAK2 Inhibitor Compounds (other than JAK Excluded Compounds) Covered ***,
within the Selection Patent Rights that exist as of the Effective Date; (d) all
salts, prodrugs, esters, metabolites, solvates, stereoisomers and polymorphs of
the foregoing; and (e) all derivatives of the
foregoing containing one or more atoms substituted with a radio isotope (including
derivatives containing deuterium).

 

1.49         “Licensed
Product” means a product or product candidate that contains one or more
Licensed Compounds in any formulation as the active ingredient, including all
dosages of such Licensed Compounds and all processes and delivery systems that
incorporate such Licensed Compounds, but
not including the Topical Field.

 

1.50         “Major
EU Countries” means ***.

 

1.51         “Major
Market Country” means ***.

 

1.52         “Marketing
and Sales Support” means any
direct support (internal or external, but excluding any allocation of general,
corporate or administrative overhead) relating to the sale, promotion and
marketing of Licensed Products, including: (a) Detailing or such other
contact  regarding Licensed Products; (b) sample
drops and any activities performed by medical information scientists, market
development specialists, managed care account directors and other personnel;
(c), market research, marketing communications, managed care, sales meetings,
sales force training, product hotlines, reimbursement support, contracting,
pricing, and telemarketing services; (d) advertising through any means,
including television and radio advertisements, advertisements appearing in
journals, newspapers, magazines or other media, packaging design, visual aids
and other selling materials, hospital formulary committee presentations and
presentations to state and other governmental formulary committees; and (e) any
public relations activity relating to a Licensed Product.

 

1.53         “MHLW” means the Japanese Ministry of Health, Labor
and Welfare, or a successor agency thereto.

 

1.54         “NDA” means (a) (i) a New Drug Application
submitted to the FDA, or any successor application or procedure, as more fully
defined in 21 C.F.R. § 314.50 et. seq.; or (ii) any non-United States
counterpart of such a New Drug Application; and (b) all supplements and
amendments, including supplemental New Drug Applications (and any non-United
States counterparts) that may be filed with respect to the foregoing.

 

1.55         “Net Sales” means, with respect to any Licensed
Product, the gross amount invoiced by Lilly or its Affiliates, or sublicensees
on sales or other dispositions of Licensed Product to Third Parties, or
otherwise directly or indirectly paid to or earned by Lilly or its Affiliates
or sublicensees with respect to the sale of Licensed Product, less the
following:

 

(a)           trade, cash and/or quantity discounts not already
reflected in the amount invoiced, to the extent related to the gross amount
invoiced;

 

7

 

(b)           allowances and adjustments credited or payable, including
credit for spoiled, damaged, outdated, recalled and returned Licensed Product,
to the extent related to the gross amount invoiced and substantiated by
reasonable documentation;

 

(c)           freight,
insurance and other transportation charges incurred in shipping a Product to
Third Parties, to the extent identified as such in the invoice to the Third
Party, to the extent included in the gross amount invoiced;

 

(d)           amounts
repaid or credited by reason of rejections, defects, recalls or returns or
because of chargebacks, refunds, rebates (including wholesaler inventory
management fees, retroactive price reductions, commissions, discounts or
billing errors, and any other allowances which effectively reduce the net
selling price);

 

(e)           all
tariffs, duties, excises, sales taxes, or other taxes (including VAT) and
custom duties imposed on Licensed Products, in each case to the extent invoiced
to customers or otherwise included within gross amounts invoiced;

 

(f)            allowance
for distribution expenses; and

 

(g)           other
similar and customary deductions which are in accordance with US GAAP.

 

Net Sales will not include sales between or among Lilly and its
Affiliates and/or sublicensees; provided, however, that any resale to Third
Parties shall be included in Net Sales.

 

Net Sales shall be calculated in accordance with Lilly’s standard
internal policies and procedures, which must be in accordance with Accounting
Standards.  In the case of any sale or other
disposal for value, such as barter or counter-trade, of Licensed Product, or
part thereof, other than in an arm’s length transaction exclusively for cash,
Net Sales shall be calculated as above on the value of the non-cash
consideration received or the fair market price (if higher) of the Licensed
Product in the country of sale or disposal, as determined in accordance with
Accounting Standards. Donated product will be excluded from Net Sales.

 

In the event the Licensed Product is sold in a finished dosage form
containing the Licensed Product in combination with one or more other active
ingredients (a “Combination Product”), the Net Sales of the Licensed
Product, for the purposes of determining royalty payments, shall be determined
by multiplying the Net Sales (as defined above in this Section) of the
Combination Product by the fraction, A/(A+B) where A is the weighted (by sales
volume) average sale price in a particular country of the Licensed Product in
the prior Calendar Year when sold separately in finished form and B is the
weighted average sale price in that country in the prior Calendar Year of the
other product(s) sold separately in finished form.

 

In
the event that the weighted average sale price of the Licensed Product can be
determined but the weighted average sale price of the other product(s) cannot
be determined, Net Sales for purposes of determining royalty payments shall be
calculated by multiplying the Net Sales of the Combination Product by the
fraction A / C where A is the weighted average sale price of the Licensed
Product when sold separately in finished form and C is the weighted average
sale price of the Combination Product.

 

8

 

In the event that the weighted average sale price of the other product(s) can
be determined but the weighted average sale price of the Licensed Product
cannot be determined, Net Sales for purposes of determining royalty payments
shall be calculated by multiplying the Net Sales of the Combination Product by
the following formula:  one (1) minus
B / C where B is the weighted average sale price of the other product(s) when
sold separately in finished form and C is the weighted average sale price of
the Combination Product.

 

In the event that such average sale price cannot be determined for both
the Licensed Product and the other product(s) in combination, Net Sales
for purposes of determining royalty payments shall be agreed by the Parties
based on the relative value contributed by each component, such agreement shall
not be unreasonably withheld.

 

In the initial Calendar Year, a forecasted weighted
average sale price will be used for the Licensed Product, other product(s), or
Combination Product. Any over or under payment due to a difference between
forecasted and actual weighted average sale prices will be paid or credited in
the first royalty payment of the following Calendar Year.

 

1.56         “Oncology
Field” means the treatment, control, mitigation, prevention, cure, or
diagnosis of any oncology Indications as defined in subsections 140 — 239
(Neoplasms) of the International Classification of Diseases, Ninth Revision,
Clinical Modification (ICD-9-CM) as set forth in Exhibit E,
including all hematologic malignancies, solid tumors and myeloproliferative
diseases (including Myelofibrosis, Polycythemia Vera and Essential
Thrombocythemia) as listed in ICD-9-CM.

 

1.57         “Out-of-Pocket Costs”
means, with respect to certain activities hereunder, direct expenses paid or
payable by either Party or its Affiliates to Third Parties (other than
employees of such Party or its Affiliates) that are specifically identifiable
and incurred to conduct such activities for Licensed Products and have been
recorded in accordance with Accounting Standards.

 

1.58         “Party” means Lilly or Incyte.  “Parties” means Lilly and Incyte.

 

1.59         “Patent Rights” means all patents and patent
applications in any country in the world, including any continuations,
continuations-in-part, divisions, provisionals or any substitute applications,
any patent issued with respect to any such patent applications, any reissue,
reexamination, renewal, term adjustment, restoration, or extension (including
any supplemental protection certificate) of any such patent, and any confirmation
patent or registration patent or patent of addition based on any such patent,
and all non-United States counterparts of any of the foregoing.

 

1.60         “Patent Term Extension” means any patent term
extension, adjustment or restoration or supplemental protection certificates.

 

1.61         “Person” means any natural person, general or limited
partnership, corporation, limited liability company, limited liability
partnership, firm, association or organization or other legal entity.

 

9

 

1.62         “Phase I Study” means a study in humans which
provides for the first introduction into humans of a product, conducted in
healthy volunteers or patients to obtain information on product safety,
tolerability, pharmacological activity or pharmacokinetics, as more fully
defined in 21 C.F.R. § 312.21(a) (or the non-United States equivalent
thereof).

 

1.63         “Phase II Study” means a study in humans of the
safety, dose ranging and efficacy of a product, which is prospectively designed
to generate sufficient data (if successful) to commence pivotal clinical
trials, as further defined in 21 C.F.R. § 312.21(b) (or the non-United
States equivalent thereof).

 

1.64         “Phase
IIb Study” means a well-controlled, dose ranging, multicenter Phase II
Study in patients with the disease or condition under study which is conducted
after a proof of concept study and that is adequately powered to further
evaluate efficacy and safety and define the dosage regimen of a product in the
target indication and which is intended to be among the last clinical trials in
the patient population performed prior to the initiation of Phase III
Studies.  A Phase IIb Study could include several hundred patients but not
to the extent required for registration.

 

1.65         “Phase III Study” means a controlled study in humans
of the efficacy and safety of a product, which is prospectively designed to
demonstrate statistically whether such product is effective and safe for use in
a particular Indication in a manner sufficient to file an NDA to obtain
regulatory approval to market the product, as further defined in 21 C.F.R. §
312.21(c) (or the non-United States equivalent thereof).

 

1.66         “Phase IV Study” means a human clinical trial which
is conducted on a product after Regulatory Approval of the product has been
obtained from an appropriate Regulatory Authority, and includes (a) trials
conducted voluntarily for enhancing marketing or scientific knowledge of an
approved Indication or (b) trials conducted after Regulatory Approval due
to request or requirement of a Regulatory Authority or as a condition of a
previously granted Regulatory Approval.

 

1.67         “Prior Confidentiality Agreement” means the
Confidentiality Agreement between Incyte and Lilly, dated April 23, 2009.

 

1.68          “Publication” means any publication in a scientific
journal, any abstract to be presented to any scientific audience, any
presentation at any scientific conference, including slides and texts of oral
or other public presentations, any other scientific presentation and any other
oral, written or electronic disclosure directed to a scientific audience which
pertains to the Licensed Compound, the Licensed Product or the use of the
Licensed Product.

 

1.69         “Regulatory Approval” means all approvals (including
any applicable governmental price and reimbursement approvals), licenses,
registrations, and authorizations of any federal, national, multinational,
state, provincial or local Regulatory Authority, department, bureau and other
governmental entity that are necessary for the marketing and sale of a Licensed
Product in a country or group of countries.

 

1.70         “Regulatory
Authority” means, with respect to a country, the regulatory authority or
regulatory authorities of such country with authority over the testing,
manufacture, use, 

 

10

 

*** Confidential material redacted
and filed separately with the Commission.

 

storage, importation, promotion, marketing, pricing or sale of a
pharmaceutical product in such country.

 

1.71         “Regulatory
Documentation” means, with respect to the Licensed Compounds and Licensed
Products, all INDs and other regulatory applications submitted to any
Regulatory Authority, copies of Regulatory Approvals, regulatory materials,
drug dossiers, master files (including Drug Master Files, as defined in 21
C.F.R. 314.420 and any non-United States equivalents), and any other reports,
records, regulatory correspondence and other materials relating to Regulatory
Approval of a Licensed Compound or Licensed Product, or required to
manufacture, distribute or sell the Licensed Products, including any
information that relates to pharmacology, toxicology, chemistry, manufacturing
and controls data, batch records, safety and efficacy, and any safety database
required to be maintained for Regulatory Authorities.

 

1.72         “Regulatory
Exclusivity” means that Third Parties are prevented from legally
Developing, manufacturing or Commercializing a product that could compete with
a Licensed Product in a country, either through data exclusivity rights, orphan
drug designation, or such other rights conferred by a Regulatory Authority in
such country, other than through Patent Rights.

 

1.73         “Right of Reference or Use” means a “Right of
Reference or Use” as that term is defined in 21 C.F.R. §314.3(b) or any
successor regulatory scheme, and any non-United States equivalents.

 

1.74         “Selection Patent Rights” means the Incyte Patent
Rights that are designated as INCY0086 and Joint IP Covering the Licensed
Compounds and Licensed Products.  The Selection
Patent Rights that exist as of the Effective Date are set forth on Exhibit A-2.

 

1.75         “Territory”
means the entire world.

 

1.76         “Third
Party” means any Person other than a Party or any of its Affiliates.

 

1.77         “Topical
Field” means any topical, intranasal, ophthalmic or other non-systemic
formulations or dosage forms (e.g. cream, ointment, lotion, solution, spray,
suspension, emulsion, etc.) that are administered with the intent to achieve a
local/non-systemic pharmacologic activity that provides a localized treatment
***. For avoidance of doubt, Topical Field does not include the administration
of a drug through any route if the primary intent of said administration is to
achieve a systemic pharmacologic effect.

 

1.78         “Valid
Claim” means (a) a claim of an issued patent that has not expired or
been abandoned, or been revoked, held invalid or unenforceable by a patent
office, court or other governmental agency of competent jurisdiction in a final
and non-appealable judgment (or judgment from which no appeal was taken within
the allowable time period) or (b) a claim within a patent application ***
and which claim has not been revoked, cancelled, withdrawn, held invalid or
abandoned.

 

11

 

*** Confidential material redacted
and filed separately with the Commission.

 

1.79         “Voting
Stock” means securities of any class or series of a corporation, limited
liability company, association or other entity, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote generally in
matters put before the shareholders or members of such corporation, limited
liability company, association or other entity, including the right to vote for
the election of directors or members of an equivalent governing body.

 

1.80         Additional Definitions.  Each of the following definitions is set
forth in the section of this Agreement indicated below:

 

	
   

  	
  DEFINITION

  	
   

  	
  SECTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Abandoned
  Commercialization

  	
   

  	
  5.1(b)

  	
   

  
	
   

  	
  Abandoned
  Development

  	
   

  	
  4.2(b)(iii)

  	
   

  
	
   

  	
  Additional
  Field

  	
   

  	
  2.4

  	
   

  
	
   

  	
  Agreement

  	
   

  	
  Preamble

  	
   

  
	
   

  	
  Bankruptcy
  Code

  	
   

  	
  2.3

  	
   

  
	
   

  	
  Breaching
  Party

  	
   

  	
  8.2(b)

  	
   

  
	
   

  	
  Combination
  Product

  	
   

  	
  1.55

  	
   

  
	
   

  	
  Co-Promotion
  Option

  	
   

  	
  5.4(a)

  	
   

  
	
   

  	
  Development
  Budget

  	
   

  	
  4.2(a)(iii)C

  	
   

  
	
   

  	
  Development
  Plan

  	
   

  	
  4.2(a)(iii)

  	
   

  
	
   

  	
  Disclosing
  Party

  	
   

  	
  11.1

  	
   

  
	
   

  	
  Effective
  Date

  	
   

  	
  Preamble

  	
   

  
	
   

  	
  Follow-On
  Lead Compound

  	
   

  	
  1.46

  	
   

  
	
   

  	
  Future
  Incyte Patent Rights

  	
   

  	
  6.2(a)

  	
   

  
	
   

  	
  Genus
  Patent Rights

  	
   

  	
  6.2(a)

  	
   

  
	
   

  	
  Global
  Safety Database

  	
   

  	
  4.5(c)

  	
   

  
	
   

  	
  Incyte

  	
   

  	
  Preamble

  	
   

  
	
   

  	
  Incyte
  Indemnified Parties

  	
   

  	
  9.1(a)

  	
   

  
	
   

  	
  Incyte
  Phase IIa Study

  	
   

  	
  4.2(a)(ii)

  	
   

  
	
   

  	
  Initial
  Development Plan

  	
   

  	
  4.2(a)(iii)

  	
   

  
	
   

  	
  Initial
  Lead Compound

  	
   

  	
  1.48

  	
   

  
	
   

  	
  Initial
  Licensed Back-Up Compound

  	
   

  	
  1.48

  	
   

  
	
   

  	
  JDC

  	
   

  	
  3.1(a)

  	
   

  
	
   

  	
  Joint
  IP

  	
   

  	
  6.1(b)

  	
   

  
	
   

  	
  Lilly

  	
   

  	
  Preamble

  	
   

  
	
   

  	
  Lilly
  Indemnified Parties

  	
   

  	
  9.2(a)

  	
   

  
	
   

  	
  ***

  	
   

  	
  2.4

  	
   

  
	
   

  	
  ***

  	
   

  	
  2.4

  	
   

  
	
   

  	
  Non-Breaching
  Party

  	
   

  	
  8.2(b)

  	
   

  
	
   

  	
  Notice

  	
   

  	
  13.5

  	
   

  
	
   

  	
  Ongoing
  Studies

  	
   

  	
  4.2(a)(i)

  	
   

  
	
   

  	
  Promotional
  Plan

  	
   

  	
  5.4(a)

  	
   

  
	
   

  	
  Receiving
  Party

  	
   

  	
  11.1

  	
   

  
	
   

  	
  Royalty
  Term

  	
   

  	
  7.3(b)

  	
   

  
	
   

  	
  SEC

  	
   

  	
  11.3(b)

  	
   

  
	
   

  	
  Severed
  Clause

  	
   

  	
  13.12

  	
   

  

 

12

 

*** Confidential material redacted
and filed separately with the Commission.

 

	
   

  	
  DEFINITION

  	
   

  	
  SECTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Subcommittee

  	
   

  	
  3.2

  	
   

  
	
   

  	
  Term

  	
   

  	
  8.1

  	
   

  
	
   

  	
  Third-Party
  Infringement

  	
   

  	
  6.3(a)

  	
   

  
	
   

  	
  UCC

  	
   

  	
  5.4(b)(iii)

  	
   

  
	
   

  	
  Voting
  Securities

  	
   

  	
  10.5(a)(i)

  	
   

  

 

1.81         Construction. 
In construing this Agreement, unless expressly specified otherwise:

 

(a)           references to Articles, Sections, Exhibits and Schedules
are to articles and sections of, and exhibits and schedules to, this Agreement;

 

(b)           except where the context otherwise requires, use of either
gender includes the other gender, and use of the singular includes the plural
and vice versa;

 

(c)           headings and titles are for convenience only and do not
affect the interpretation of this Agreement;

 

(d)           any list or examples following the word “including” shall
be interpreted without limitation to the generality of the preceding words;

 

(e)           except where the context otherwise requires, the word “or”
is used in the inclusive sense;

 

(f)            all references to “dollars” or “$” herein shall mean U.S.
Dollars; and

 

(g)           each Party represents that it has been represented by
legal counsel in connection with this Agreement and acknowledges that it has
participated in the drafting hereof.  In
interpreting and applying the terms and provisions of this Agreement, the
Parties agree that no presumption will apply against the Party which drafted
such terms and provisions.

 

ARTICLE II

 

LICENSES

 

2.1           Rights Granted by Incyte to Lilly.  Subject to the terms of this Agreement,
Incyte hereby grants Lilly, during the Term, an exclusive (even as to Incyte
and its Affiliates), royalty-bearing, non-transferable (except in accordance
with Section 13.3) license, with the right to sublicense (subject to Section 2.2),
under Incyte IP, to research, Develop, Commercialize, make, have made, use,
offer for sale, sell and import Licensed Compounds and Licensed Products in the
Territory in the Field.

 

2.2           Sublicense Rights. 
Lilly shall have the right to grant sublicenses within the scope of the
license under Section 2.1 solely to its Affiliates and to (a) Bona
Fide Collaborators; (b) Third Parties for the purpose of distributing,
importing, marketing, promoting and selling a Licensed Product in the Field (i) in
any country other than a Major Market Country and (ii) in a Major Market
Country ***;

 

13

 

*** Confidential material redacted
and filed separately with the Commission.

 

or (c) Third Parties for the purpose of engaging such Third
Parties as contract research organizations, contract manufacturers, contract
sales forces and academic institutions in connection with Development and/or
Commercialization of Licensed Compounds and Licensed Products in the Field in
the Territory; provided  that any sublicense granted under this
Agreement shall be pursuant to a written agreement that subjects such
sublicensee to all relevant restrictions and limitations set forth in this
Agreement.  If Lilly grants a sublicense
to a Third Party pursuant to subclause (a) or (b) to research,
Develop or Commercialize Licensed Products in the United States, Major EU
Countries or Japan, as permitted by Section 2.2(a) or (b), then Lilly
shall provide Incyte with prompt written notice thereof and shall provide
Incyte with an executed copy of any such sublicense (redacted as necessary to
protect confidential or commercially sensitive information).  Except as otherwise agreed by the Parties in
writing, Lilly shall be jointly and severally responsible with its sublicensees
to Incyte for failure by its sublicensees to comply with, and Lilly guarantees
the compliance by each of its sublicensees with, all such applicable
restrictions and limitations in accordance with the terms and conditions of
this Agreement.  For the purposes this Section 2.2,
a “Bona Fide Collaborator” means a Third Party that has entered into a collaboration
with Lilly for the research, Development or Commercialization of Licensed
Compounds and/or Licensed Products in which Lilly plays a significant role in
the decision-making process with respect to the Development and/or
Commercialization of such Licensed Compound and/or Licensed Product.  For purposes of clarity, a Third Party that
is granted a sublicense in accordance with Section 2.2(b) or 2.2(c) shall
not be deemed a Bona Fide Collaborator.

 

2.3           Section 365(n) of
The Bankruptcy Code.  All rights
and licenses granted under or pursuant to any section of this Agreement,
including the licenses granted under this ARTICLE II and the rights granted
under Section 4.1(c), are and will otherwise be deemed to be for purposes
of Section 365(n) of the United States Bankruptcy Code (Title 11,
U.S. Code), as amended (the “Bankruptcy Code”), licenses of rights to “intellectual
property” as defined in Section 101(35A) of the Bankruptcy Code.  Lilly will retain and may fully exercise all
of its respective rights and elections under the Bankruptcy Code.  Incyte agrees that Lilly, as licensee of such rights under this
Agreement, will retain and may fully exercise all of its rights and elections
under the Bankruptcy Code or any other provisions of applicable Law outside the
United States that provide similar protection for “intellectual property.”  Incyte further agree that, in the event of
the commencement of a bankruptcy proceeding by or against Incyte under the
Bankruptcy Code or analogous provisions of applicable Law outside the United
States, Lilly will be entitled to a complete duplicate of (or complete access
to, as Lilly deems appropriate) such intellectual property and all embodiments
of such intellectual property, which, if not already in Lilly’s possession,
will be promptly delivered to it upon Lilly’s written request thereof.  Any agreements supplemental hereto will be
deemed to be “agreements supplementary to” this Agreement for purposes of Section 365(n) of
the Bankruptcy Code.

 

2.4           Field
Expansion.  From time to time during
the Term, Lilly shall have the right, upon written notice to Incyte, to request
to expand the Field to *** (each an “Additional Field”) in which Lilly
has a good faith intention to seek to Develop and Commercialize Licensed
Compounds and Licensed Products, which right shall be subject to any agreement
which Incyte may have entered into with a Third Party with respect to such

 

14

 

*** Confidential material redacted
and filed separately with the Commission.

 

Additional Field(s).  Following Incyte’s receipt of such
written notice, and upon mutual agreement of the Parties, the Field may be
expanded to include such Additional Field(s). 
The milestone payments set forth in Section 7.2(a)(i) shall
apply as follows for the Lead Compound and in Section 7.2(a)(ii) for
a Licensed Back-Up Compound when Developed for such Additional Field: (a) ***
payments shall apply for *** means an *** in ***; and (b) *** payments
shall apply for *** means an *** in ***.

 

2.5           Retained Rights.

 

(a)           No
Implied Licenses or Rights.  Except
as expressly provided in Section 2.1 or elsewhere in this Agreement, all
rights in and to the Incyte IP, and any other Patent Rights or Know-How of
Incyte and its Affiliates, are hereby retained by Incyte and its Affiliates.

 

(b)           Other
Retained Rights.

 

(i)            Notwithstanding
the exclusive licenses granted to Lilly pursuant to Section 2.1, Incyte
retains the right to practice under the Incyte IP solely to perform (and to
sublicense Third Parties to perform) its obligations under this Agreement
(including the manufacture and supply of Licensed Compound and Licensed Product
to Lilly).

 

(ii)           For
purposes of clarity, the license granted to Lilly in Section 2.1 shall not
require Incyte to remove any Licensed Compounds from Incyte’s compound library,
provided, however, that Incyte shall have no right to Develop or Commercialize
any Licensed Compound or Licensed Product, even if included in Incyte’s
compound library.

 

2.6           Non-Compete.

 

(a)           Incyte
agrees not to, and shall cause its Affiliates not to, directly or indirectly,
including through any ownership interest in any other entity (other than
through an ownership interest of *** or less of a public company), (i) Develop
prior to the First Commercial Sale of the first Licensed Product; and (ii) Commercialize
prior to the First Commercial Sale of the first Licensed Product and for a
period of *** from the First Commercial Sale of the first Licensed Product, any
JAK2 Inhibitor Compound in the Field anywhere in the world, other than a
Licensed Compound in accordance with the terms of this Agreement.

 

(b)           Incyte
shall cause its licensees of the Incyte Patent Rights (other than Lilly with
respect to Licensed Compounds pursuant to this Agreement) not to use such Incyte Patent Rights to, directly or indirectly,
including through any ownership interest in any other entity (other than
through an ownership interest of *** or less of a public company), (i) Develop
prior to the First Commercial Sale of the first Licensed Product; and (ii) Commercialize
prior to the First Commercial Sale of the first Licensed Product and for a
period of *** from the First Commercial Sale of the first Licensed Product, any
JAK2 Inhibitor

 

15

 

*** Confidential material redacted
and filed separately with the Commission.

 

Compound in the Field anywhere in the world, other than a Licensed
Compound in accordance with the terms of this Agreement.

 

(c)           Lilly
agrees not to, and shall cause its Affiliates and sublicensees not to, directly
or indirectly, including through any ownership interest in any other entity
(other than through an ownership interest of *** or less of a public company), (i) Develop
prior to the First Commercial Sale of the first Licensed Product; and (ii) Commercialize
prior to the First Commercial Sale of the first Licensed Product and for a
period of *** from the First Commercial Sale of the first Licensed Product, any
JAK2 Inhibitor Compound in the Field anywhere in the world, other than a
Licensed Compound in accordance with the terms of this Agreement.

 

(d)           Notwithstanding
the foregoing: (i) nothing in this Agreement shall prohibit either Party
from Developing or Commercializing any JAK Excluded Compound (other than any
JAK Excluded Compound Covered *** ) in any field anywhere in the world and (ii) neither
Party shall Develop or Commercialize any JAK Excluded Compound Covered ***
anywhere in the world in or outside the Field.

 

(e)           During
the Term, Lilly shall not, nor shall Lilly allow its Affiliates or sublicensees
to, Develop or Commercialize any Licensed Compounds anywhere in the world in
the Excluded Field. 

 

(f)            During
the Term, Incyte shall not, nor shall Incyte allow its Affiliates or its licensees of the Incyte Patent Rights
(other than Lilly in the Field in the Territory) to use such Incyte Patent
Rights to, Develop or Commercialize any Licensed Compounds anywhere in the
world in or outside the Field.

 

(g)           In
the event that this Agreement is assigned by Incyte in connection with the sale
or transfer of all or substantially all of the business and assets of Incyte or
Incyte merges with or is consolidated with a Third Party, the Development,
manufacture or Commercialization of a compound or product that, as of the date
of such sale, transfer, merger or consolidation, is being Developed,
manufactured or Commercialized by the assignee or acquirer of Incyte or any
Affiliate controlled by (as “controlled by” is defined in Section 1.2)
such assignee or acquirer, shall not constitute a breach of this Agreement; provided
that (i) such compound or product is not a Licensed Product or
Licensed Compound; (ii) such assignee or acquirer or Affiliate keeps such
Development, manufacture or Commercialization program for such other product
separate from the Development, manufacture and Commercialization programs for
Licensed Products, and ensures that no Lilly Confidential Information is
utilized in such program; (iii) ***; and (iv) Incyte continues to
meet its obligations hereunder.

 

(h)           In
the event Lilly acquires control of any Third Party, the activities of such
Third Party shall not constitute a breach of this Agreement provided  that
(i) within no later than ***,

 

16

 

Lilly takes appropriate action, through divestiture of assets or
otherwise, to cause Lilly to come into compliance with the terms of this
Agreement; (ii) Lilly keeps such activities separate from the Development,
manufacture and Commercialization programs for Licensed Products, and ensures
that no Incyte Confidential Information is utilized in such activities; and (iii) Lilly
continues to meet its other obligations hereunder.

 

(i)            Notwithstanding
the foregoing, nothing in this Agreement shall prohibit either Party or an
Affiliate of the Party from having or controlling separate Development and/or
Commercialization programs directed toward the use of a JAK2 Inhibitor Compound
outside the Field, provided  that the JAK2 Inhibitor Compound is
not a Licensed Product or Licensed Compound, and the separate Development
and/or Commercialization program activities are separate from the Development
and Commercialization programs for Licensed Products, and such Party ensures
that no Confidential Information received from the other Party or Joint IP is
utilized in such activities.

 

ARTICLE
III

 

GOVERNANCE

 

3.1           Joint Development Committee.

 

(a)           Establishment.  The Parties shall establish a joint
development committee (“JDC”) within thirty (30) days after the
Effective Date that will have the responsibility for the overall coordination
and oversight of the Development of Licensed Compounds and Licensed Products
under this Agreement.  As soon as
practicable following the Effective Date (but in no event more than thirty (30)
days following the Effective Date), each Party shall designate its initial
three (3) representatives on the JDC. 
Each Party’s representatives and any substitute for a representative
shall be bound by the obligations of confidentiality set forth in ARTICLE XI. A representative from Lilly shall act as the chairperson
of the JDC.  The chairperson shall not
have any greater authority than any other representative on the JDC and shall
conduct the following activities of the JDC: (i) calling meetings of the
JDC; (ii) preparing and issuing minutes of each such meeting within thirty
(30) days thereafter; (iii) ensuring that any decision-making delegated to
the JDC is carried out in accordance with Section 3.5; and (iv) preparing
and circulating an agenda for the upcoming meeting; provided  that
the chairperson shall include any agenda items proposed by Incyte.  Each Party shall be free to
change its representatives on notice to the other or to send a substitute
representative to any JDC meeting; provided, however, that each Party shall ensure
that at all times during the existence of the JDC, its
representatives on the JDC are
appropriate in terms of expertise and seniority for the then-current stage of
Development of the Licensed Products.

 

(b)           Responsibilities. 
The JDC shall have responsibility for: 
(i) overseeing the initial transfer of information and designated
activities from Incyte to Lilly relating to the clinical Development of
Licensed Compounds and Licensed Products; (ii) the general oversight of
the Development of Licensed Compounds and Licensed
Products, including the periodic review and approval of the Development
Plans (and any material updates, amendments and modifications thereto) and the
review and evaluation of the progress under the Development Plans; (iii)

 

17

 

reviewing, amending and
approving the Development Budget(iv) selecting Indications for Development
in the Field; (v) reviewing the regulatory approach and filing strategy
with respect to seeking and obtaining Regulatory Approval of Licensed Products
in the Field in the Territory; and (vi) performing such other functions as
appropriate to further the purposes of this Agreement, as mutually agreed upon
by the Parties in writing.

 

3.2           Subcommittees. 
The JDC may establish and disband such subcommittees as deemed necessary by the JDC (each a “Subcommittee”).  Each Subcommittee shall consist of the same
number of representatives designated by each Party, which number shall be
mutually agreed by the Parties.  Each
Party shall be free to change its representatives on notice to the other or to
send a substitute representative to any Subcommittee meeting; provided, however,
that each Party shall ensure that at all times during the existence of
any Subcommittee, its representatives on such Subcommittee are appropriate in
terms of expertise and seniority for the then-current stage of Development of
the Licensed Product in the Field in the Territory and have the authority to
bind such Party with respect to matters within the purview of the relevant
Subcommittee. Each Party’s representatives and any substitute for a
representative shall be bound by the obligations of confidentiality set forth
in ARTICLE XI.  Except as expressly
provided in this Agreement, no Subcommittee shall have the authority to bind
the Parties hereunder and each Subcommittee shall report to, and any decisions
shall be made by, the JDC.

 

3.3           Committee Meetings.  The JDC and each of the
Subcommittees shall each hold at least one (1) meeting per Calendar
Quarter at such times during such Calendar Quarter as the chairperson elects to
do so.  Except where a Party fails to
appoint a member or members to the JDC or the Subcommittees or fails to
participate in meetings of the JDC or the Subcommittees pursuant to Section 3.6, meetings of the JDC and the Subcommittees, respectively, shall be
effective only if at least one (1) representative of each Party is present
or participating.  The JDC and the
Subcommittees may meet either (i) in person at either Party’s facilities
or at such locations as the Parties may otherwise agree or (ii) by audio
or video teleconference; provided  that no less than one (1) meeting
during each Calendar Year shall be conducted in person.  Other representatives of each Party involved
with Licensed Products (including representatives of such Party’s alliance
management function) may attend meetings as non-voting participants, subject to
the confidentiality provisions set forth in ARTICLE XI.  Additional meetings of the JDC and the
Subcommittees may also be held with the consent of each Party, or as required
under this Agreement, and neither Party shall unreasonably withhold its consent
to hold such additional meetings.  Each
Party shall be responsible for all of its own expenses incurred in connection
with participating in all such meetings.

 

3.4           Authority.  The JDC and any Subcommittee
shall have only the powers assigned expressly to it in this ARTICLE III and
elsewhere in this Agreement, and shall not have any power to amend, modify or
waive compliance with this Agreement.  In
furtherance thereof, each Party shall retain the rights, powers and discretion
granted to it under this Agreement and no such rights, powers or discretion
shall be delegated or vested in the JDC or any Subcommittee unless such
delegation or vesting of rights is expressly provided for in this Agreement or
the Parties expressly so agree in writing.

 

3.5           Decisions.

 

18

 

(a)           Initial Dispute Resolution Procedures.  Subject to the provisions of this Section 3.5, actions to be taken by the JDC and each of the
Subcommittees shall be taken only following a unanimous vote, with each Party
having one (1) vote.  If any
Subcommittee fails to reach unanimous agreement on a matter before it for
decision for a period in excess of thirty (30) days, either Party shall have
the right to refer the matter to the JDC.

 

(b)           Final Decision-Making. If the JDC fails to reach
unanimous agreement on a matter properly before it (in accordance with this
ARTICLE III) for decision for a period in excess of thirty (30) days, the JDC
representatives appointed by Lilly shall have the deciding vote on any
matter.  Incyte shall have the right to
appeal any such decision of the JDC to the Lilly Executive Officer or a
designee of the Lilly Executive Officer with decision-making authority for
resolution. In such case, the Lilly Executive Officer or designee shall have
the final decision-making authority on such issue.

 

(c)           Notwithstanding the foregoing, Lilly shall not exercise
its right to finally resolve a dispute pursuant to Section 3.5(b):  (i) in a manner that expands Lilly’s
rights or excuses Lilly from any of its obligations specifically enumerated
under this Agreement; (ii) in a manner that negates any consent rights or
other rights specifically allocated to Incyte under this Agreement; (iii) to
resolve any dispute regarding whether a milestone event set forth in Section 7.2
has been achieved; or (iv) in a manner that would require Incyte to
perform any act that it reasonably believes to be inconsistent with any Law or
any approval, order, policy or guidelines of a Regulatory Authority.

 

3.6           Committee Membership.

 

(a)           Appointment is a Right.  The appointment of members of the JDC and any
Subcommittees is a right of each Party and not an obligation and shall not be a
“deliverable” as referenced in any existing authoritative accounting
literature.  Each Party shall be free to
determine not to appoint members to the JDC or any Subcommittee.

 

(b)           Consequence of
Non-Appointment.  If a Party
does not appoint members of the JDC or any Subcommittee, it shall not be a
breach of this Agreement, nor shall any consideration be required to be
returned, and unless and until such members are appointed, the Party that has made the requisite appointments may
unilaterally discharge the roles of the JDC or any Subcommittee for which
members were not appointed, provided  that
neither Party shall unilaterally discharge the roles of the JDC or any Subcommittee as permitted under this Section 3.6(b) unless the other Party has not appointed any members within thirty (30)
days after the first Party has completed its appointment of its members.

 

3.7           Future Adjustments in Governance.  The Parties may at any time by mutual
agreement create or delete governance committees or subcommittees or make other
modifications to the governance structures contemplated by this Agreement in
order to promote the efficient operation of the collaboration. 

 

19

 

*** Confidential material redacted
and filed separately with the Commission.

 

ARTICLE IV

 

DEVELOPMENT; REGULATORY MATTERS; SUPPLY

 

4.1           Initial Transfer.

 

(a)           Initial
Information Transfer to Lilly.  (i) Within
a reasonable period not to exceed *** after the Effective Date, Incyte shall
make available to Lilly, in a mutually-agreed upon format, the material
clinical data and manufacturing Know-How included in the Incyte Know-How and
that is described in Exhibit B; and (ii) from the Effective
Date through ***, Incyte shall make its relevant scientific and technical
personnel reasonably available to Lilly at Incyte’s offices, at reasonable
times during Incyte’s normal business hours and upon reasonable prior notice,
to answer any questions or provide instruction as reasonably requested by Lilly
concerning the information delivered pursuant to this Section 4.1.  Thereafter, with respect to any information
that constitutes Incyte Know-How not transferred to Lilly as contemplated
above, Incyte will, upon request by Lilly, use its good faith efforts to make
available to Lilly such Incyte Know-How as Lilly may reasonably request.

 

(b)           Transfer of Regulatory Documentation.  Upon Lilly’s request after payment of the license fee in
accordance with Section 7.1, Incyte shall transfer ownership to Lilly of
any Regulatory Documentation Controlled by Incyte and existing as of the
Effective Date.

 

(c)           Right of Reference or Use.  Incyte hereby grants to Lilly, solely for the
purposes set forth in this Agreement, a Right of Reference or Use to any and
all Regulatory Documentation Controlled by Incyte relating to Licensed Products
and existing as of the Effective Date or generated from any Clinical Trial
commenced by Incyte prior to the Effective Date, and agrees to sign, and cause
its Affiliates to sign, any instruments reasonably requested by Lilly in order
to effect such grant.  Notwithstanding
the foregoing, nothing in this Section 4.1 is intended to imply the
existence of any particular data, information, drug master file or other
Regulatory Documentation.

 

(d)           Applicability of Bankruptcy Code.  For the avoidance of doubt, rights granted
under this ARTICLE IV shall be deemed to be license of rights to “intellectual
property” as defined in Section 101 (35A) of the Bankruptcy Code and shall
otherwise be subject to Section 2.3.

 

4.2           Conduct of Development Activities.

 

(a)           Generally.

 

(i)            Except as provided in Section 4.2(a)(ii),
from and after the Effective Date, Lilly will, subject to the terms of this
Agreement, be responsible, at its expense, for the Development of Licensed
Products in the Field in the Territory. 
Without limiting the foregoing, except as provided in Section 4.2(a)(ii),
Lilly shall be responsible
for all Out-of-Pocket Costs, including costs for contract research organizations
and drug substance and drug product costs, associated with studies 28050-103,
102 and 110 (the “Ongoing Studies”) that are incurred after the
Effective Date, it being understood that Incyte shall be responsible for all
costs

 

20

 

*** Confidential material redacted and filed
separately with the Commission.

 

incurred
prior to the Effective Date, whether billed prior to the Effective Date or
thereafter.  Incyte shall transfer the
Ongoing Studies to Lilly within *** after the Effective Date. 
Incyte shall invoice Lilly for Incyte’s Out-of-Pocket Costs incurred
after the Effective Date and FTE costs in connection with the management and
supervision of such Ongoing Studies after the Effective Date.

 

(ii)           Incyte shall continue to advance, at its expense, all
clinical Development conducted by Incyte for the Initial Lead Compound through
the completion of the ongoing Phase IIa trial, Study INCB28050-201 (the “Incyte
Phase IIa Study”).

 

(iii)          The Development of Licensed Products shall be governed by
Development plans that describe the proposed overall program of Development for
Licensed Products (the “Development Plan”); including:

 

A.            overall
goals of the program;

 

B.            the
activities to be performed (including all Clinical Trials and Regulatory
Approvals required for manufacturing, marketing and selling Licensed Products
in the Territory), as well as the characterization of studies;

 

C.            a
detailed budget of Development Costs, including the overall costs for each
study, annualized over the course of each such study (“Development Budget”);

 

D.            anticipated
timelines for performance; and

 

E.             specific
deliverables.

 

(iv)          A current draft of a summary development plan for the
Initial Lead Compound is attached hereto as Exhibit C (the “Initial
Development Plan”).  Lilly shall have the sole right and
responsibility for preparing the Development Plan for each Licensed Product in
the Field in the Territory.  Except as
otherwise provided in this Agreement, with respect to Licensed Product in the
Field in the Territory, all decisions with respect to the creation,
modification and implementation of the Initial Development Plan, all other
Development Plans and all Development activities shall be made by Lilly in its
sole discretion; provided  that Lilly will present a draft
Development Plan for each Licensed Product and any material changes to the
Initial Development Plan to the JDC and will give due consideration to any
comments of Incyte thereto.  Notwithstanding
the foregoing, each Development Plan, as initially prepared and as created,
modified and implemented, will reflect and be consistent with the use of
Commercially Reasonable Efforts to Develop Licensed Products.

 

(b)           Diligence.

 

(i)            Lilly shall use Commercially Reasonable Efforts to (A) Develop
Licensed Compounds and Licensed Products in the Field in the Territory in
accordance with the Development Plans; and (B) seek and obtain Regulatory
Approval for Licensed Products in the Field in the Territory.  Incyte shall reasonably cooperate with Lilly
to obtain Regulatory 

 

21

 

*** Confidential material redacted and filed
separately with the Commission.

 

Approval for Licensed
Products in the Field in the Territory, including by providing Lilly access to
Incyte Know-How and Incyte personnel and consultants.

 

(ii)           Within either the later of (A) *** after receipt of the ***
clinical study results generated in the Phase IIa Study INCB28050-201 for rheumatoid arthritis; or (B) *** after receipt of the  *** clinical
study results generated in the Phase IIa Study INCB28050-201 for rheumatoid
arthritis, Lilly shall initiate a Phase IIb Study; provided  that (1) the
Phase IIa Study INCB28050-201 supports initiation; (2) the clinical trial
protocol is approved and does not require any specialized equipment, testing,
or site preparation; (3) the clinical trial material is acceptable; (4) there
are no delays caused by a Regulatory Authority; and (5) there are no other
factors that cause a delay that could not have been reasonably avoided by
Lilly.

 

(iii)          Lilly
shall Develop, including seeking Regulatory Approval for, at least ***.  If at any point in time prior to First
Commercial Sale of a Licensed Product, no Development activities conducted in
good faith with the intention of advancing at least *** (and not for the sole
purpose of preserving rights hereunder), have occurred during at least the
preceding *** and (x) no significant constraints on such Development
imposed by a Regulatory Authority or a Force Majeure Event have been in effect
during such period and (y) during such period Lilly has not engaged in
bona fide sublicensing negotiations with a Third Party with respect to the
Development of Licensed Compounds and Licensed Products in the United States
and the Major EU Countries (provided  that the time period in
which such negotiations have taken place does not exceed ***), then Lilly shall
be deemed to have abandoned Development of Licensed Compounds and Licensed
Product (“Abandoned Development”). 
For purposes of clarity, ***.  If
Incyte concludes that Lilly has Abandoned Development, then Incyte shall
deliver written notice to Lilly setting out the basis for Incyte’s
conclusion.  If Lilly disagrees with
Incyte’s conclusion that Lilly has Abandoned Development, then the Parties will
meet within *** to discuss the disagreement. 
If the Parties cannot agree after such discussion, then the terms of 8.2(e) shall
apply to resolve the dispute.  If Lilly
has Abandoned Development, then:

 

A.            If
Lilly has not previously been properly deemed
to have Abandoned Development, then within *** from receipt of notice
from Incyte that Lilly has Abandoned Development, Lilly shall either: (1) ***;
or (2) provide Incyte with written notice that  ***, in which
case Incyte shall have the right to terminate this Agreement in accordance with
Section 8.2(d).  In the event that
Lilly elects to take the actions described in this subclause (A), Lilly shall
have an additional *** from the delivery of *** to initiate and diligently
pursue such steps that will result in Lilly not being deemed to have Abandoned
Development.  If Lilly fails to take such
actions within such *** period, then Incyte may terminate this Agreement in
accordance with Section 8.2(d).

 

22

 

*** Confidential material redacted and filed
separately with the Commission.

 

B.            If
Lilly has previously been properly deemed to have Abandoned Development and had
previously elected to take the actions described in subclause (A) above,
Incyte shall have the right to terminate this Agreement in accordance with Section 8.2(d).

 

4.3           Development Reports.  Lilly shall provide the JDC with a written
report at least *** summarizing in reasonable detail Lilly’s and its Affiliates’ activities and progress
related to the Development of Licensed
Products in the Field in the Territory, including information concerning the conduct of non-clinical activities
and Clinical Trials, applications for and securing of Regulatory Approvals,
First Commercial Sale of the Licensed Product on a country-by-country basis and any future planned Development activities.

 

4.4           Licensed Product Co-Development Option.   On a Licensed Product-by-Licensed Product
basis, for each Indication for which (x) Lilly anticipates initiating a
Phase IIb Study and (y) there is a means to separately track the Annual
Net Sales of such Licensed Product for such Indication (each a “Co-Development
Indication”) based on a new formulation or a new targeted prescribing
specialist group ***, and provided that Incyte has not exercised the Incyte
Development Opt Out in accordance with Section 4.4(c)(ii) for any
Licensed Product, Incyte shall have the option to co-fund Development of such
Co-Development Indication (the “Co-Development Option”) as follows:

 

(a)           Within  *** prior to the anticipated initiation of a Phase IIb Study for the
Co-Development Indication, Lilly shall notify Incyte of such anticipated
initiation and shall provide Incyte with the following information:  all material pre-clinical and clinical data
and related analysis and regulatory information submitted to any Regulatory Authorities prior to the applicable
time-period mentioned above, and Lilly’s then current Development Plans
and total global Development Budget (including the overall costs for each
study, annualized over the course of each such study) with respect to such
Co-Development Indication (the “Co-Development Indication Budget”).  Incyte shall have the option to co-fund
Development of such Co-Development Indication, exercisable by (i) providing
Lilly written notice within *** after receipt of such information and (ii) co-funding
thirty percent (30%) of Lilly’s total global Development Costs for such
Co-Development Indication incurred after the date of such notice through the
Regulatory Approval of such Co-Development Indication on a country by country
basis (“Incyte Target Global Funding”). As used herein in this Section 4.4,
Regulatory Approval costs include costs for any post-launch studies required by
a Regulatory Authority.

 

(b)           If
Incyte timely delivers such notice, within *** following the end of each
Calendar Quarter after Incyte has delivered such notice, Lilly shall prepare
and deliver to Incyte a quarterly report detailing its Development Costs incurred
during such period with respect to such Co-Development Indication.  Lilly shall submit any supporting information
reasonably requested by Incyte related to such Development Costs included in
its report within *** after its receipt of such request.  Lilly shall issue an invoice to Incyte for
thirty percent (30%) of the Development Costs identified in such report. Incyte
shall pay all amounts payable under any such invoice within *** after its
receipt of such invoice, subject to Section 4.4(c).  Incyte shall have the right to audit the
records of Lilly with respect to any purported Development Costs included in
such reports, in accordance with Section 7.6.

 

23

 

*** Confidential material redacted and filed
separately with the Commission.

 

(c)           If
Incyte exercises its Co-Development Option with respect to a Licensed Product,
in addition to the royalty rates set forth in Section 7.3, Lilly shall pay
Incyte an incremental *** royalty (the “Target Co-Development Royalty”)
on Annual Net Sales of such Licensed Product for the Co-Development Indication,
provided that:

 

(i)            The
JDC shall review and, as necessary, amend the Co-Development Indication Budget
no later than October 30th of each year and any interim
changes must be reviewed and approved by the JDC.  In the event that the actual global
Development Costs in a Calendar Year exceed (A) *** of the annualized
Co-Development Indication Budget approved by the JDC for such Calendar Year no
later than October 30th of the preceding year or (B) ***
of the projected total Development Costs for a particular study as set forth in
the Co-Development Indication Budget approved by the JDC that was in effect
immediately prior to the initiation of such study (the “Development Cap”),
then Incyte may elect, by providing Lilly with written notice of such election
within *** after receipt of an invoice pursuant to 4.4(b) that would
result in a payment above the Development Cap, not to fund the Co-Development
Indication Budget for that year above the Development Cap (the “Funding Cap
Option”).  Except where the
Development Cap has been reached pursuant to Section 4.4(c)(i)(B), Incyte
shall resume its payment obligation pursuant to 4.4(b) on January 1
following each such election of the Funding Cap Option.  In the event that Incyte elects the Funding
Cap Option, such election of the Funding Cap Option shall not constitute a
violation of this Section 4.4.  Such
Funding Cap Option does not impact the Target Co-Development Royalty for the
Co-Development Indication; however, Incyte agrees to reimburse Lilly for all
unpaid Incyte Target Global Funding pursuant to this Section 4.4(c)(i) solely
in the form of a reduction of future milestone payments and/or royalty payments
as requested by Lilly; and

 

(ii)           In
the event that Incyte provides Lilly with written notice within *** after
receipt of an invoice pursuant to 4.4(b) of its election not to fund the
entire amount of Incyte Target Global Funding for a Licensed Product (“Incyte
Development Opt Out”), then the Target Co-Development Royalty will be
adjusted based on the formula:

 

***

 

By way of example, if ***.

 

24

 

(iii)          Further,
election of the Incyte Development Opt Out for a Licensed Product thereby terminates
Incyte’s option to co-fund further Development Costs for any Licensed Product
and Incyte’s contribution to actual global Development Costs is determined upon
notice to Lilly that Incyte elects to exercise the Incyte Development Opt Out. 

 

4.5           Regulatory Matters Related to Licensed Products.

 

(a)           Regulatory Submissions.  Lilly shall oversee, monitor and coordinate
all regulatory actions, communications and filings with, and submissions to all
Regulatory Authorities with respect to Licensed Products in the Field in the
Territory.  Lilly shall keep the JDC reasonably informed in connection with the
preparation of all Regulatory Documentation, Regulatory Authority review of
Regulatory Documentation, and Regulatory Approvals, annual reports, annual re-assessments,
and variations and labeling, in each case with respect to the Licensed Product
in the Field; provided  that Lilly shall have the right to redact
any information to the extent not related to Licensed Product in the
Field.  Lilly shall respond within a
reasonable time frame to all reasonable inquiries by Incyte with respect to any
information provided pursuant to this Section 4.5(a).  Unless already the Confidential Information
of Incyte, any information disclosed pursuant to this Section 4.5(a) shall
be the Confidential Information of Lilly. 
Lilly shall use Commercially Reasonable Efforts to promptly take the
actions described in this Section 4.5(a).

 

(b)           Regulatory Meetings and Correspondence.

 

(i)            Lilly shall be responsible for interfacing, corresponding
and meeting with the FDA, EMEA, MHLW and other Regulatory Authorities with
respect to Licensed Products in the Field in the Territory.

 

(ii)           Incyte shall have the right
to have a senior, experienced employee reasonably acceptable to Lilly, participate
as an observer in material or scheduled face-to-face meetings, video
conferences and any teleconferences, involving participation of personnel
beyond regulatory experts, with the FDA, EMEA, and MHLW, and shall be provided
with advance access to Lilly’s material documentation prepared for such
meetings.  Prior to submission of
material correspondence to the applicable Regulatory Authority, Lilly shall,
sufficiently in advance for Incyte to review and comment, provide Incyte any
material correspondence with the FDA, EMEA and MHLW related to such
meetings.  Lilly shall also provide
Incyte with copies of any material correspondence with the FDA, EMEA, and MHLW
relating to Development of, or the process of obtaining Regulatory Approval
for, Licensed Products in the Field, and respond within a reasonable time frame
to all reasonable inquiries by Incyte with respect thereto.

 

(c)           Global Safety Database.  Following the Effective Date, Lilly shall
establish, hold and maintain the global safety databases for each Licensed
Product (the “Global Safety Database”) into which it shall enter
information on all serious adverse events and suspected reactions concerning
the Licensed Product occurring anywhere in the world and reported to either of
the Parties. Such database shall comply in all material respects with all Laws

 

25

 

*** Confidential material redacted
and filed separately with the Commission.

 

reasonably applicable to pharmacovigilance anywhere where the Licensed Products
are being or have been Developed or Commercialized.

 

4.6           Manufacture and Supply.

 

(a)           As
soon as reasonably practicable after the Effective Date, Incyte and Lilly shall
agree upon an appropriate manufacturing transfer plan and Incyte shall use Commercially
Reasonable Efforts to transition the responsibility for manufacturing Licensed
Compound and Licensed Product to Lilly in accordance with such plan.  Lilly shall have the option, exercisable
within *** following the Effective Date, to obtain Incyte’s existing inventory
of Licensed Product and any related raw materials or supplies at a price equal
to *** of Incyte’s Out-of-Pocket Costs for such inventory of Licensed
Product.  Lilly may exercise such option
by written notice to Incyte during such *** period. In addition, to the extent
Incyte has contracts with Third Party contract manufacturers or others relating
to its manufacturing operations for Licensed Compounds and Licensed Products,
if Lilly so requests, Incyte will use its Commercially Reasonable Efforts to
assign such agreements to Lilly or otherwise facilitate Lilly’s efforts to
continue to utilize such manufacturers or suppliers.

 

(b)           Without limiting the
foregoing, if Lilly
does not assume direct responsibilities for the manufacture of Licensed
Compound and Licensed Product within *** after the Effective Date, Incyte will invoice Lilly for all
Out-of-Pocket Costs incurred by Incyte after the Effective Date for the
manufacture and supply of Licensed Compound and Licensed Product for Lilly as well
as Incyte’s FTEs required to manage and supervise such manufacture and supply.

 

(c)           Notwithstanding
anything in this Agreement to the contrary, Incyte shall not conduct any
manufacturing related activities following the Effective Date without the express
written consent of Lilly, except for those activities incidental to the
transfer of manufacturing responsibility to Lilly in accordance with the
manufacturing transfer plan contemplated above. 
If requested by Lilly and agreed to by Incyte, Incyte shall supply Lilly
with clinical supplies of Licensed Product under the terms of a mutually
acceptable manufacturing agreement, quality agreement, and manufacturing
requirements document relating to Incyte’s activities, all upon commercially
reasonable terms consistent with this Agreement.

 

ARTICLE V

 

COMMERCIALIZATION

 

5.1           Commercialization Diligence.  During the Term, Lilly shall be solely
responsible for Commercializing Licensed Products in the Territory for use in
the Field.

 

(a)           Lilly shall use Commercially Reasonable Efforts, at its expense, to
Commercialize Licensed Products in the Field in the Territory after receipt of Regulatory Approval therefor.  Notwithstanding the foregoing, Lilly shall (i) Commercialize
*** after
receipt of the relevant Regulatory Approval; (ii) Commercialize *** in at least ***

 

26

 

*** Confidential material redacted
and filed separately with the Commission.

 

after receipt
of the relevant Regulatory Approval; (iii) maintain minimum combined
Marketing and Sales Support (aggregated for all markets) per each *** period following First Commercial Sale for
such Licensed Product of the lesser of *** or *** of total sales of such Licensed Product in
such Calendar; and (iv) reach or contact, the top *** of highest prescribing rheumatologists or
other appropriate specialist in the United States and the Major EU Countries on
average *** times or
more per Calendar Year, beginning in the second full Calendar Year following
First Commercial Sale, provided  that there are no significant
constraints on such Commercialization or contacts imposed by a Regulatory
Authority in the respective jurisdictions. 
These provisions will apply for the first Regulatory Approval of the Licensed
Product, and not per Indication.  These
provisions will not apply in the event that there are any outstanding
negotiations related to Regulatory Approval with any Regulatory Authority
(REMS, label(s), marketing materials or other related matters), or in the event
that Lilly is prevented from meeting the obligations by any other factors that
could not have been reasonably avoided by Lilly.  In the event that this
Agreement is assigned by Lilly in connection with the sale or transfer of all
or substantially all of the business and assets of Lilly or an Affiliate
controlled by (as “controlled by” is defined in Section 1.2) Lilly merges
with or is consolidated with a Third Party, and such sale, transfer, merger or
consolidation results in the stockholders of Lilly immediately prior to such
transaction owning less than *** of the voting power of the Voting Stock of the
acquirer or surviving entity, as the case may be, immediately after such
transaction, then for *** following such sale, transfer, merger or
consolidation, Lilly shall maintain Marketing and Sales Support for each Licensed
Product in each country in the Territory equal to no less than the level of
Marketing and Sales Support that Lilly maintained with respect to such Licensed
Product in such country in the *** prior to such sale, transfer, merger or
consolidation, unless the relevant Licensed Product is within *** of the
anticipated end of the Royalty Term for such country.

 

(b)           If
at any point in time after First Commercial
Sale of a Licensed Product, Lilly does
not promote such Licensed Product in at least *** during the preceding *** and during
that period (i) Lilly has not
reasonably determined that promotion in at least ***, as applicable, is likely to reduce the overall
commercial viability of such Licensed Product in the Territory; (ii) no
significant constraint on such promotion imposed by a Regulatory Authority have
been in effect in the jurisdictions in which such promotion failed to occur; (iii) no
Force Majeure Event has been in effect in any jurisdictions in which such
promotion failed to occur; and (iv) Lilly is not actively seeking Regulatory Approval (including pricing and
reimbursement approval) in at least  ***, as
applicable in the jurisdiction in which such promotion failed to occur; then Lilly
shall be deemed to have abandoned
Commercialization of Licensed Compounds and Licensed Products in that country (“Abandoned
Commercialization”).  For purposes of
clarity, ***.   If Incyte concludes that Lilly
has Abandoned Commercialization, then Incyte shall deliver written notice to
Lilly setting out the basis for Incyte’s conclusion.  If Lilly disagrees with Incyte’s conclusion
that Lilly has Abandoned Commercialization, then the Parties will meet within
*** to discuss the

 

27

 

*** Confidential material redacted and filed
separately with the Commission.

 

disagreement.  If the Parties
cannot agree after such discussion, then the terms of 8.2(e) shall apply
to resolve the dispute.  If Lilly has
Abandoned Commercialization, then:

 

(i)            If Lilly has not
previously been properly deemed to have Abandoned Commercialization,
then within *** from receipt of notice from Incyte that Lilly has Abandoned Commercialization, Lilly shall either (1) *** not being deemed to have ***; or (2) provide
Incyte with written notice that it chooses not to provide ***, in which case Incyte shall have the right to
terminate this Agreement in accordance with Section 8.2(d).  In the event
that Lilly elects to take the actions described in this subclause (i), Lilly shall have an additional *** from the delivery of *** to initiate and diligently pursue such steps that
will result in Lilly not being deemed to have Abandoned Commercialization.  If Lilly
fails to take such actions within such *** period, then Incyte may terminate this Agreement in accordance with Section 8.2(d).

 

(ii)           If Lilly has previously been properly deemed to have
Abandoned Commercialization and had previously elected to take the actions
described in subclause (i) above, Incyte shall have the right to
terminate this Agreement in accordance with Section 8.2(d).

 

5.2               Marketing Responsibilities For Licensed Products.  Subject to the provisions of Section 5.1,
all business decisions regarding Commercialization of Licensed Products in the
Field in the Territory, including the design, sale, pricing, and promotion of
Licensed Products in the Field in the Territory under this Agreement, shall be
within the sole discretion of Lilly and its Affiliates.  All materials used in the promotion of all
Licensed Products in the Field in the Territory, including product packaging,
materials used in Detailing doctors, product messaging and content used in the
promotion of such Licensed Products, shall be approved solely by Lilly.

 

5.3           Trademarks.

 

(a)           Lilly
and its Affiliates shall select their own trademarks under which they will
market Licensed Products (provided  that no such trademark shall
contain the word “Incyte”) and shall own such trademarks.

 

(b)           Lilly shall use, in connection with all packaging, literature,
labels and other printed matters, to the extent permitted by Law, an expression
to the effect that the Licensed Products were developed under license from
Incyte, together with the Incyte logo.

 

5.4           Co-Promotion.

 

(a)           Co-Promotion
Option.  *** Incyte shall have the
option to co-promote Licensed Products on a Licensed Product-by-Licensed
Product basis in the United States on the terms and conditions set forth in
this Section 5.4 (“Co-Promotion Option”). Lilly shall notify Incyte
at least *** prior to the anticipated launch of each Licensed Product in the
United States and shall provide Incyte with the following information:  Lilly’s then-current Commercialization plans
(“Promotional Plan”) with respect to each such Licensed Product, which
plan shall include (i) a description of the short- and long-term vision
for

 

28

 

*** Confidential material redacted and filed
separately with the Commission.

 

the Licensed Product and Licensed Product positioning; (ii) a Strengths,
Weaknesses, Opportunities and Threats (SWOT) analysis; (iii) a summary of
the minimum level of sales efforts to be dedicated to the promotion of the
Licensed Product, including the anticipated number of Details and targets of
such Details; and (iv) a detailed budget for the Commercialization
activities.  Incyte may exercise its
Co-Promotion Option by providing Lilly written notice at any time after receipt
of Lilly’s notice and not later than *** prior to the initial anticipated
launch of such Licensed Product in the United States.

 

(b)           Effects
of Exercise of Co-Promotion Option. 
If Incyte exercises its Co-Promotion Option:

 

(i)            The Parties shall, no later
than *** prior to the initial anticipated launch of such Licensed Product in the United States, set out the number of FTE sales representatives Detailing such Licensed
Product in the United States.  In no event
shall Incyte be responsible for a number of FTE sales representatives Detailing
such Licensed Product which exceeds *** of the total FTEs for such Licensed
Product in the United States.

 

(ii)           Incyte shall be responsible for its costs in conducting
co-Detailing activities; provided  that Lilly shall reimburse
Incyte ***. Incyte shall provide an invoice to
Lilly for such expense on a quarterly basis, and Lilly shall pay such invoice
within *** after receipt.

 

(iii)          The Parties shall establish a joint U.S. Commercialization
Committee (“UCC”) to oversee the Detailing of the relevant Licensed
Product in the U.S.  Incyte shall be
entitled to have one (1) representative sit on the UCC or any group
carrying out the UCC’s function after the Effective Date but prior to the UCC’s
establishment.  The UCC shall have
responsibility for general oversight of all promotion and Detailing activities
with respect to such Licensed Product in the United States.  The UCC (or any group carrying out the UCC’s
function after the exercise of the Co-Promotion Option but prior to the UCC’s
establishment) will meet quarterly or more frequently as agreed by the
Parties.  The term of the UCC will be
determined by the Parties.  Lilly shall
have the right to make the final decision with respect to all matters within
the purview of the UCC related to Commercialization of the relevant Licensed
Product.

 

(iv)          Incyte’s sales representatives will be included in training
programs with respect to the applicable Licensed Product that Lilly provides to
its own sales representatives Detailing such Licensed Product. Such training
shall be provided by Lilly to Incyte ***, but Incyte shall be responsible for
all of its costs related to such training programs, including travel and
lodging, for its sales representatives.

 

(v)           Incyte’s sales representatives shall be provided, at Lilly’s
expense, with the same promotional materials, including literature and samples,
as Lilly provides to its own similarly-situated representatives.

 

29

 

*** Confidential material redacted and filed
separately with the Commission.

 

(vi)          Prior
to the initiation of the co-promotion efforts contemplated hereby, the Parties
shall enter into a mutually acceptable co-promotion agreement containing terms
consistent with this Agreement.  Such
co-promotion agreement shall require Incyte to comply with all applicable Laws,
with Lilly’s Good Promotional Practices and other compliance related practices
and procedures, and with the terms of any order or consent decree applicable to
Lilly’s promotional activities.

 

ARTICLE VI

 

INTELLECTUAL PROPERTY OWNERSHIP,

PROTECTION AND RELATED MATTERS

 

6.1           Inventorship; Ownership.

 

(a)           Inventorship. 
Inventorship of Inventions conceived or reduced to practice during the
course of the performance of activities pursuant to this Agreement shall be
determined in accordance with the patent Laws of the United States.

 

(b)           Ownership. 
As between the Parties, all Inventions made or information created by a
Party’s or any of its Affiliates’ employees, independent contractors or
consultants, in the course of conducting activities under this Agreement,
together with all Intellectual Property Rights therein, shall be owned by such
Party.  All inventions or discoveries
made, or information created, jointly by each Party’s (or any of its Affiliates’)
employees, independent contractors or consultants, in the course of conducting
activities under this Agreement, together with all Intellectual Property Rights
therein, shall be jointly owned by the Parties and are “Joint IP”.  Joint IP shall be owned jointly by Incyte and
Lilly on the basis of an undivided interest without a duty to account to the
other Party and shall be deemed to be Controlled by each Party.  Notwithstanding anything to the contrary
herein, each Party shall have the right to use such Joint IP, or license such
Joint IP to its Affiliates or any Third Party, or sell or otherwise transfer
its interest in such Joint IP to its Affiliates or a Third Party, in each case
without the consent of the other Party, so long as such use, sale, license or
transfer is subject to the licenses granted pursuant to this Agreement and is
otherwise consistent with this Agreement. The Parties, through the JDC, shall
determine which Party shall be responsible for the filing, prosecution and
maintenance of Joint IP on a case-by-case basis; provided that Lilly
shall have the first right to prosecute such Joint IP in accordance with Section 6.2(b) if
such Joint IP Covers Licensed Products. 
Each Party hereby authorizes and grants the other Party its permission
and consent to assume, directly or through its authorized agents, attorneys, or
representatives, the responsibilities set forth in Section 6.2.

 

6.2           Prosecution and Maintenance of Patent Rights.

 

(a)           ***
Prosecution and Maintenance of Incyte Patent Rights.  *** shall have the sole right to file,
prosecute and maintain, at *** expense, the Incyte Patent Rights designated as
INCY0039 (the “Genus Patent Rights”) (the Genus Patent Rights that exist
as of the Effective Date are set forth on Exhibit A-1).  *** shall, subject to Section 6.2(a)(i),
have the sole right to file, prosecute and maintain, at *** expense, the Incyte
Patent Rights other than the Genus Patent Rights and the Selection Patent
Rights (the “Future Incyte Patent Rights”)

 

30

 

*** Confidential material redacted and filed
separately with the Commission.

 

in the Territory.  If ***
declines to file, prosecute or maintain any Future Incyte Patent Rights in any
country in the Territory, desires to allow any Future Incyte Patent Rights to
lapse in any country in the Territory, or desires to abandon any Future Incyte
Patent Rights in any country in the Territory before all appeals within the
respective jurisdiction have been exhausted, then:

 

(i)           
*** may, in its sole discretion, provide *** with reasonable written notice of
such decision so as to permit *** to decide whether to file, prosecute or
maintain such Future Incyte Patent Right in such country and to take any
necessary action.

 

(ii)           Following
notice from *** pursuant to clause (i), *** may, by providing prompt written
notice thereof to ***, assume control of the filing, prosecution and/or
maintenance of such Future Incyte Patent Right in such country, at *** expense.

 

(b)           ***
Prosecution and Maintenance of Selection Patent Rights.  *** shall have the first right to file, prosecute
and maintain, at Lilly’s expense, the Selection Patent Rights in the Territory
***.  If *** declines to file, prosecute
or maintain any Selection Patent Rights in any country in the Territory,
desires to allow any Selection Patent Rights to lapse in any country in the
Territory, or desires to abandon any Selection Patent Rights in any country in
the Territory before all appeals within the respective jurisdiction have been
exhausted, then:

 

(i)           
*** shall provide *** with reasonable written notice of such decision so as to
permit *** to decide whether to file, prosecute or maintain such Selection
Patent Right in such country and to take any necessary action.

 

(ii)           Following
notice from *** pursuant to clause (i), *** may, by providing prompt written notice
thereof to ***, assume control of the filing, prosecution and/or maintenance of
such Selection Patent Right in such country, at *** expense.

 

(c)               Cooperation. 
For the purposes of rights and obligations described in Section 6.2,
an individual Party responsible for the filing, prosecution and maintenance of
a Selection Patent Right will be referred to as the “Controlling Party”
and the other Party will be referred to as the “Non-Controlling Party”.

 

(i)            The Non-Controlling Party shall, at the Controlling Party’s
expense and reasonable request, assist and cooperate in the filing, prosecution
and maintenance of or any related necessary action for Future Incyte Patent
Rights and Selection Patent Rights.

 

(ii)           The Controlling Party shall provide the Non-Controlling
Party sufficiently in advance, where reasonable, for the Non-Controlling Party
to comment, with copies of all patent applications and other material
submissions and communications (including oral communications) with any patent
counsel or patent authorities pertaining to Future Incyte Patent Rights and
Selection Patent Rights.

 

(iii)          The Controlling Party shall give due consideration to the
Non-Controlling Party’s comments, but shall have the final say in determining
whether or not to incorporate such comments.

 

31

 

*** Confidential material redacted and filed
separately with the Commission.

 

(iv)         *** shall whenever possible provide *** in advance with
copies of all material submissions or other communications with patent
authorities relating to the Genus Patent Rights, or, to the extent that *** has
the right to do so, to communications with Third Parties relating to
enforcement of the Genus Patent Rights, in each case to the extent the same may
be material to Selection Patent Rights or Future Incyte Patent Rights, and
consider in good faith any comments *** may make.

 

(v)           Each Party shall provide the other with copies of all
material communications received from any patent counsel or patent authorities
pertaining to such Future Incyte Patent Rights and Selection Patent Rights.

 

(vi)          As used in this Section 6.2(c) “material”
means that the submission or communication could affect the patentability or
scope of the patents Covering the Licensed Compounds or Licensed Products.

 

(d)           Patent Term Extensions.  *** may select which, if any, Selection
Patent Rights for which a Patent Term Extension is to be sought or
obtained.  *** may select which, if any,
Genus Patent Rights and Future Incyte Patent Rights for which a Patent Term
Extension is to be sought or obtained.

 

6.3           Third Party Infringement.

 

(a)           Notice.  Each
Party shall immediately provide the other Party with written notice reasonably
detailing any (i) known or alleged infringement of Joint IP or any
Selection Patent Rights by a Third Party which is infringing the Joint IP or
any Selection Patent Rights by making, using or selling a product that competes
with a Licensed Product in the Field in the Territory; (ii) “patent
certification” filed in the United States under 21 U.S.C. §355(b)(2) or 21
U.S.C. §355(j)(2) or similar provisions in other jurisdictions; and (iii) any
declaratory judgment, opposition, or similar action alleging the invalidity,
unenforceability or non-infringement of any such Intellectual Property Rights
(collectively “Third-Party Infringement”).  Within *** after receipt of such notice, the
Parties shall consult to determine the response to any Third Party
Infringement.

 

(b)           Enforcement.

 

(i)            If within *** after meeting pursuant to Section 6.3(a) the
Parties fail to agree on a joint course of action with respect to a Third Party
Infringement, *** will have the first right to bring and control any legal
action in the Territory in connection with the Third Party Infringement against
a Third Party which is infringing the relevant Intellectual Property Rights by
making, using or selling a product that competes with a Licensed Product in the
Field in the Territory, at its own expense as it reasonably determines
appropriate, and *** may choose, at its own expense, to be represented in any
such action by counsel of its own choice. If required, *** agrees to be joined
as a necessary party to such action, wherein as a necessary party, *** agrees
to be joined only to the extent necessary, and *** shall not actively direct,
control or otherwise participate in the legal action; provided  that
*** shall pay *** reasonable expenses associated therewith.  At the request and expense of ***, *** shall
provide reasonable assistance to *** in connection therewith, including by
executing

 

32

 

*** Confidential material redacted and filed
separately with the Commission.

 

reasonably appropriate documents, cooperating
in discovery and joining as a party to the action.  In connection with any such proceeding, ***
shall not enter into any settlement admitting the invalidity of, or otherwise
impairing *** rights in, Joint IP or any Selection Patent Rights without the
prior written consent of ***.  Any
recoveries resulting from such an action relating to a claim of Third Party
Infringement shall be applied as follows:

 

A.            First, to reimburse each Party for all Out-of-Pocket
Costs in connection with such proceeding (on a pro rata basis, based on each
Party’s respective litigation costs, to the extent the recovery was less than
all such litigation costs); and

 

B.            ***

 

(ii)           If within *** after *** receipt of a notice of a Third
Party Infringement with respect to Joint IP or any Selection Patent Rights, ***
does not bring legal action as permitted hereunder against a Third Party who is
infringing such Intellectual Property Rights by making, using or selling a
product that competes with a Licensed Product in the Territory, *** may,
subject to the following sentence, in its sole discretion, bring and control
any legal action in connection therewith at its sole expense.  At the request and expense of ***, *** shall
provide reasonable assistance to *** in connection therewith, including by
executing reasonably appropriate documents, cooperating in discovery and
joining as a party to the action.  In
connection with any such proceeding, *** shall not enter into any settlement
admitting the invalidity of or otherwise impairing *** rights under the Joint
IP or such Selection Patent Rights without the prior written consent of ***.  Any recoveries resulting from such an action
relating to a claim of Third Party Infringement (after payment of each Party’s
costs and expenses ) will be retained by ***.

 

6.4           Patent Marking. 
If permitted and to the extent that Lilly does so with respect to its
other products in the same geographic market, Lilly shall, and shall cause its
Affiliates, distributors and sublicensees, to (a) mark the Licensed
Products with the number of each issued patent under the Incyte Patent Rights
that apply to the Licensed Product and which Lilly determines reasonably should
be listed or marked and (b) comply with the patent marking statutes in
each country in which the Licensed Product is manufactured by or on behalf of
Lilly or its Affiliates.

 

ARTICLE
VII

 

FINANCIAL PROVISIONS

 

7.1           License Fee. 
Within *** after the Effective Date, Lilly shall pay to Incyte a
one-time, non-creditable, non-refundable license fee of Ninety Million U.S.
Dollars (US$90,000,000).

 

7.2           Milestone Payments.

 

(a)           Development and Regulatory Milestones.

 

33

 

*** Confidential material redacted and filed
separately with the Commission.

 

(i)            Lilly
shall pay Incyte the following one-time, non-refundable, non-creditable
milestone payments within *** after the first achievement by Lilly, its
Affiliates or its sublicensees, or with respect to the milestone event in Section 7.2(a)(i)(A),
Incyte or one of Incyte’s Affiliates, of the corresponding milestone events set
forth below with respect to a Lead Compound (provided that with respect to the
Follow-On Lead Compound, such Follow-On Lead Compound shall only be eligible
for the milestone payments set forth below if such payments have not previously
been made with respect to the Initial Lead Compound):

 

	
  Milestone Event

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

With
respect to the milestone set forth in ***, the milestone payment shall be
contingent *** with a

 

34

 

*** Confidential material redacted
and filed separately with the Commission.

 

***.

 

	
  ***

  	
   

  	
  ****

  	
   

  	
  ****

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

* ***

(ii)           Lilly
shall pay Incyte the following non-refundable, non-creditable (subject to Section 7.2(c))
milestone payments within *** after the first achievement by Lilly, its
Affiliates or its sublicensees of the corresponding milestone events set forth
below with respect to a Licensed Back-Up Compound (provided that with respect
to the Follow-On Lead Compound, such Follow-On Lead Compound shall only be
eligible for any such milestone payment if it is not eligible for the
comparable one-time Lead Compound milestone payment set forth in Section 7.2(a)(i)):

 

	
  Milestone Event

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

35

 

*** Confidential material redacted and filed
separately with the Commission.

 

(iii)          For
the avoidance of doubt, the registrations of line extensions (i.e., different
dosage forms or delivery) shall not be eligible for milestone payments set
forth in this Section 7.2(a). 
Additionally, any Combination Products containing a Lead Compound and a
Licensed Back-Up Compound, wherein the Licensed Back-Up Compound is only
available in combination with such Lead Compound, shall be solely eligible for
the one-time Lead Compound milestone payments set forth in Section 7.2(a)(i) and
shall not additionally be eligible for a Licensed Back-Up Compound milestone
set forth in Section 7.2(a)(ii).

 

(b)           Sales
Milestones.

 

(i)            Lilly
shall make the following non-refundable, non-creditable, one-time payments to
Incyte within *** upon the first achievement of aggregate Annual Net Sales of
all Licensed Products in the Territory that meet or exceed the thresholds set
forth below if such Licensed Products contain or incorporate a Lead Compound:

 

	
  Annual
  Net Sales of Licensed Products in the 

  Territory Threshold

  	
   

  	
  Milestone Payment

  
	
  (A) 
  Annual Net Sales of Licensed Products equal to or greater than ***

  	
   

  	
  ***

  
	
  (B) 
  Annual Net Sales of Licensed Products equal to or greater than ***

  	
   

  	
  ***

  
	
  (C) 
  Annual Net Sales of Licensed Products equal to or greater than ***

  	
   

  	
  ***

  

 

(ii)           Lilly
shall make the following non-refundable, non-creditable, one-time payments to
Incyte within *** upon the first achievement of aggregate Annual Net Sales of
all Licensed Products in the Territory that meet or exceed the thresholds set
forth below if such Licensed Products contain or incorporate a Licensed Back-Up
Compound (other than the Follow-On Lead Compound which, for purposes of
clarity, is subject to subsection (i) above):

 

	
  Annual
  Net Sales of Licensed Products in the 

  Territory Threshold

  	
   

  	
  Milestone Payment

  
	
  (A) 
  Annual Net Sales of Licensed Products equal to or greater than ***

  	
   

  	
  ***

  
	
  (B) 
  Annual Net Sales of Licensed Products equal to or greater than ***

  	
   

  	
  ***

  
	
  (C) 
  Annual Net Sales of Licensed Products equal to or greater than ***

  	
   

  	
  ***

  

 

36

 

*** Confidential material redacted and filed
separately with the Commission.

 

Achievement of the milestone events above in this Section 7.2(b) shall
be determined based on Annual Net Sales of the Licensed Products made by Lilly
and its Affiliates and sublicensees throughout the Territory.  More than
one of the sales milestone payments may be earned concurrently based on the
same Annual Net Sales of the Licensed Products.  By way of example, if in
the first Calendar Year following the First Commercial Sale of a Licensed
Product, the Annual Net Sales for Licensed Products that contain the Lead
Compound is equal to or exceeds ***, but is less than ***, then Lilly shall pay
Incyte the milestone payments set forth in both Sections 7.2(b)(i)(A) and (B) (total
***).

 

(c)           Except as otherwise specified, none of the payments listed
in this Section 7.2 shall be payable more than once, and each shall be
payable at the first achievement of a milestone event for a Licensed Product
and shall not be payable again if subsequently another Licensed Product
achieves the same milestone event.  For
clarification, if a milestone is paid for a Licensed Compound, that milestone
will not be paid again for a back-up compound.

 

(d)           In the event that a milestone event described in Section 7.2(a) is
achieved, all milestones prior to that stage of Development for that Indication
shall be deemed to have been achieved as well, and if the related payment for
any such preceding milestone has not been previously paid, the previously
unpaid payments that would be due for the preceding milestones shall also
become due and payable, even though the missing milestone has not been
achieved; provided  that the foregoing shall not apply to Section 7.2(a)(i)(A) milestone
1b.

 

7.3           Royalties.

 

(a)           Royalty
Rates.

 

(i)            Lilly
shall pay to Incyte royalties on aggregate worldwide Net Sales of all Licensed
Products that contain or incorporate a Lead Compound in the Territory, on a
Licensed Product-by-Licensed Product basis, at the following rates:

 

	
  Annual Net Sales of Licensed Product in the Territory

  	
   

  	
  Royalty Rate

  
	
  On
  Annual Net Sales less than or equal to ***

  	
   

  	
  ***

  
	
  On
  Annual Net Sales greater than *** and less than or equal to ***

  	
   

  	
  ***

  
	
  On
  Annual Net Sales greater than *** and less than or equal to ***

  	
   

  	
  ***

  
	
  On
  Annual Net Sales greater than ***

  	
   

  	
  20%

  

 

37

 

*** Confidential material redacted and filed
separately with the Commission.

 

(ii)           Lilly
shall pay to Incyte royalties on aggregate worldwide Net Sales of all Licensed
Products that contain or incorporate a Licensed Back-Up Compound (other than
the Follow-On Lead Compound which, for purposes of clarity, is subject to
subsection (i) above) in the Territory, on a Licensed Product-by-Licensed
Product basis, at the following rates:

 

	
  Annual Net Sales of Licensed Product in the Territory

  	
   

  	
  Royalty Rate

  
	
  On
  Annual Net Sales less than or equal to ***

  	
   

  	
  ***

  
	
  On
  Annual Net Sales greater than *** and less than or equal to ***

  	
   

  	
  ***

  
	
  On
  Annual Net Sales greater than *** and less than or equal to ***

  	
   

  	
  ***

  
	
  On
  Annual Net Sales greater than ***

  	
   

  	
  ***

  

 

(iii)          ***

 

(iv)          The
royalty rates set forth in Section 7.3(a)(i) (and not Section 7.3(a)(ii))
shall apply to Annual Net Sales of any Combination Products containing a Lead
Compound and a Licensed Back-Up Compound, wherein the Licensed Back-Up Compound
is only available in combination with such Lead Compound.

 

(b)           Royalties payable under this Section 7.3 shall be
paid by Lilly on a Licensed Product-by-Licensed Product and country-by-country
basis from the date of First

 

38

 

*** Confidential material redacted and filed
separately with the Commission.

 

Commercial Sale of each Licensed Product with respect to which royalty
payments are due for a period which is the longer of: (i) the last to
expire of any Valid Claim of Incyte Patent Rights Covering such Licensed
Product in such country; (ii) *** following the date of First Commercial
Sale of such Licensed Product in such country; and (iii) the expiration of
Regulatory Exclusivity for such Licensed Product in such country (each such
term with respect to a Licensed Product and a country, a “Royalty Term”).

 

(c)           Notwithstanding the foregoing, in the event that either (i) the
Royalty Term continues solely due to Section 7.3(b)(ii) (i.e. in a
specific country the Licensed Product is not Covered by a Valid Claim of Incyte
Patent Rights nor is such Licensed Product protected by Regulatory
Exclusivity); or (ii) Generic Competition exists with respect to a
Licensed Product in the Field in a country in the Territory in a Calendar Year,
then the royalty rates in such country for such Licensed Product for such
Calendar Year will be reduced to *** of the applicable rate in Section 7.3(a);
provided  that any reduction of the applicable rate in Section 7.3(a) pursuant
to subclause (ii) due to the existence of Generic Competition shall be
retroactively applied for the relevant Calendar Year.

 

(d)           If
Lilly (i) determines in good faith that, in order to avoid infringement of
any Patent Right not licensed hereunder, it is reasonably necessary to obtain a
license from a Third Party in order to Develop, Commercialize, make, have made,
use, offer for sale, sell or import the Licensed Product in the Field in a
country in the Territory and to pay a royalty or other consideration under such
license (including in connection with the settlement of a patent infringement
claim); or (ii) shall be subject to a final court or other binding order
or ruling requiring any payments, including the payment of a royalty to a Third
Party patent holder in respect of the Development, Commercialization, making,
having made, using, offering for sale, selling and importing of a Licensed
Product in the Field in a country in the Territory, then the amount of Lilly’s
royalty payments under Section 7.3(a) with respect to Net Sales for
such Licensed Product in such country shall be reduced by *** of the amount
payable by Lilly to such Third Party that are reasonably and appropriately
allocable to the Licensed Product in the Field in the Territory, provided,
however, that in no event shall the aggregate deductions under this Section 7.3(d) reduce
any royalty payment made by Lilly in respect of Net Sales of such Licensed
Product pursuant to Section 7.3(a) by more than ***.

 

(e)           Upon the expiration of the Royalty Term with respect to a
Licensed Product in a country, the licenses granted by Incyte to Lilly pursuant
to Section 2.1 shall be deemed to be fully paid-up, irrevocable and
perpetual with respect to such Licensed Product in such country.

 

7.4           Royalty Reports; Payments.  Lilly shall deliver to Incyte, within ***
after the end of each Calendar Quarter, a royalty report for such Calendar
Quarter, together with the required payments. 
Such reports shall indicate, on a country-by-country basis, the Net
Sales and the calculation of royalties from Net Sales with respect thereto,
each determined in accordance with this Agreement and, with respect to sales of
Licensed Product in the United States, such reports shall include gross sales
and all deductions taken from gross sales. 
All payments due to Incyte pursuant to this Agreement shall be made in
United States dollars by wire transfer in immediately available funds from a
Lilly account in the United States to an account designated in advance by
Incyte.

 

39

 

*** Confidential material redacted and filed
separately with the Commission.

 

7.5           Financial Records. 
Lilly shall keep complete and accurate books and records in accordance
with Accounting Standards. Lilly will keep such books and records for at least
*** following the end of the Calendar Year to which they pertain. Such books of
accounts shall be kept at the principal place of business of the financial
personnel with responsibility for preparing and maintaining such records.  With respect to royalties, such records shall
be in sufficient detail to support calculations of royalties due to Incyte.

 

7.6           Audits.  ***
during each Calendar Year for the Term, Incyte may retain an independent
certified public accountant reasonably acceptable to Lilly to audit the records
described in Section 7.5, upon at least *** prior notice to Lilly.  Incyte shall bear the costs of such audit,
except as provided below.  The results of
such audit shall be made available to both Parties, but shall be considered
Lilly’s Confidential Information.  If the
audit demonstrates that the payments owed under this Agreement have been
understated, Lilly shall pay the balance to Incyte, together with interest in
accordance with Section 7.9. 
Further, if the amount of the understatement is greater than *** of the
amount owed to Incyte with respect to the audited period, then Lilly shall
reimburse Incyte for the reasonable cost of the audit.  If the audit demonstrates that the payments
owed under this Agreement have been overstated, Lilly shall be entitled to
credit such amount against payments due to Incyte.  All payments owed by Lilly under this Section 7.6
shall be made within *** after the results of the audit are delivered to the
Parties.

 

7.7           Tax Matters. 
The royalties, milestones and other amounts payable by Lilly to Incyte
pursuant to this Agreement shall not be reduced on account of any taxes unless
required by Law.  Lilly shall inform
Incyte of any withholding tax obligation on payments due to Incyte under this
Agreement as soon as Lilly becomes aware of the withholding tax obligation.  The Parties shall meet promptly thereafter to
discuss how best to minimize the amount of such withholding tax obligation in
accordance with Law, and Lilly shall take all reasonable and lawful steps to
minimize the amount of any such withholding tax obligation.  The Parties agree to cooperate in good faith
to provide one another with such documents and certifications as are reasonably
necessary to enable Lilly and Incyte to minimize and/or recover any withholding
tax obligation.  Lilly shall provide to
Incyte documentation of the payment of any withholding tax that is paid
pursuant to this Section 7.7. 
Notwithstanding the foregoing, Lilly represents that the payments to be
paid by Lilly to Incyte pursuant to Sections 7.1, 7.2 and 7.3 hereof shall not
be subject to withholding tax under conditions less favorable to Incyte than
those applicable to treaty-eligible residents under the income tax treaty
between the United States and the country of payment origination in force at
the point of time such payments are paid. 
Payments to Incyte will be made from the United States unless Incyte
receives notice from Lilly that payments will be made from either Puerto Rico
or Ireland.

 

7.8           Currency Exchange. 
All payments to be made by Lilly to Incyte shall be made in U.S.
Dollars.  In the case of sales of
Licensed Product outside the United States, royalty payments by Lilly to Incyte
shall be converted to U.S. Dollars in accordance with the following:  the rate of currency conversion shall be
calculated using the average of the daily foreign exchange rates as published
by The Wall Street Journal, Eastern Edition, for the Calendar Quarter in
which such payments occurred.

 

40

 

*** Confidential material redacted and filed
separately with the Commission.

 

7.9           Late Payments. 
The paying Party shall pay interest to the receiving Party on the
aggregate amount of any payments that are not paid on or before the date such
payments are due under this Agreement at a rate per annum equal to the lesser
of ***, as reported by The Wall Street Journal, Eastern Edition, *** or
the highest rate permitted by applicable Law, calculated on the number of days
such payments are paid after the date such payments are due; provided,
that with respect to any disputed payments, no interest payment shall be due
until such dispute is resolved and the interest which shall be payable thereon
shall be based on the finally-resolved amount of such payment, calculated from
the original date on which the disputed payment was due through the date on
which payment is actually made.

 

ARTICLE
VIII

 

TERM AND TERMINATION

 

8.1           Agreement
Term.  The term of this Agreement
shall commence on the Effective Date and shall continue until the earlier of (i) the
termination of this Agreement in accordance with Section 8.2; or (ii) following
the First Commercial Sale of any Licensed Product, the expiration of the
last-to-expire of all Royalty Terms with respect to all Licensed Compounds and
Licensed Products (the “Term”). 
Notwithstanding the above, if there are any ongoing disputes at the end
of the Term as set forth above, this Agreement shall remain in full force and
effect until all such disputes are resolved.

 

8.2           Termination.

 

(a)           Termination for Convenience.  Prior to the first anniversary of the
Effective Date, Lilly may elect to terminate this Agreement at any time by
providing *** prior written notice to Incyte; provided, that at any time
after such notice by Lilly, Incyte may accelerate the effective date of such
termination by providing *** prior written notice to Lilly of such accelerated
effective date.  After the first
anniversary of the Effective Date, Lilly may elect to terminate this Agreement
at any time by providing *** prior written notice to Incyte; provided,
that at any time after such notice by Lilly, Incyte may accelerate the effective
date of such termination by providing *** prior written notice to Lilly of such
accelerated effective date.

 

(b)           Termination for Material Breach.  If either Party (the “Non-Breaching Party”)
believes that the other Party (the “Breaching Party”) is in material
breach of this Agreement, then the Non-Breaching Party may deliver notice of
such breach to the Breaching Party.  If
the Breaching Party fails to cure such breach, or to initiate such steps as
would be considered reasonable to effectively cure such breach (and thereafter
diligently pursues such cure), within *** after receipt of such notice of
breach, the Non-Breaching Party may terminate this Agreement upon written
notice to the Breaching Party.  Notwithstanding
the foregoing, if a Party disputes the termination, then 8.2(e) shall
apply.

 

(c)           Termination
if Lilly Challenges Incyte IP.  If
Lilly or any of its Affiliates or sublicensees, directly or indirectly, (i) initiates
or requests an interference or opposition proceeding with respect to any Incyte
Patent Right; (ii) makes, files or maintains any claim,

 

41

 

*** Confidential material redacted and filed
separately with the Commission.

 

demand, lawsuit, or cause of action to challenge the validity or
enforceability of any Incyte Patent Right; or (iii) opposes any extension
of, or the grant of a supplementary protection certificate with respect to, any
Incyte Patent Right, Incyte shall have the right to terminate this Agreement
upon *** written notice to Lilly.  Any
such termination shall only become effective if Lilly or its Affiliate or
sublicensee, as applicable, has not withdrawn such action before the end of the
above notice period.

 

(d)           Termination
for Lilly’s Abandonment of Development or Commercialization.  Subject to Section 4.2(b)(iii)A and
5.1(b)(i), if Lilly has Abandoned Development or Abandoned Commercialization in
accordance with Section 4.2(a)(iii) or 5.1(b), as applicable, Incyte
may elect to terminate this Agreement by providing Lilly written notice of such
termination, such termination to be effective immediately.  Notwithstanding the foregoing, if Lilly
disputes the termination, then 8.2(e) shall apply.

 

(e)           Termination
Disputes.  If a Party gives notice of
termination under Section 8.2(b), if the Parties dispute whether Lilly has
Abandoned Development or Abandoned Commercialization in accordance with Section 4.2(b)(iii) or
5.1(b), as applicable, or Incyte gives notice of termination under 8.2(d), and
the other Party disputes whether such notice was proper, then the issue of
whether or not Lilly has Abandoned Development, Abandoned Commercialization, or
if this Agreement was properly terminated shall be resolved in accordance with
ARTICLE XII, and the Agreement shall remain in full force and effect until such
dispute is resolved.  If as a result of
such dispute resolution process it is determined that the notice of termination
was proper, then such termination shall be deemed to be effective on the date
on which such dispute is resolved.  On
the other hand, if as a result of the dispute resolution process it is
determined that the notice of termination was improper, then no termination
shall have occurred and this Agreement shall remain in full force and effect.

 

8.3           Effects Of Termination.

 

(a)           Upon termination of this Agreement by Lilly under Section 8.2(a) or
by Incyte under Sections 8.2(b), 8.2(c) or 8.2(d):

 

(i)            all licenses granted by Incyte to Lilly hereunder shall
terminate and Lilly shall not have any rights to use or exercise any rights
under the Incyte IP;

 

(ii)           Lilly shall provide to Incyte a fair and accurate summary
report of the status of the Development and Commercialization of the Licensed
Products in each country in the Territory through the effective date of
termination within *** after such termination;

 

(iii)          Lilly hereby grants to Incyte, exercisable from and after
such termination, an exclusive, worldwide, perpetual, irrevocable,
royalty-free, fully-paid license, with the right to grant sublicenses, under
Lilly and its Affiliates’ interest in the Joint IP and any Know-How or Patent
Rights Controlled by Lilly or its Affiliates as of the date of such termination
solely to the extent that such licenses are necessary to research, Develop,
make, have made, use, offer for sale, sell and import Licensed Products in the
Field in the Territory, and Lilly shall retain all other remaining rights;

 

42

 

*** Confidential material redacted and filed
separately with the Commission.

 

(iv)          Lilly shall promptly transfer and assign to Incyte all of
Lilly’s and its Affiliates’ rights, title and interests in and to the product
trademark(s) (but not any Lilly house marks or any trademark containing
the word “Lilly” owned by Lilly and used for the Licensed Products in the Field
in the Territory) owned by Lilly and used for the Licensed Products in the
Field in the Territory;

 

(v)           Lilly shall as soon as reasonably practicable transfer and
assign to Incyte all Regulatory Documentation, the Global Safety Database and
other documented technical and other information or materials Controlled by
Lilly which are necessary or useful for the Development, manufacture and
Commercialization of the Licensed Compounds or Licensed Products; provided
that Lilly may retain a single copy of such items for its records.  Within *** after Incyte’s receipt of an
invoice therefor, Incyte shall reimburse Lilly for Lilly’s and its Affiliates’
reasonable Out-of-Pocket Costs incurred in connection with such transfers and
assignment (but not the generation, creation or development of such information
and materials);

 

(vi)          Incyte shall have the option, exercisable within ***
following the effective date of such termination, to obtain Lilly inventory of
Licensed Products at a price equal to *** of Lilly’s
non-auditable “standard cost” that Lilly uses for internal accounting
purposes.  Lilly’s “standard cost” does
not include the research and development costs to develop the molecule or costs
not associated with Licensed Products.  Incyte
may exercise such option by written notice to Lilly during such *** period; provided
that in the event Incyte exercises such right to purchase such
inventory, Lilly shall grant, and hereby does grant, a royalty-free right and
license to any trademarks, names and logos of Lilly contained therein for a
period of *** solely to permit the orderly sale of such inventory, except where
Lilly reasonably believes that continued sales would pose an unreasonable
safety risk, and any materials having a Lilly logo (a housemark or the word “Lilly”)
that are released by Lilly must meet the Lilly quality assurance standards;

 

(vii)         to the extent that Lilly is responsible for manufacturing a Licensed
Product prior to termination of this Agreement, Lilly shall:

 

A.            in exchange
for a payment equal to *** of Lilly’s “standard costs”, use Commercially Reasonable
Efforts to supply Incyte and its Affiliates with comparable quantities of the
Licensed Products in the dosage strength, formulation and presentation as were
being Commercialized as of the effective date of termination until the earlier
of *** after the
effective date of the termination or establishment by Incyte of an alternative
supply for such Licensed Product, it being understood that Lilly is not
obligated to manufacture itself if Lilly reasonably believes that such
manufacture and/or Licensed Product would pose an unreasonable safety risk, and
unless Lilly was manufacturing itself immediately prior to termination, and in
the event Lilly was utilizing a contract manufacturer, Lilly’s obligation is to
use Commercially Reasonable Efforts to cooperate with Incyte to obtain Licensed
Product from such manufacturer; provided  that Incyte shall use
its Commercially Reasonable Efforts to establish an alternative supply as promptly
as reasonably practicable;

 

B.            cooperate with Incyte in reasonable respects to transfer

 

43

 

*** Confidential material redacted and filed
separately with the Commission.

 

manufacturing documents and materials which are used (at the time of
the termination) by Lilly in the Manufacture of the applicable Licensed
Products; and

 

C.            cooperate with Incyte in reasonable respects to transfer
to Incyte, or Incyte’s designated contract manufacturer, the manufacturing
technologies (including all relevant Know-How) that are used and necessary (at
the time of the termination) and Controlled by Lilly in the manufacture of the
applicable Licensed Products, provided  that Incyte shall
reimburse Lilly for Lilly’s reasonable Out-of-Pocket Costs to provide such
requested assistance;

 

(viii)        in
the event that Incyte terminates this Agreement pursuant to Section 8.2(d) or
Lilly terminates pursuant to 8.2(a) and such termination occurs after
Lilly has initiated a Phase III Study for a Licensed Product, ***); and

 

(ix)           Section 8.3(d) shall
apply.

 

(b)           Upon termination of this Agreement by Lilly in accordance
with Section 8.2(b):

 

(i)            the license granted to Lilly pursuant to Section 2.1
and the rights and obligations of the Parties pursuant to Sections 6.2 and 6.3
shall remain in effect and Lilly shall continue to pay to Incyte all royalties
due under Section 7.3 and 4.4 and all milestones due under Section 7.2
in accordance with the terms of this Agreement;

 

(ii)           until the last to expire of
all Royalty Terms with respect to Licensed Compounds and Licensed Products, the
rights and obligations of the Parties pursuant to Sections 2.6(d), 2.6(e), 2.6(f) shall
survive; provided however, that if the First
Commercial Sale of a Licensed Product has not occurred at the time of
termination, then the rights and obligations of the Parties pursuant to
Sections 2.6(d), 2.6(e), 2.6(f) shall survive for *** after the effective date of such termination provided  further that if a First
Commercial Sale of a Licensed Product takes place within such *** period, Sections 2.6(d), 2.6(e), 2.6(f) shall survive
until the last to expire of all Royalty Terms;
and

 

(iii)          Section 8.3(d) shall apply.

 

(c)           ARTICLE I (Definitions), IX (Indemnification and Limitation
of Liability), XI (Confidentiality), XII (Dispute Resolution) and XIII
(Miscellaneous) and Sections 6.1 (Inventorship; Ownership), 7.5 (Financial
Records), 7.6 (Audits), 8.3 (Effects of Termination), 10.4 (Disclaimer of
Warranty) and 10.5 (Standstill) shall survive termination or expiration of this
Agreement.

 

(d)           Termination of this Agreement shall be in addition to, and
shall not prejudice, the Parties’ remedies at law or in equity, including the
Parties’ ability to receive legal damages and/or equitable relief with respect
to any breach of this Agreement, regardless of whether or not such breach was
the reason for the termination.

 

44

 

***Confidential material redacted and
filed separately with the commission.

 

ARTICLE IX

 

INDEMNIFICATION; LIMITATION OF LIABILITY

 

9.1           By
Lilly.

 

(a)           Lilly agrees, at
Lilly’s cost and expense, to defend, indemnify and hold harmless Incyte and its
Affiliates and their respective directors, officers, employees and agents (the “Incyte
Indemnified Parties”) from and against any losses, costs, damages, fees or
expenses arising out of any Third Party claim relating to (i) any breach
by Lilly of any of its representations, warranties or obligations pursuant to
this Agreement; (ii) the gross negligence or willful misconduct of Lilly;
and (iii) the Development, manufacture, Commercialization, use, sale or
other disposition by Lilly, its Affiliates or sublicensees of any Licensed
Compound or Licensed Product.

 

(b)           In the event of any
such claim against the Incyte Indemnified Parties by any Third Party, Incyte
shall promptly notify Lilly in writing of the claim and Lilly shall have the
right, exercisable by notice to Incyte within *** after receipt of notice from
Incyte of the claim, to assume direction and control of the defense,
litigation, settlement, appeal or other disposition of the claim (including the
right to settle the claim solely for monetary consideration) with counsel
selected by Lilly and reasonably acceptable to Incyte.  The Incyte Indemnified Parties shall
cooperate with Lilly and may, at their option and expense, be separately
represented in any such action or proceeding. 
Lilly shall not be liable for any litigation costs or expenses incurred
by the Incyte Indemnified Parties without Lilly’s prior written
authorization.  In addition, Lilly shall
not be responsible for the indemnification or defense of any Incyte Indemnified
Party to the extent arising from any negligent or intentional acts by any
Incyte Indemnified Party or the breach by Incyte of any obligation or warranty
under this Agreement, or any claims compromised or settled without its prior
written consent.  Notwithstanding the
foregoing, Lilly shall not settle a Third Party claim without the written
consent of Incyte, if such settlement would impose any monetary obligation on
Incyte or require Incyte to submit to an injunction.

 

(c)           Notwithstanding
anything to the contrary above, in the event of any such claim against the
Incyte Indemnified Parties by a governmental or criminal action seeking an
injunction against Incyte, Incyte shall have the right to control the defense,
litigation, settlement, appeal or other disposition of the claim at Lilly’s
expense.

 

9.2           By
Incyte.

 

(a)           Incyte agrees, at
Incyte’s cost and expense, to defend, indemnify and hold harmless Lilly and its
Affiliates and their respective directors, officers, employees and agents (the “Lilly
Indemnified Parties”) from and against any losses, costs, damages, fees or
expenses arising out of any Third Party claim relating to (a) any breach
by Incyte of any of its representations, warranties or obligations pursuant to
this Agreement, or (b) the gross negligence or willful misconduct of Incyte, and (c) the Development,
manufacture, Commercialization, use, sale or other disposition by Incyte, its
Affiliates or sublicensees of any Licensed Compound or Licensed Product.

 

45

 

*** Confidential material redacted and filed separately with
the Commission.

 

(b)           In the event of any
such claim against the Lilly Indemnified Parties by any Third Party, Lilly
shall promptly notify Incyte in writing of the claim. Incyte shall have the
right, exercisable by notice to Lilly within *** after receipt of notice from
Lilly of the claim, to assume direction and control of the defense, litigation,
settlement, appeal or other disposition of the claim (including the right to
settle the claim solely for monetary consideration) with counsel selected by
Incyte and reasonably acceptable to Lilly. The Lilly Indemnified Parties shall
cooperate with Incyte and may, at their option and expense, be separately
represented in any such action or proceeding. 
Incyte shall not be liable for any litigation costs or expenses incurred
by the Lilly Indemnified Parties without Incyte’s prior written
authorization.  In addition, Incyte shall
not be responsible for the indemnification or defense of any Lilly Indemnified
Party to the extent arising from any negligent or intentional acts by any Lilly
Indemnified Party, or the breach by Lilly of any representation, obligation or
warranty under this Agreement, or any claims compromised or settled without its
prior written consent.  Notwithstanding the
foregoing, Incyte shall not settle a Third Party claim without the written
consent of Lilly,
if such settlement would impose any monetary obligation on Lilly or require Lilly to submit to an injunction.

 

(c)           Notwithstanding
anything to the contrary above, in the event of any such claim against the
Lilly Indemnified Parties by a governmental or criminal action seeking an
injunction against Lilly, Lilly shall have the right to control the defense,
litigation, settlement, appeal or other disposition of the claim at Incyte’s
expense.

 

9.3           Limitation
of Liability.  EXCEPT WITH RESPECT TO A BREACH OF ARTICLE XI, OR A
PARTY’S LIABILITY PURSUANT TO ARTICLE IX, NEITHER PARTY SHALL BE LIABLE FOR
SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR OTHER
INDIRECT OR REMOTE DAMAGES, OR, EXCEPT WITH RESPECT TO A BREACH OF SECTION 2.6,
FOR LOSS OF PROFITS, LOSS OF DATA OR LOSS OF USE DAMAGES ARISING IN ANY WAY OUT
OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, WHETHER BASED UPON
WARRANTY, CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSS.

 

ARTICLE X

 

REPRESENTATIONS AND WARRANTIES AND COVENANTS

 

10.1         Representation Of Authority;
Consents.  Incyte and Lilly each
represents and warrants to the other Party that:

 

(a)            as
of the Effective Date, it has full right, power and authority to enter into
this Agreement;

 

(b)           as of the Effective
Date, this Agreement has been duly executed by such Party and constitutes a
legal, valid and binding obligation of such Party, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium and other Laws
relating to or affecting

 

46

 

creditors’ rights
generally and by general equitable principles and public policy constraints
(including those pertaining to limitations and/or exclusions of liability,
competition Laws, penalties and jurisdictional issues including conflicts of
Laws); and

 

(c)           as
of the Effective Date, and except as otherwise contemplated in this Agreement,
all necessary consents, approvals and authorizations of all government
authorities and other persons required to be obtained by such Party in
connection with the execution, delivery and performance of this Agreement have
been and shall be obtained.

 

10.2         No
Conflict.  Each Party represents and
warrants to the other Party that the execution and delivery of this Agreement
and the performance of such Party’s obligations hereunder (a) do not
conflict with or violate such Party’s corporate charter and bylaws or any
requirement of applicable Laws and (b) do not and shall not conflict with,
violate or breach or constitute a default or require any consent under, any
material oral or written contractual obligation of such Party.  Each Party agrees that it shall not during
the term of this Agreement grant any right, license, consent or privilege to any
Third Party or otherwise undertake any action, either directly or indirectly,
that would conflict with the rights granted to the other Party or interfere
with any obligations of such Party set forth in this Agreement.

 

10.3         Additional
Incyte Representations and Warranties. 
Incyte represents and warrants that, as of the Effective Date, except as
previously disclosed to Lilly:

 

(a)           Neither
it nor any of its Affiliates has received written notice of any claim or
litigation which alleges any Intellectual Property Rights of a Third Party are
infringed by a Licensed Compound or the Development or Commercialization of any
Licensed Compound; to the knowledge of Incyte and its Affiliates, none of
Incyte or any of its Affiliates has in the past infringed or is currently
infringing any Third Party Intellectual Property Rights through activities
related to the Licensed Compounds;

 

(b)           there
are no claims, judgments or settlements against or owed by Incyte or any of its
Affiliates, nor, to the knowledge of Incyte or any of its Affiliates, any
pending reissue, reexamination, interference, opposition or similar
proceedings, with respect to any Licensed Compounds or Incyte IP, and Incyte
has not received written notice of any threatened claims or litigation or any
reissue, reexamination, interference, opposition or similar proceedings seeking
to invalidate or otherwise challenge any Incyte IP;

 

(c)           to
the knowledge of Incyte and its Affiliates, no Third Party is infringing any
Incyte Patent Rights;

 

(d)           (i) Incyte
is the legal and beneficial owner or has the right to grant to Lilly the rights
granted herein, to all Incyte IP; (ii) no Third Party has any right,
interest or claim in or to such rights that would limit the rights granted to
Lilly under this Agreement; and (iii) all assignments to Incyte of
inventorship rights relating to the Incyte Patent Rights Controlled by Incyte
are valid and enforceable;

 

(e)           all
fees due to date that are required to maintain the Incyte IP have been paid in
full and to Incyte’s knowledge, the Incyte IP is valid and enforceable; 

 

47

 

*** Confidential material redacted and filed separately with
the Commission.

 

(f)            Incyte
has not granted and shall not grant any Third Party rights that are or would be
inconsistent with Lilly’s rights hereunder and there are no agreements or
arrangements to which Incyte or any of its Affiliates is a party relating to
Licensed Compound or Incyte IP that would limit the rights granted to Lilly
under this Agreement; and

 

(g)           Incyte has disclosed
to Lilly all material information known to it and its Affiliates with respect
to the safety and efficacy of each of the Licensed Compounds.

 

(h)           Neither Incyte nor
any of its Affiliates Controls any Patent Rights or Know-How necessary to
Develop, manufacture or Commercialize Licensed Products and not included in the
licenses granted hereunder to Lilly. 
Subject to Section 13.3(b)(ii), in the event Incyte subsequently
determines that any Patent Rights or Know-How necessary to Develop, manufacture
or Commercialize Licensed Products is Controlled by any Affiliate of Incyte,
and not Incyte, Incyte shall immediately cause such Affiliate to grant to
Incyte, a license (that is sublicenseable to Lilly hereunder) to, or ownership
of, such Patent Rights or Know-How in a manner consistent with this Agreement.

 

(i)            None of the Incyte
IP has been licensed or sublicensed from any Third Party, and there are no
royalties or other payments that would be due to Third Parties on account of
Development or Commercialization of Licensed Compounds or Licensed Products
hereunder as a result of any agreement entered into by Incyte or any of its
Affiliates.

 

10.4         Disclaimer
of Warranty.  Nothing in this
Agreement shall be construed as a representation made or warranty given by
Incyte that Lilly will be successful in obtaining any Patent Rights, that any
patents will issue based on pending applications or that any such pending
applications or patents issued thereon will be valid.  ALL INCYTE IP TRANSFERRED PURSUANT TO THIS
AGREEMENT SHALL BE PROVIDED ON AN “AS IS” BASIS.  EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, EACH PARTY EXPRESSLY DISCLAIMS, WAIVES, RELEASES AND RENOUNCES ANY
WARRANTY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT.

 

10.5         Standstill.

 

(a)           Lilly agrees that,
for a period commencing on the Effective Date and ending *** after the
Effective Date, unless specifically invited in writing to do so by Incyte,
Lilly and each of its Affiliates will not in any manner, directly or
indirectly:

 

(i)            effect, or seek,
offer or propose to effect (whether publicly or otherwise) or cause or
participate in, (A) any acquisition of (1) any Voting Stock of Incyte
or any securities that at such time are convertible or exchangeable into or exercisable
for any Voting Stock of Incyte (collectively, “Voting Securities”); (2) any
direct or indirect rights or options to acquire any Voting Securities; or (3) any
assets or securities of Incyte or any of its subsidiaries; (B) any merger,
consolidation, tender or exchange offer, or other business combination
involving Incyte or any Affiliate thereof; (C) any restructuring,
recapitalization, liquidation, dissolution or similar transaction with respect
to Incyte or any Affiliate thereof; (D) any “solicitation” of “proxies”
(as such terms are defined or used in Regulation 14A under the Exchange Act) or

 

48

 

*** Confidential material redacted and filed separately with
the Commission.

 

consents with
respect to any Voting Securities, any “election contest” (as such term is
defined or used in Rule 14a-11 of the Exchange Act) with respect to
Incyte, or any demand for a copy of Incyte’s stock ledger, list of its
stockholders, or other books and records; or (E) any action inconsistent
with the terms of this Section 10.5;

 

(ii)           form, join,
participate in or encourage the formation of any “group” (within the meaning of
Section 13(d)(3) of the Exchange Act) with respect to any Voting
Securities;

 

(iii)          otherwise act,
alone or in concert with others (including by providing financing for another
party), to seek or offer to control or influence, in any manner, the
management, Board of Directors or policies of Incyte;

 

(iv)          take any action that
might force Incyte to make a public announcement regarding any of the types of
matters set forth in Section 10.5(a)(i);

 

(v)           make (publicly or to
Incyte, or its directors, officers, employees, agents or security holders,
directly or indirectly) any request or proposal to amend, waive or terminate
any provision of this Section 10.5 or any inquiry or statement relating
thereto; or

 

(vi)          instigate, encourage
or assist any Third Party to do any of the foregoing.

 

(b)           Notwithstanding
anything in this Section 10.5 to the contrary, the provisions of this Section 10.5
shall immediately cease to be of any effect as to Lilly and its Affiliates and
shall be deemed to be waived in the event (i) ***; or (ii) a person
or 13D Group not including Lilly or its Affiliates ***.  In the event that the transactions
contemplated by this clause shall have been terminated or abandoned, and such
termination or abandonment is demonstrable by objective, written evidence
provided by Incyte to Lilly, all of the restrictions in this Section 10.5
shall again be applicable as to the activities Lilly or its Affiliates initiate
thereafter for the remainder of the period specified herein.

 

(c)           Notwithstanding
anything in the Section 10.5 to the contrary, Lilly and its Affiliates may
acquire an aggregate amount of Voting Securities that would represent less than
*** of the voting power represented by Incyte’s Voting Stock solely for the
purposes of investment in the ordinary course of business (so long as any
decision to make such acquisition is in compliance with United States securities
laws).  Nothing in this Section 10.5
shall ***. 

 

49

 

*** Confidential
material redacted and filed separately with the Commission.

 

(d)               
This Section 10.5 shall not apply to any of the activities with
respect to Licensed Compounds or Licensed Products contemplated by this
Agreement.

 

(e)           incyte *** upon (i) ***; and
(ii) ***.

 

ARTICLE XI

 

CONFIDENTIALITY

 

11.1         Confidential Information.  All Confidential Information of a Party (the “Disclosing
Party”) shall not be used by the other Party (the “Receiving Party”)
except in performing its obligations or exercising rights explicitly granted
under this Agreement and shall be maintained in confidence by the Receiving
Party and shall not otherwise be disclosed by the Receiving Party to any Third
Party, without the prior written consent of the Disclosing Party with respect
to such Confidential Information, except to the extent that the Confidential
Information:

 

(a)           was
known by the Receiving Party or its Affiliates prior to its date of disclosure
to the Receiving Party; or

 

(b)           is
lawfully disclosed to the Receiving Party or its Affiliates by sources other
than the Disclosing Party rightfully in possession of the Confidential
Information; or

 

(c)           becomes
published or generally known to the public through no fault or omission on the
part of the Receiving Party, its Affiliates or its sublicensees; or

 

(d)           is
independently developed by or for the Receiving Party or its Affiliates without
reference to or reliance upon such Confidential Information, as established by
written records.

 

Specific information shall not be deemed to be within
any of the foregoing exclusions merely because it is embraced by more general
information falling within those exclusions.

 

11.2         Permitted Disclosure.  The Receiving Party may provide the
Disclosing Party’s Confidential Information:

 

(a)           to the Receiving
Party’s respective employees, consultants and advisors, and to the employees,
consultants and advisors of such Party’s Affiliates, who have a need to know
such information and materials for performing obligations or exercising rights
expressly granted under this Agreement and have an obligation to treat such
information and materials as confidential;

 

50

 

*** Confidential material redacted and filed separately with
the Commission.

 

(b)           to patent offices in order to seek or
obtain Patent Rights or to Regulatory Authorities in order to seek or obtain
approval to conduct Clinical Trials or to gain Regulatory Approval with respect
to the Licensed Product as contemplated by this Agreement; provided,
that such disclosure may be made only to the extent reasonably necessary to
seek or obtain such Patent Rights or approvals; or

 

(c)           if such disclosure
is required by Law or to defend or prosecute litigation or arbitration; provided
that prior to such disclosure, to the extent permitted by Law, the
Receiving Party promptly notifies the Disclosing Party of such requirement and
furnishes only that portion of the Disclosing Party’s Confidential Information
that the Receiving Party is legally required to furnish. 

 

11.3         Publicity; Attribution; Terms of
this Agreement; Non-Use of Names.

 

(a)           Except as required by judicial order
or applicable Law or as set forth below, neither Party shall make any public
announcement concerning this Agreement without the prior written consent of the
other Party, which consent shall not be unreasonably withheld or delayed.  The Party preparing any such public
announcement shall provide the other Party with a draft thereof at least ***
prior to the date on which such Party would like to make the public
announcement.  Notwithstanding the
foregoing, the Parties shall issue a press release, in the form attached as Exhibit D,
within one (1) Business Day after the Effective Date to announce the
execution of this Agreement and describe the material financial and operational
terms of this Agreement.  For purposes of
disclosure to the investor community during conference calls, investor
presentations, and analyst meetings, the Parties acknowledge that Incyte can
disclose the following information, (i) base royalty: tiered, double digit
royalty payments on future global sales with rates ranging up to twenty
percent, (ii)  Development expenditure of thirty percent (30%) of
Co-Development costs through Regulatory Approval if Incyte fully participates
in co-funding Development, (iii) increased royalties payments on potential
future global sales with tiered rates ranging from twenty percent up to the
high twenties, (iv) the ability for Incyte to defer Development Costs that
exceed a predetermined level against future milestones and royalties, (v) the
ability to terminate Co-Development at any time for an incremental royalty
commensurate with Incyte’s contribution, and (vi) based on the current
Co-Development Budget, Incyte’s option to fund thirty percent (30%) of
Co-Development costs is expected to be primarily funded by the anticipated
development and regulatory milestones associated with this collaboration.  Neither Party shall use the name, trademark,
trade name or logo of the other Party or its employees in any publicity or news
release relating to this Agreement or its subject matter, without the prior
express written permission of the other Party.

 

(b)           Notwithstanding
the terms of this ARTICLE XI,

 

(i)            either Party shall
be permitted to disclose the existence and terms of this Agreement to the
extent required, based on the advice of such Party’s legal counsel, to comply
with applicable Laws, including the rules and regulations promulgated by
the United States Securities and Exchange Commission (the “SEC”) or any
other governmental authority, or the rules or regulations of the New York Stock Exchange (the “NYSE”), The
NASDAQ Stock Market (“NASDAQ”) or any other stock exchange on which
securities issued by a Party or a Party’s Affiliate are traded. 
Notwithstanding the foregoing, before disclosing this Agreement or

 

51

 

*** Confidential material redacted and filed separately with
the Commission.

 

any of the terms hereof pursuant to this Section 11.3(b), the Parties will coordinate in advance with each
other in connection with the redaction of certain provisions of this Agreement
with respect to any filings with the SEC, the NYSE, NASDAQ or any other stock exchange on which securities issued
by a Party or a Party’s Affiliate are traded, and each Party will use
Commercially Reasonable Efforts to seek confidential treatment for such terms as may be reasonably requested by the other Party; provided that each Party will ultimately
retain control over what information that Party discloses to their relevant
exchange, and provided further that the Parties will use their Commercially
Reasonable Efforts to file redacted versions with any governing bodies which
are consistent with redacted versions previously filed with any other governing
bodies. 
Other than such obligation,
neither Party (nor its Affiliates) will be obligated to consult with or obtain
approval from the other Party with respect to any filings to the SEC, the NYSE,
NASDAQ or any other stock exchange.

 

(ii)           Either
Party may disclose the existence and terms of this Agreement in confidence to
its attorneys and advisors, and to potential acquirers (and their respective
professional attorneys and advisors), in connection with a potential merger,
acquisition or reorganization and to existing and potential investors or
lenders of such Party, as a part of their due diligence investigations, or to
existing and potential licensees or sublicensees or to permitted assignees, in
each case under an agreement to keep the terms of confidentiality and non-use
substantially no less rigorous than the terms contained in this Agreement and
to use such information solely for the purpose permitted pursuant to this Section 11.3(b).

 

(iii)          Either Party may issue a press release
or make a public disclosure relating to this Agreement or the Parties’
activities under this Agreement to the extent that such disclosure describes
the commencement and/or “top-line” results of Clinical Trials of the Licensed
Product, the achievement of any Development events with respect to the Licensed
Product or the filing for or receipt of Regulatory Approval with respect to the
Licensed Product, amounts paid to Incyte in respect of the achievement of any
milestone events, Incyte’s exercise of the co-Development option or the
termination of this Agreement; however, the Party responsible for particular
Clinical Trials will coordinate press release information and disclosures to
protect rights to the Licensed Product and communication strategies relating to
the Licensed Product.  Prior to making
any such disclosure, the Party making the disclosure shall provide the other
Party with a draft of such proposed disclosure at least *** (or, to the extent
timely disclosure of a material event is required by Law or stock exchange or
stock market rules, such period of time sufficiently in advance of the
disclosure so that the other Party will have the opportunity to comment upon
the disclosure) prior to making any such disclosure, for the other Party’s
review and comment.

 

(c)           For
purposes of clarity, either Party may issue a press release or public
announcement or make such other disclosure relating to this Agreement if the
contents of such press release, public announcement or disclosure (i) has
previously been made public other than through a breach of this Agreement by
the issuing Party or its Affiliates or (ii) is contained in such Party’s
financial statements prepared in accordance with Accounting Standards.

 

11.4         Publications.  Each Party and its Affiliates shall have the
right to make disclosures pertaining to Licensed Compound or Licensed Product
to Third Parties in Publications in accordance with the following procedure
(provided that Incyte shall abide by such 
procedure to

 

52

 

*** Confidential material redacted and filed separately with
the Commission.

 

the extent
possible under any Clinical Trial agreement(s) that Incyte entered into
prior to the Effective Date):  The
publishing Party shall provide the non-publishing Party with an advance copy of
the proposed Publication, and each Party shall then have *** prior to submission
for any Publication in which to recommend any changes it reasonably believes
are necessary to preserve any Patent Rights or Know-How belonging in whole or
in part to the non-publishing Party.  If
the non-publishing Party informs the publishing Party that such Publication, in
the non-publishing Party’s reasonable judgment, could be expected to have a
material adverse effect on any patentable invention owned by or licensed, in
whole or in part, to the non-publishing Party (other than pursuant to a license
granted under this Agreement), or on any Know-How which is Confidential
Information of the non-publishing Party, the publishing Party shall delay or
prevent such Publication as follows:  (i) with
respect to a patentable invention, such Publication shall be delayed
sufficiently long (not to exceed ***) to permit the timely preparation and
filing of a patent application; and (ii) with respect to Know-How which is
Confidential Information of such non-publishing Party, such Know-How shall be
deleted from the Publication.  Following
the initiation of Phase III Clinical Trials with respect to a Licensed Product,
all Publications relating to such Licensed Product shall be controlled by
Lilly, and Incyte shall have no right (other than as required pursuant to any
publication provisions contained in any Clinical Trial agreement(s) that
Incyte entered into prior to the Effective Date) to publish without Lilly’s
prior written consent.  Notwithstanding
the foregoing, Lilly shall be permitted to disclose information on sites such
as clinicaltrials.gov in accordance with Lilly’s normal business practices.

 

11.5         Term.  All obligations under this ARTICLE XI shall
expire (a) *** following expiration of this Agreement pursuant to Section 8.1
or (b) *** following termination of this Agreement pursuant to Sections
8.2(a), 8.2(b), 8.2(c) or 8.2(d).

 

11.6         Return of Confidential Information.  Upon the expiration or termination of this
Agreement, upon request, the Receiving Party shall return to the Disclosing
Party or destroy all Confidential Information received by the Receiving Party
from the Disclosing Party (and all copies and reproductions thereof).  In addition, the Receiving Party shall
destroy:  (a) any notes, reports or
other documents prepared by the Receiving Party which contain Confidential
Information of the Disclosing Party; and (b) any Confidential Information
of the Disclosing Party (and all copies and reproductions thereof) which is in
electronic form or cannot otherwise be returned to the Disclosing Party.   Nothing in this Section 11.6 shall
require the alteration, modification, deletion or destruction of archival tapes
or other electronic back-up media made in the ordinary course of business; provided
that the Receiving Party shall continue to be bound by its obligations
of confidentiality and other obligations under this ARTICLE XI with respect to
any Confidential Information contained in such archival tapes or other
electronic back-up media.  Any requested
destruction of Confidential Information shall be certified in writing to the
Disclosing Party by an authorized officer of the Receiving Party supervising
such destruction.  Notwithstanding the
foregoing, (i) the Receiving Party may retain one copy of the Disclosing
Party’s Confidential Information solely for the purpose of determining the
Receiving Party’s continuing obligations under this ARTICLE XI and (ii) the
Receiving Party may retain the Disclosing Party’s Confidential Information and
its own notes, reports and other documents to the extent reasonably required (x) to
exercise the rights and licenses of the Receiving Party expressly surviving
expiration or termination of this Agreement; (y) to perform the
obligations of the Receiving Party expressly surviving expiration or
termination of this Agreement, and for

 

53

 

*** Confidential material redacted and filed separately with
the Commission.

 

regulatory or
archival purposes.  Notwithstanding the
return or destruction of the Disclosing Party’s Confidential Information, the
Receiving Party shall continue to be bound by its obligations of
confidentiality and other obligations under this ARTICLE XI.

 

ARTICLE XII

 

DISPUTE RESOLUTION

 

12.1         Dispute Resolution Process.  Matters before the JDC and Subcommittees
shall be governed by the process specified in Section 3.5.  Any controversy, claim or dispute arising out
of or relating to this Agreement that is not subject to Section 3.5, shall
be settled, if possible, through good faith negotiations between the Parties.  If the
Parties are unable to settle such dispute within ***, and a Party wishes to pursue the matter, the
matter may be referred by either Party to the Executive Officers, who shall meet to attempt to resolve the dispute
in good faith.  Such resolution, if any,
of a referred issue shall be final and binding on the Parties.  All negotiations pursuant to this Section 12.1
are confidential and shall be treated as compromise and settlement negotiations
for purposes of applicable rules of evidence.  If the Executive Officers are unable to
settle the dispute within *** after referral thereto pursuant to Section 12.1,
then each Party reserves its right to any and all remedies available under law
or equity with respect to the dispute, subject to Section 12.2.

 

12.2         Injunctive Relief.  Notwithstanding anything to the contrary in
this ARTICLE XII, any Party may seek immediate injunctive or other interim
relief from any court of competent jurisdiction as necessary to enforce the
provisions of Section 10.5 or ARTICLE XI and to enforce and prevent
infringement or misappropriation of the Patent Rights, Know-How or Confidential
Information Controlled by such Party.

 

ARTICLE XIII

 

MISCELLANEOUS

 

13.1         Governing Law.  This Agreement (and any claims or disputes
arising out of or related thereto or to the transactions contemplated thereby
or to the inducement of any party to enter therein, whether for breach of
contract, tortious conduct, or otherwise and whether predicated on common law,
statute or otherwise) shall in all respects be governed by and construed in
accordance with the laws of the State of New York, including all matters of
construction, validity and performance, in each case without reference to any
conflict of law rules that might lead to the application of the laws of
any other jurisdiction.

 

13.2         Consent to Jurisdiction.  Each Party irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Southern
District of New York or the United States District Court for the District of
Delaware, for the purposes of any suit, action or other proceeding arising out
of the Transaction.  Each Party agrees to
commence any such action, suit or proceeding either in the United States
District Court for the Southern District of New York or the United States
District Court for the District of Delaware or if such suit, action or other
proceeding may not be brought in such court for jurisdictional reasons, in the
Supreme Court of the State of New York, New York County.  Each Party further agrees that service of any

 

54

 

process, summons,
notice or document by U.S. registered mail to such Party’s respective address
set forth in Section 13.5 shall be effective service of process for any
action, suit or proceeding in New York or Delaware with respect to any matters
to which it has submitted to jurisdiction in this Section 13.2. Each Party
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement in (i) the
United States District Court for the Southern District of New York or (ii) the
United States District Court for the District of Delaware, and hereby and
thereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.

 

13.3         Assignment.

 

(a)           Neither
Party may assign its rights and obligations under this Agreement without the
prior written consent of the other Party, except that either Party may make
such assignment without the prior written consent of the other Party to an
Affiliate (so long as such Party shall remain jointly and severally liable with
such Affiliate with respect to all obligations so assigned).  Any request for consent to assignment shall
not be unreasonably withheld or delayed. 
Any purported assignment in contravention of this Section 13.3
shall, at the option of the non-assigning Party, be null and void and of no
effect.  No assignment shall release
either Party from responsibility for the performance of any accrued obligation
of such Party hereunder.  This Agreement
shall be binding upon and enforceable against the successor to or any permitted
assignee from either of the Parties.

 

(b)           Each
Party agrees that, notwithstanding any provisions of this Agreement to the
contrary:

 

(i)           
Either Party may assign this Agreement and the rights, obligations and licenses
granted hereunder to a Third Party in connection with a sale or transfer of all
or substantially all of the assigning Party’s business to which this Agreement
relates or if a Party merges or consolidates with a Third Party.

 

(ii)           In
the event that this Agreement is assigned by either Party in connection with a
sale or transfer of all or substantially all of the assigning Party’s business
to which this Agreement relates, such assignment shall not provide (A) the
non-assigning Party with rights or access to Intellectual Property Rights of
the assignee or acquirer of such Party, nor (B) the assignee or acquirer
with rights or access to Intellectual Property Rights of the non-assigning
Party.

 

13.4         Entire Agreement; Amendments.  This Agreement and the Exhibits and Schedules
referred to in this Agreement constitute the entire agreement between the
Parties with respect to the subject matter hereof, and supersede all previous
arrangements with respect to the subject matter hereof, whether written or
oral, including the Prior Confidentiality Agreement.  Any amendment or modification to this
Agreement shall be made in writing signed by both Parties.

 

13.5         Notices.  Notices to Incyte shall be addressed to:

 

Incyte
Corporation

Experimental
Station, Route 141 & Henry Clay Road 

 

55

 

*** Confidential material redacted and filed separately with
the Commission.

 

Wilmington,
Delaware 19880

Attention: Chief
Commercial Officer

Facsimile
No.: ***

 

with a
copy to:

 

Incyte
Corporation

Experimental
Station, Route 141 & Henry Clay Road

Building
E336

Wilmington,
Delaware 19880

Attention: General
Counsel

Facsimile
No.: ***

 

Notices
to Lilly shall be addressed to:

 

Eli
Lilly and Company

Lilly
Corporate Center

Indianapolis,
Indiana  46285

Attention: Vice President and President, Established Markets

 

with a
copy to:

 

Eli
Lilly and Company

Lilly
Corporate Center

Indianapolis,
Indiana  46285

 

Attention:  General Patent Counsel

 

Facsimile
No.:***

 

Either
Party may change its address to which notices shall be sent by giving notice to
the other Party in the manner herein provided. 
All reports, approvals, and notices required or permitted by this
Agreement to be given to a Party (each a “Notice”) shall be given in
writing, by personal delivery, telecopy or overnight courier, to the Party
concerned at its address as set forth above (or at such other address as a
Party may specify by written notice pursuant to this Section 13.5 to the
other). All Notices shall be deemed effective, delivered and received (a) if
given by personal delivery, or by overnight courier, when actually delivered
and signed for; or (b) if given by facsimile, when such facsimile is
transmitted to the facsimile number specified above and receipt therefor is
confirmed.

 

13.6         Force Majeure.  No failure or omission by either Party in the
performance of any obligation of this Agreement shall be deemed a breach of
this Agreement or create any liability if the same shall arise from a Force
Majeure Event; provided  that the Party affected by such cause
promptly notifies the other Party and uses diligent efforts to cure such
failure or omission as soon as is practicable after the occurrence of one or
more of the above mentioned causes.

 

13.7         Compliance With Laws.  Each Party shall perform its obligations
under this Agreement in compliance with all applicable Laws. 

 

56

 

13.8         Use Of Names, Logos Or Symbols.  Subject to Sections 5.3 and 11.3, no Party
shall use the name, trademarks, logos, physical likeness, employee names or
owner symbol of the other Party for any purpose, including private or public
securities placements, without the prior written consent of the affected
Party.  Nothing contained in this
Agreement shall be construed as granting either Party any rights or license to
use any of the other Party’s trademarks or trade names or the names of any
employees thereof, without separate, express written permission of the owner of
such trademark or trade name or name.

 

13.9         Independent Contractors.  It is understood and agreed that the
relationship between the Parties is that of independent contractors and that
nothing in this Agreement shall be construed to create a joint venture or any
relationship of employment, agency or partnership between the Parties to this
Agreement.  Neither Party is authorized
to make any representations, commitments, or statements of any kind on behalf
of the other Party or to take any action that would bind the other Party except
as explicitly provided in this Agreement. 
Furthermore, none of the transactions contemplated by this Agreement
shall be construed as a partnership for any tax purposes.

 

13.10       Headings.  The captions or headings of the sections or
other subdivisions hereof are inserted only as a matter of convenience or for
reference and shall have no effect on the meaning of the provisions hereof.

 

13.11       No Implied Waivers; Rights Cumulative.  No failure on the part of Incyte or Lilly to
exercise, and no delay by either Party in exercising, any right, power, remedy
or privilege under this Agreement, or provided by statute or at law or in
equity or otherwise, shall impair, prejudice or constitute a waiver of any such
right, power, remedy or privilege by such Party or be construed as a waiver of
any breach of this Agreement or as an acquiescence therein by such Party, nor
shall any single or partial exercise of any such right, power, remedy or
privilege by a Party preclude any other or further exercise thereof or the
exercise of any other right, power, remedy or privilege.

 

13.12       Severability.  If, under applicable Laws, any provision of
this Agreement is invalid or unenforceable, or otherwise directly or indirectly
affects the validity of any other material provision(s) of this Agreement
(such invalid or unenforceable provision, a “Severed Clause”), this
Agreement shall endure except for the Severed Clause.  The Parties shall consult one another and use
good faith efforts to agree upon a valid and enforceable provision that is a
reasonable substitute for the Severed Clause in view of the intent of this
Agreement.

 

13.13       Execution In Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.  Signatures provided by facsimile transmission
or in AdobeTM Portable Document Format (PDF) sent by electronic mail shall be
deemed to be original signatures.

 

13.14       No Third Party Beneficiaries.  No Person other than Lilly and Incyte (and
their respective assignees) shall be deemed an intended beneficiary hereunder
or have any right to enforce any obligation of this Agreement.

 

57

 

13.15       Performance by Affiliates.  Either Party may use one or more of its
Affiliates to perform its obligations and duties hereunder and Affiliates of a
Party are expressly granted certain rights herein; provided  that
each such Affiliate shall be bound by the corresponding obligations of such
Party and the Parties shall remain liable hereunder for the prompt payment and
performance of all their respective obligations hereunder.

 

13.16       Exhibits.  In the event of inconsistencies between this
Agreement and any exhibits, schedules or attachments hereto, the terms of this
Agreement shall control.

 

[THE REMAINDER OF
THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

 

58

 

IN WITNESS WHEREOF, the Parties have caused their duly authorized
officers to execute and acknowledge this Agreement as of the date first written
above.

 

 

	
  ELI
  LILLY AND COMPANY

  	
  INCYTE CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Steven M. Paul

  	
   

  	
  By:

  	
  /s/ Paul A. Friedman

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Steven M. Paul, M.D.

  	
   

  	
  Name:

  	
  Paul A. Friedman

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  EVP, Science and
  Technology

  	
   

  	
  Title:

  	
  President &
  CEO

  

 

59

 

Exhibit A

 

Incyte Patent Rights

 

 

*** Confidential material redacted
and filed separately with the Commission.

 

Exhibit A-1

 

Genus
Patent Rights

 

***

	
  ***

  	
   

  	
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  ***

  	
   

  	
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  ***

  	
   

  	
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  ***

  	
   

  	
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  ***

  

 

2

 

***
Confidential material redacted and filed separately with the Commission.

 

	
  ***

  	
   

  	
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  ***

  

 

3

 

***
Confidential material redacted and filed separately with the Commission.

 

	
  ***

  	
   

  	
  ***

  	
   

  	
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  ***

  

 

4

 

***
Confidential material redacted and filed separately with the Commission.

 

Exhibit A-2

 

Selection
Patent Rights

 

***

 

	
  ***

  	
   

  	
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5

 

***
Confidential material redacted and filed separately with the Commission.

 

	
  ***

  	
   

  	
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  ***

  

 

6

 

Exhibit B

 

Initial Information Transfer

 

Described
below are the items to be provided to Lilly by Incyte pursuant to Section 4.1(a) of
the Agreement, which include the material documents, information and data
listed in this Exhibit B that are recorded in tangible form that are
Incyte Know-How, to the extent each of which exists as of the Effective Date
and has not already been provided to Lilly. 
Within sixty (60) days after the Effective Date, Lilly will confirm in
writing to Incyte whether Incyte’s initial data transfer obligations, as
described in Section 4.1(a) of the Agreement, have been achieved.

 

Clinical &
Regulatory Documents and Information

 

·                  Clinical study related documents, information
and data that are recorded in tangible form, including those currently
possessed by CROs and other third party vendors

·                  Regulatory Authority submissions,
correspondence and all communications, including minutes from teleconferences
and contact reports (US and ex-US)

·                  Regulatory Authority meeting briefing
documents and related minutes (US and ex-US)

·                  Pre-IND submissions

·                  IND submissions

·                  Annual reports to IND(s)

·                  CTA/IMPD submissions

·                  Annual Safety Reports submissions

·                  Investigator’s Brochures and any updates
thereto

·                  Safety reports (CIOMSs and/or Medwatch
reports)

·                  Documents related to serious adverse events (“SAEs”)

·                  Investigator Safety Letters, actions taken
for safety reasons, and other relevant safety information

·                  Safety pharmacology and toxicology study
related documents, information and data that are recorded in tangible form

·                  Pharmacology and Absorption, Distribution,
Metabolism, and Excretion (ADME) related documents, information and data that
are recorded in tangible form

 

Licensed
Compound Documents

 

Incyte
may retain (x) originals of all documents, information and data, including
regulatory submissions, correspondence, and clinical trial data and (y) originals
of regulatory submissions, correspondence, and clinical trial data directly
related to Study 201 until fifteen (15) Business Days after responsibility for
the relevant regulatory filing or clinical trial has been transferred to Lilly
in accordance with the Agreement and this Exhibit B.  Incyte will provide both a shared electronic
depository and paper copies of all requested documents, information and data
where both electronic and paper versions are currently available.

 

Manufacturing
Know-How

 

Incyte
will prepare and compile an inventory of relevant documents and transfer all
Incyte Know-How for manufacturing Licensed Products including: laboratory
notebook data, batch 

 

 

records,
process data, stability data, summary reports, formulation folders, analytical
methods, development reports, quality and regulatory documentation, validation
reports and other material data related to the development, manufacturing,
and/or distribution of Licensed Compounds and/or Licensed Products. As part of
the Know-How transfer, Incyte shall cooperate with Lilly to establish a
transfer protocol and make resources available at Incyte’s cost to enable the
successful execution of the transfer protocol. 
Additionally, Incyte will disclose and transfer as necessary, any vendor
sourcing and/or contracting information that Lilly may reasonably request.

 

2

 

Exhibit C

 

Initial Development Plans

 

 

*** Confidential material redacted
and filed separately with the Commission.

 

***

 

 

***
Confidential material redacted and filed separately with the Commission.

 

***

 

 

*** Confidential material redacted and filed separately with the
Commission.

 

***

 

 

*** Confidential material redacted and filed separately with the
Commission.

 

***

 

 

Exhibit D

 

Press Release

 

 

	
  

  	
  

  
	
   

  	
   

  
	
   

  	
  Eli
  Lilly and Company

  Lilly
  Corporate Center

  Indianapolis,
  Indiana 46285

  U.S.A.

  www.lilly.com

  

 

Date: December 21, 2009

 

	
  For Release:

  	
  Immediately

  
	
   

  	
   

  
	
  Refer to:

  	
  (317) 276-5795 — Mark E. Taylor (Lilly)

  
	
   

  	
   

  
	
   

  	
  (302) 498-6944 — Pamela Murphy (Incyte)

  

 

 

	
  

  	
  

  
	
   

  	
   

  
	
   

  	
  Eli
  Lilly and Company

  Lilly
  Corporate Center

  Indianapolis,
  Indiana 46285

  U.S.A.

  www.lilly.com

  

 

Lilly and Incyte Announce
Collaboration for Development and Commercialization of Oral Anti-Inflammatory
and Autoimmune Therapies

 

Lilly Gains Worldwide
Rights for Incyte’s Novel JAK1/JAK2 Inhibitor, INCB28050, for Inflammatory and
Autoimmune Diseases

 

Incyte to Receive $90
Million Upfront Payment and up to $665 Million in Potential Milestones, Plus
Royalties on Future Sales

 

Incyte Retains
Co-Development & Co-Promotion Options

 

INDIANAPOLIS, IN and WILMINGTON, DE —  Eli Lilly and Company (NYSE:LLY) and Incyte
Corporation (NASDAQ:INCY) announced today that they have entered into an
exclusive worldwide license and collaboration agreement for the development and
commercialization of Incyte’s oral JAK1/JAK2 inhibitor, INCB28050, and certain
follow on compounds, for inflammatory and autoimmune diseases. The lead
compound, INCB28050, is currently being studied in a six-month dose-ranging
Phase II trial for rheumatoid arthritis.

 

Under the terms of the agreement, Lilly will receive
worldwide rights to develop and commercialize INCB28050 as an oral treatment
for all inflammatory conditions. In exchange for these rights, Incyte will
receive an initial payment of $90 million and is eligible for up to $665 million
in additional potential development, regulatory, and commercialization
milestones, as well as tiered, double-digit royalty payments on future global
sales with rates ranging up to twenty percent if a product is successfully
commercialized.

 

 

“This new alliance with Incyte reinforces Lilly’s
commitment to expand our presence in inflammation and autoimmunity through the
development of a new class of oral anti-inflammatory therapies,” said Eiry
Roberts, M.D. Lilly vice president for autoimmune product development. “We look
forward to continuing the development of INCB28050 in RA and initiating
additional clinical studies to help address the unmet patient needs from
debilitating autoimmune and inflammatory diseases.”

 

Paul Friedman, Incyte’s president and chief
executive officer, stated, “Lilly’s success in bringing novel therapies to
market, their commitment to building a franchise in inflammation and
autoimmunity, and their enthusiasm regarding the potential of JAK inhibition
gives us confidence that the full therapeutic and commercial potential of
INCB28050 in RA as well as other autoimmune and inflammatory conditions can be
rapidly and effectively achieved through this agreement.  This collaboration leverages the capabilities
and strengths of each partner and achieves our objective to retain significant
value for Incyte’s shareholders.”

 

Incyte will retain the option to co-develop its
JAK1/JAK2 inhibitors with Lilly on a compound-by-compound and
indication-by-indication basis beginning at the initiation of Phase IIb
development. Under the agreement, if Incyte elects to co-develop any compounds
and/or indications, Incyte would be responsible for funding thirty percent of
the associated future global development costs from the initiation of a Phase
IIb trial. Incyte would receive an incremental royalty rate increase across all
tiers resulting in effective royalty rates ranging up to the high twenties on
potential future global sales for compounds and/or indications that Incyte
elects to co-develop. Incyte expects that the earliest it would consider
exercising a co-development option would be in the second half of 2010,
concurrent with the potential initiation of a Phase IIb trial with INCB28050.

 

 

Development of the JAK1/JAK2 inhibitors will be
governed by a joint development committee. Incyte also has the option to
co-promote products in the US.

 

As a result of this transaction, Lilly expects to
incur a charge to earnings in the fourth quarter of 2009 of approximately $.05
per share. The company reconfirmed its full-year 2009 earnings-per-share
guidance of $3.90 to $4.00 per share on a reported basis, or $4.30 to $4.40 per
share on a pro forma non-GAAP basis.

 

About Rheumatoid Arthritis (RA)

 

Rheumatoid arthritis is an autoimmune disease,
estimated to affect about 1% of the world’s population. The disease is
characterized by aberrant immune mechanisms that lead to joint inflammation and
swelling with progressive destruction of joints. In addition to affecting the
joints, RA can affect connective tissue in the skin and organs of the
body.  Current treatments include the
non-steroidal anti-inflammatory drugs, disease-modifying anti-rheumatic drugs
such as methotrexate, and the newer injectable biological response modifiers
that target tumor necrosis factor alpha, a pro-inflammatory cytokine implicated
in the pathogenesis of rheumatoid arthritis. None of these treatments is
curative and RA remains a disease for which there is still a significant unmet
clinical need.

 

About JAK Inhibition

 

There are four known JAK enzymes: JAK1, 2, 3 and
TYK2. These enzymes are critical components of signaling mechanisms utilized by
a number of cytokines and growth factors, including those that are elevated in
RA patients. Cytokines such as interleukin-6, -12, and -23 

 

 

signal through the JAK pathway and have been
clinically validated as therapeutic targets in inflammatory diseases.
Additional JAK-dependent cytokines have also been implicated in a number of
inflammatory and autoimmune diseases suggesting that JAK inhibitors may be
useful for the treatment of a broad range of inflammatory conditions.

 

About INCB28050

 

INCB28050 is an orally-available, potent and
selective JAK1/JAK2 inhibitor that is currently in Phase II development as a
treatment for RA. In previously conducted Phase II studies, Incyte’s JAK1/JAK2
inhibitors have demonstrated efficacy and have been well tolerated in clinical
studies to date.

 

About Incyte

 

Incyte Corporation is a Wilmington, Delaware-based
drug discovery and development company focused on developing proprietary small
molecule drugs for oncology, inflammation and diabetes. Incyte’s most advanced
compound, INCB18424, is in Phase III development for myelofibrosis. For
additional information on Incyte, visit the Company’s web site at
www.incyte.com.

 

About Eli Lilly and Company

 

Lilly, a leading innovation-driven corporation, is
developing a growing portfolio of pharmaceutical products by applying the
latest research from its own worldwide laboratories and from collaborations
with eminent scientific organizations. Headquartered in Indianapolis, Ind.,
Lilly provides answers — through medicines and information — for some of the
world’s most urgent medical needs. 
Additional information about Lilly is available at www.lilly.com.  C-LLY

 

 

Lilly Safe Harbor Statement

 

This press release contains forward-looking
statements that are based on management’s current expectations, but actual
results may differ materially due to various factors. There are significant
risks and uncertainties in pharmaceutical research and development. There can
be no guarantees with respect to pipeline products (including the compounds
discussed in this press release) that the products will receive the necessary
clinical and manufacturing regulatory approvals or that they will prove to be
commercially successful. The company’s results may also be affected by such
factors as competitive developments affecting current products; the rate of
sales growth of recently launched products; the timing of anticipated
regulatory approvals and launches of new products; other regulatory
developments and government investigations; patent disputes and other
litigation involving current and future products; the impact of governmental
actions regarding pricing, importation, and reimbursement for pharmaceuticals;
business development transactions; changes in tax law; asset impairments and
restructuring charges and the impact of exchange rates. For additional
information about the factors that affect the company’s business, please see
the company’s latest Form 10-K, filed February 2009, and Form 10-Q
filed October 2009. The company undertakes no duty to update
forward-looking statements.

 

Incyte Safe Harbor Statement

 

Except for the historical information contained
herein, the matters set forth in this press release, including statements with
respect to with respect to the potential for Incyte to receive up to $665
million in additional potential milestones, Incyte’s expectation for the
earliest time for it to consider exercising a co-development option, Incyte’s
confidence that the full therapeutic and commercial potential of INCB28050 in
RA as well as other inflammatory conditions can be rapidly and effectively
achieved through the collaboration agreement, and the potential for JAK
inhibitors to be useful for the treatment of a broad range of inflammatory
conditions, are all forward-looking statements within the meaning of the “safe
harbor” provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and uncertainties that
may cause the parties not to achieve some or all of the commercial and
developmental milestones set forth in the collaboration agreement and that may
otherwise cause Incyte’s actual results and timing to differ materially,
including the high degree of risk and uncertainty associated with drug
development and clinical trials, the uncertainty associated with the regulatory
approval processes, risks related to the timing of and patient enrollment in
clinical trials, risks related to the potential failure of INCB28050 to
demonstrate safety and efficacy in clinical testing, risks and uncertainty
associated with the therapeutic and commercial value of INCB28050, risks
relating to Lilly’s and Incyte’s abilities to successfully develop and commercialize
drug candidates, risks relating to market competition, risks associated with 

 

 

Incyte’s dependence on its relationship with its
collaboration partners, and other risks detailed from time to time in Incyte’s
filings with the Securities and Exchange Commission, including its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2009. Incyte
disclaims any intent or obligation to update these forward-looking statements.

 

#       #       #

 

 

Exhibit E

 

Hematology Field and
Oncology Field  (ICD-9CM)

 

 

2.  NEOPLASMS (140-239)

 

1.             Content:

 

This
chapter contains the following broad groups:

 

140-195                          Malignant neoplasms, stated or presumed to be primary, of
specified sites, except of lymphatic and hematopoietic tissue

196-198                          Malignant neoplasms, stated or presumed to be secondary, of
specified sites

199                                                   Malignant neoplasms, without specification of site

200-208                          Malignant neoplasms, stated or presumed to be primary, of
lymphatic and hematopoietic tissue

209                                                   Neuroendocrine tumors

210-229                          Benign neoplasms

230-234                          Carcinoma in situ

235-238                          Neoplasms of uncertain behavior [see Note, at beginning of
section 235-238]

239                                                   Neoplasms of unspecified nature

 

2.             Functional activity

 

All
neoplasms are classified in this chapter, whether or not functionally active.
An additional code from Chapter 3 may be used to identify such functional
activity associated with any neoplasm, e.g.:

catecholamine-producing
malignant pheochromocytoma of adrenal:

code 194.0, additional code 255.6

basophil
adenoma of pituitary with Cushing’s syndrome:

code 227.3, additional code 255.0

 

3.             Morphology [Histology]

 

For
those wishing to identify the histological type of neoplasms, a comprehensive
coded nomenclature, which comprises the morphology rubrics of the ICD-Oncology,
is given after the E-code chapter.

 

4.             Malignant neoplasms overlapping
site boundaries

 

Categories
140-195 are for the classification of primary malignant neoplasms according to
their point of origin.  A malignant
neoplasm that overlaps two or more subcategories within a three-digit rubric
and whose point of origin cannot be determined should be classified to the
subcategory .8 “Other.”  For example, “carcinoma
involving tip and ventral surface of tongue” should be assigned to 141.8. On
the other hand, “carcinoma of tip of tongue, extending to involve the ventral
surface” should be coded to 141.2, as the point of origin, the tip, is
known.  Three subcategories (149.8,
159.8, 165.8) have been provided for malignant neoplasms that overlap the
boundaries of three-digit rubrics within certain systems.  Overlapping malignant neoplasms that cannot
be classified as indicated above should be assigned to the appropriate
subdivision of category 195 (Malignant neoplasm of other and ill-defined
sites).

 

MALIGNANT NEOPLASM OF LIP, ORAL
CAVITY, AND PHARYNX (140-149)

 

Excludes:              carcinoma
in situ (230.0)

 

140                           Malignant
neoplasm of lip

 

 

Excludes:              skin of lip (173.0)

 

140.0                 Upper lip, vermilion border

Upper lip:

NOS

external

lipstick area

 

140.1                 Lower lip, vermilion border

Lower lip:

NOS

external

lipstick area

 

140.3                 Upper lip, inner aspect

Upper lip:

buccal aspect

frenulum

mucosa

oral aspect

 

140.4                 Lower lip, inner aspect

Lower lip:

buccal aspect

frenulum

mucosa

oral aspect

 

140.5                 Lip, unspecified, inner aspect

Lip, not specified whether
upper or lower:

buccal aspect

frenulum

mucosa

oral aspect

 

140.6                 Commissure of lip

Labial commissure

 

140.8                 Other sites of lip

Malignant neoplasm of
contiguous or overlapping sites of lip whose point of origin cannot be
determined

 

140.9                 Lip, unspecified, vermilion border

Lip, not specified as upper or
lower:

NOS

external

lipstick area

 

141                           Malignant
neoplasm of tongue

 

141.0                 Base of tongue

Dorsal surface of base of
tongue

Fixed part of tongue NOS

 

141.1                 Dorsal surface of tongue

Anterior two-thirds of tongue,
dorsal surface

Dorsal tongue NOS

 

2

 

Midline of tongue

 

Excludes:              dorsal surface of base of tongue
(141.0)

 

141.2                 Tip and lateral border of tongue

 

141.3                 Ventral surface of tongue

Anterior two-thirds of tongue,
ventral surface

Frenulum linguae

 

141.4                 Anterior two-thirds of tongue, part unspecified

Mobile part of tongue NOS

 

141.5                 Junctional zone

Border of tongue at junction of
fixed and mobile parts at insertion of anterior tonsillar pillar

 

141.6                 Lingual tonsil

 

141.8                 Other sites of tongue

Malignant neoplasm of
contiguous or overlapping sites of tongue whose point of origin cannot be
determined

 

141.9                 Tongue, unspecified

Tongue NOS

 

142                           Malignant
neoplasm of major salivary glands

 

Includes:               salivary ducts

 

Excludes:              malignant neoplasm of minor
salivary glands:

NOS (145.9)

buccal mucosa (145.0)

soft palate (145.3)

tongue (141.0-141.9)

tonsil, palatine (146.0)

 

142.0                 Parotid gland

 

142.1                 Submandibular gland

Submaxillary gland

 

142.2                 Sublingual gland

 

142.8                 Other major salivary glands

Malignant neoplasm of
contiguous or overlapping sites of salivary glands and ducts whose point of
origin cannot be determined

 

142.9                 Salivary gland, unspecified

Salivary gland (major) NOS

 

143                           Malignant
neoplasm of gum

 

Includes:               alveolar (ridge) mucosa

gingiva (alveolar)
(marginal)

interdental papillae

 

Excludes:              malignant odontogenic neoplasms
(170.0-170.1)

 

143.0                 Upper gum

 

143.1                 Lower gum

 

3

 

143.8                 Other sites of gum

Malignant neoplasm of
contiguous or overlapping sites of gum whose point of origin cannot be
determined

 

143.9                 Gum, unspecified

 

144                           Malignant
neoplasm of floor of mouth

 

144.0                 Anterior portion

Anterior to the premolar-canine
junction

 

144.1                 Lateral portion

 

144.8                 Other sites of floor of mouth

Malignant neoplasm of
contiguous or overlapping sites of floor of mouth whose point of origin cannot
be determined

 

144.9                 Floor of mouth, part unspecified

 

145                           Malignant
neoplasm of other and unspecified parts of mouth

 

Excludes:              mucosa of lips (140.0-140.9)

 

145.0                 Cheek mucosa

Buccal mucosa

Cheek, inner aspect

 

145.1                 Vestibule of mouth

Buccal sulcus (upper) (lower)

Labial sulcus (upper) (lower)

 

145.2                 Hard palate

 

145.3                 Soft palate

 

Excludes:              nasopharyngeal [posterior] [superior]
surface of soft palate (147.3)

 

145.4                 Uvula

 

145.5                 Palate, unspecified

Junction of hard and soft
palate

Roof of mouth

 

145.6                 Retromolar area

 

145.8                 Other specified parts of mouth

Malignant neoplasm of
contiguous or overlapping sites of mouth whose point of origin cannot be
determined

 

145.9                 Mouth, unspecified

Buccal cavity NOS

Minor salivary gland,
unspecified site

Oral cavity NOS

 

146                           Malignant
neoplasm of oropharynx

 

146.0                 Tonsil

Tonsil:

NOS

faucial

 

4

 

palatine

 

Excludes:              lingual tonsil (141.6)

pharyngeal tonsil
(147.1)

 

146.1                 Tonsillar fossa

 

146.2                 Tonsillar pillars (anterior) (posterior)

Faucial pillar

Glossopalatine fold

Palatoglossal arch

Palatopharyngeal arch

 

146.3                 Vallecula

Anterior and medial surface of
the pharyngoepiglottic fold

 

146.4                 Anterior aspect of epiglottis

Epiglottis, free border
[margin]

Glossoepiglottic fold(s)

 

Excludes:              epiglottis:

NOS (161.1)

suprahyoid portion
(161.1)

 

146.5                 Junctional region

Junction of the free margin of
the epiglottis, the aryepiglottic fold, and the pharyngoepiglottic fold

 

146.6                 Lateral wall of oropharynx

 

146.7                 Posterior wall of oropharynx

 

146.8                 Other specified sites of oropharynx

Branchial cleft

Malignant neoplasm of
contiguous or overlapping sites of oropharynx whose point of origin cannot be
determined

 

146.9                 Oropharynx, unspecified

 

147                           Malignant
neoplasm of nasopharynx

 

147.0                 Superior wall

Roof of nasopharynx

 

147.1                 Posterior wall

Adenoid

Pharyngeal tonsil

 

147.2                 Lateral wall

Fossa of Rosenmüller

Opening of auditory tube

Pharyngeal recess

 

147.3                 Anterior wall

Floor of nasopharynx

Nasopharyngeal [posterior]
[superior] surface of soft palate

Posterior margin of nasal
septum and choanae

 

147.8                 Other specified sites of nasopharynx

 

5

 

Malignant
neoplasm of contiguous or overlapping sites of nasopharynx whose point of
origin cannot be determined

 

147.9       Nasopharynx, unspecified

Nasopharyngeal wall NOS

 

148          Malignant neoplasm of hypopharynx

 

148.0       Postcricoid region

 

148.1       Pyriform sinus

Pyriform fossa

 

148.2       Aryepiglottic fold,
hypopharyngeal aspect

Aryepiglottic fold or
interarytenoid fold:

NOS

marginal zone

 

Excludes:               aryepiglottic
fold or interarytenoid fold, laryngeal aspect (161.1)

 

148.3       Posterior hypopharyngeal
wall

 

148.8       Other specified sites of
hypopharynx

Malignant neoplasm of
contiguous or overlapping sites of hypopharynx whose point of origin cannot be
determined

 

148.9       Hypopharynx, unspecified

Hypopharyngeal wall NOS

Hypopharynx NOS

 

149          Malignant neoplasm of other and ill-defined sites within the
lip, oral cavity, and pharynx

 

149.0       Pharynx, unspecified

 

149.1       Waldeyer’s ring

 

149.8       Other

Malignant neoplasms of lip,
oral cavity, and pharynx whose point of origin cannot be assigned to any one of
the categories 140-148

 

Excludes:               “book leaf”
neoplasm [ventral surface of tongue and floor of mouth] (145.8)

 

149.9       Ill-defined

 

MALIGNANT
NEOPLASM OF DIGESTIVE ORGANS AND PERITONEUM (150-159)

 

Excludes:               carcinoma in situ (230.1-230.9)

 

150          Malignant neoplasm of esophagus

 

150.0       Cervical esophagus

 

150.1       Thoracic esophagus

 

150.2       Abdominal esophagus

 

Excludes:               adenocarcinoma
(151.0)

cardio-esophageal
junction (151.0)

 

6

 

150.3       Upper third of esophagus

Proximal third of esophagus

 

150.4       Middle third of
esophagus

 

150.5       Lower third of esophagus

Distal third of esophagus

 

Excludes:               adenocarcinoma
(151.0)

cardio-esophageal
junction (151.0)

 

150.8       Other specified part

Malignant neoplasm of
contiguous or overlapping sites of esophagus whose point of origin cannot be
determined

 

150.9       Esophagus, unspecified

 

151          Malignant neoplasm of stomach

 

Excludes:               benign
carcinoid tumor of stomach (209.63)

malignant carcinoid
tumor of stomach (209.63)

 

151.0       Cardia

Cardiac orifice

Cardio-esophageal junction

 

Excludes:               squamous cell
carcinoma (150.2, 150.5)

 

151.1       Pylorus

Prepylorus

Pyloric canal

 

151.2       Pyloric antrum

Antrum of stomach NOS

 

151.3       Fundus of stomach

 

151.4       Body of stomach

 

151.5       Lesser curvature,
unspecified

Lesser curvature, not
classifiable to 151.1-151.4

 

151.6       Greater curvature,
unspecified

Greater curvature, not
classifiable to 151.0-151.4

 

151.8       Other specified sites of
stomach

Anterior wall, not classifiable
to 151.0-151.4

Posterior wall, not
classifiable to 151.0-151.4

Malignant neoplasm of
contiguous or overlapping sites of stomach whose point of origin cannot be
determined

 

151.9       Stomach, unspecified

Carcinoma ventriculi

Gastric cancer

 

152          Malignant neoplasm of small intestine, including duodenum

 

Excludes:               benign
carcinoid tumor of small intestine and duodenum (209.40-209.43)

malignant carcinoid
tumor of small intestine and duodenum (209.00-209.03)

 

152.0       Duodenum

 

7

 

152.1       Jejunum

 

152.2       Ileum

 

Excludes:               ileocecal valve
(153.4)

 

152.3       Meckel’s diverticulum

 

152.8       Other specified sites of
small intestine

Duodenojejunal junction

Malignant neoplasm of
contiguous or overlapping sites of small intestine whose point of origin cannot
be determined

 

152.9       Small intestine,
unspecified

 

153          Malignant neoplasm of colon

 

Excludes:               benign
carcinoid tumor of colon (209.50-209.56)

malignant carcinoid
tumor of colon (209.10-209.16)

 

153.0       Hepatic flexure

 

153.1       Transverse colon

 

153.2       Descending colon

Left colon

 

153.3       Sigmoid colon

Sigmoid (flexure)

 

Excludes:               rectosigmoid
junction (154.0)

 

153.4       Cecum

Ileocecal valve

 

153.5       Appendix

 

153.6       Ascending colon

Right colon

 

153.7       Splenic flexure

 

153.8       Other specified sites of
large intestine

Malignant neoplasm of
contiguous or overlapping sites of colon whose point of origin cannot be
determined

 

Excludes:               ileocecal valve
(153.4)

rectosigmoid junction
(154.0)

 

153.9       Colon, unspecified

Large intestine NOS

 

154          Malignant neoplasm of rectum, rectosigmoid junction, and anus

 

Excludes:               benign
carcinoid tumor of rectum (209.57)

malignant carcinoid
tumor of rectum (209.17)

 

154.0       Rectosigmoid junction

Colon with rectum

Rectosigmoid (colon)

 

154.1       Rectum

Rectal ampulla

 

8

 

154.2       Anal canal

Anal sphincter

 

Excludes:               skin of anus
(172.5, 173.5)

 

154.3       Anus, unspecified

 

Excludes:               anus:

margin (172.5, 173.5)

skin (172.5, 173.5)

perianal skin (172.5,
173.5)

 

154.8       Other

Anorectum

Cloacogenic zone

Malignant neoplasm of
contiguous or overlapping sites of rectum, rectosigmoid junction, and anus
whose point of origin cannot be determined

 

155          Malignant neoplasm of liver and intrahepatic bile ducts

 

155.0       Liver, primary

Carcinoma:

liver, specified as primary

hepatocellular

liver cell

Hepatoblastoma

 

155.1       Intrahepatic bile ducts

Canaliculi biliferi

Interlobular:

bile ducts

biliary canals

Intrahepatic:

biliary passages

canaliculi

gall duct

 

Excludes:               hepatic duct
(156.1)

 

155.2       Liver, not specified as
primary or secondary

 

156          Malignant neoplasm of gallbladder and extrahepatic bile ducts

 

156.0       Gallbladder

 

156.1       Extrahepatic bile ducts

Biliary duct or passage

NOS

Common bile duct

Cystic duct

Hepatic duct

Sphincter of Oddi

 

156.2       Ampulla of Vater

 

156.8       Other specified sites of
gallbladder and extrahepatic bile ducts

Malignant neoplasm of
contiguous or overlapping sites of gallbladder and extrahepatic bile ducts
whose point of origin cannot be determined

 

156.9       Biliary tract, part
unspecified

 

9

 

Malignant neoplasm involving
both intrahepatic and extrahepatic bile ducts

 

157          Malignant neoplasm of pancreas

 

157.0       Head of pancreas

 

157.1       Body of pancreas

 

157.2       Tail of pancreas

 

157.3       Pancreatic duct

Duct of:

Santorini

Wirsung

 

157.4       Islets of Langerhans

Islets of Langerhans, any part
of pancreas

 

Use
additional code to identify any functional activity

 

157.8       Other specified sites of
pancreas

Ectopic pancreatic tissue

Malignant neoplasm of
contiguous or overlapping sites of pancreas whose point of origin cannot be
determined

 

157.9       Pancreas, part
unspecified

 

158          Malignant neoplasm of retroperitoneum and peritoneum

 

158.0       Retroperitoneum

Periadrenal tissue

Perinephric tissue

Perirenal tissue

Retrocecal tissue

 

158.8       Specified parts of
peritoneum

Cul-de-sac (of Douglas)

Mesentery

Mesocolon

Omentum

Peritoneum:

parietal

pelvic

Rectouterine pouch

Malignant neoplasm of
contiguous or overlapping sites of retroperitoneum and peritoneum whose point
of origin cannot be determined

 

158.9       Peritoneum, unspecified

 

159          Malignant neoplasm of other and ill-defined sites within the
digestive organs and peritoneum

 

159.0       Intestinal tract, part
unspecified

Intestine NOS

 

159.1       Spleen, not elsewhere
classified

Angiosarcoma of spleen

Fibrosarcoma of spleen

 

Excludes:               Hodgkin’s
disease (201.0-201.9)

 

10

 

lymphosarcoma (200.1)

reticulosarcoma (200.0)

 

159.8       Other sites of digestive
system and intra-abdominal organs

Malignant neoplasm of digestive
organs and peritoneum whose point of origin cannot be assigned to any one of
the categories 150-158

 

Excludes:               anus and rectum
(154.8)

cardio-esophageal
junction (151.0)

colon and rectum (154.0)

 

159.9       Ill-defined

Alimentary canal or tract NOS

Gastrointestinal tract NOS

 

Excludes:               abdominal NOS
(195.2)

intra-abdominal NOS
(195.2)

 

MALIGNANT
NEOPLASM OF RESPIRATORY AND INTRATHORACIC ORGANS (160-165)

 

Excludes:               carcinoma in situ (231.0-231.9)

 

160          Malignant neoplasm of nasal cavities, middle ear, and
accessory sinuses

 

160.0       Nasal cavities

Cartilage of nose

Conchae, nasal

Internal nose

Septum of nose

Vestibule of nose

 

Excludes:               nasal bone
(170.0)

nose NOS (195.0)

olfactory bulb (192.0)

posterior margin of
septum and choanae (147.3)

skin of nose (172.3,
173.3)

turbinates (170.0)

 

160.1       Auditory tube, middle
ear, and mastoid air cells

Antrum tympanicum

Eustachian tube

Tympanic cavity

 

Excludes:               auditory canal
(external) (172.2, 173.2)

bone of ear (meatus)
(170.0)

cartilage of ear (171.0)

ear (external) (skin)
(172.2, 173.2)

 

160.2       Maxillary sinus

Antrum (Highmore) (maxillary)

 

160.3       Ethmoidal sinus

 

160.4       Frontal sinus

 

160.5       Sphenoidal sinus

 

160.8       Other

 

11

 

Malignant neoplasm of
contiguous or overlapping sites of nasal cavities, middle ear, and accessory
sinuses whose point of origin cannot be determined

 

160.9       Accessory sinus,
unspecified

 

161          Malignant neoplasm of larynx

 

161.0       Glottis

Intrinsic larynx

Laryngeal commissure (anterior)
(posterior)

True vocal cord

Vocal cord NOS

 

161.1       Supraglottis

Aryepiglottic fold or
interarytenoid fold, laryngeal aspect

Epiglottis (suprahyoid portion)
NOS

Extrinsic larynx

False vocal cords

Posterior (laryngeal) surface
of epiglottis

Ventricular bands

 

Excludes:               anterior aspect
of epiglottis (146.4)

aryepiglottic fold or
interarytenoid fold:

NOS (148.2)

hypopharyngeal aspect
(148.2)

marginal zone (148.2)

 

161.2       Subglottis

 

161.3       Laryngeal cartilages

Cartilage:

arytenoid

cricoid

cuneiform

thyroid

 

161.8       Other specified sites of
larynx

Malignant neoplasm of
contiguous or overlapping sites of larynx whose point of origin cannot be
determined

 

161.9       Larynx, unspecified

 

162          Malignant neoplasm of trachea, bronchus, and lung

 

Excludes:               benign
carcinoid tumor of bronchus (209.61)

malignant carcinoid
tumor of bronchus (209.21)

 

162.0       Trachea

Cartilage of trachea

Mucosa of trachea

 

162.2       Main bronchus

Carina

Hilus of lung

 

162.3       Upper lobe, bronchus or
lung

 

162.4       Middle lobe, bronchus or
lung

 

12

 

162.5       Lower lobe, bronchus or
lung

 

162.8       Other parts of bronchus
or lung

Malignant neoplasm of
contiguous or overlapping sites of bronchus or lung whose point of origin
cannot be determined

 

162.9       Bronchus and lung,
unspecified

 

163          Malignant neoplasm of pleura

 

163.0       Parietal pleura

 

163.1       Visceral pleura

 

163.8       Other specified sites of
pleura

Malignant neoplasm of
contiguous or overlapping sites of pleura whose point of origin cannot be
determined

 

163.9       Pleura, unspecified

 

164          Malignant neoplasm of thymus, heart, and mediastinum

 

164.0       Thymus

 

Excludes:               benign
carcinoid tumor of the thymus (209.62)

malignant carcinoid
tumor of the thymus (209.22)

 

164.1       Heart

Endocardium

Epicardium

Myocardium

Pericardium

 

Excludes:               great vessels
(171.4)

 

164.2       Anterior mediastinum

 

164.3       Posterior mediastinum

 

164.8       Other

Malignant neoplasm of
contiguous or overlapping sites of thymus, heart, and mediastinum whose point
of origin cannot be determined

 

164.9       Mediastinum, part
unspecified

 

165          Malignant neoplasm of other and ill-defined sites within the
respiratory system and intrathoracic organs

 

165.0       Upper respiratory tract,
part unspecified

 

165.8       Other

Malignant neoplasm of
respiratory and intrathoracic organs whose point of origin cannot be assigned
to any one of the categories 160-164

 

165.9       Ill-defined sites within
the respiratory system

Respiratory tract NOS

 

Excludes:               intrathoracic
NOS (195.1)

thoracic NOS (195.1)

 

13

 

MALIGNANT
NEOPLASM OF BONE, CONNECTIVE TISSUE, SKIN, AND BREAST (170-176)

 

Excludes:               carcinoma in situ:

breast (233.0)

skin (232.0-232.9)

 

170          Malignant neoplasm of bone and articular cartilage

 

Includes:                cartilage
(articular) (joint)

periosteum

 

Excludes:               bone marrow NOS
(202.9)

cartilage:

ear (171.0)

eyelid (171.0)

larynx (161.3)

nose (160.0)

synovia (171.0-171.9)

 

170.0       Bones of skull and face,
except mandible

Bone:

ethmoid

frontal

malar

nasal

occipital

orbital

parietal

sphenoid

temporal

zygomatic

Maxilla (superior)

Turbinate

Upper jaw bone

Vomer

 

Excludes:               carcinoma, any
type except intraosseous or odontogenic:

maxilla, maxillary
(sinus) (160.2)

upper jaw bone (143.0)

jaw bone (lower) (170.1)

 

170.1       Mandible

Inferior maxilla

Jaw bone NOS

Lower jaw bone

 

Excludes:               carcinoma, any
type except intraosseous or odontogenic:

jaw bone NOS (143.9)

lower (143.1)

upper jaw bone (170.0)

 

170.2       Vertebral column,
excluding sacrum and coccyx

Spinal column

Spine

Vertebra

 

Excludes:               sacrum and
coccyx (170.6)

 

170.3       Ribs, sternum, and
clavicle

Costal cartilage

 

14

 

Costovertebral joint

Xiphoid process

 

170.4       Scapula and long bones
of upper limb

Acromion

Bones NOS of upper limb

Humerus

Radius

Ulna

 

170.5       Short bones of upper
limb

Carpal

Cuneiform, wrist

Metacarpal

Navicular, of hand

Phalanges of hand

Pisiform

Scaphoid (of hand)

Semilunar or lunate

Trapezium

Trapezoid

Unciform

 

170.6       Pelvic bones, sacrum,
and coccyx

Coccygeal vertebra

Ilium

Ischium

Pubic bone

Sacral vertebra

 

170.7       Long bones of lower limb

Bones NOS of lower limb

Femur

Fibula

Tibia

 

170.8       Short bones of lower
limb

Astragalus [talus]

Calcaneus

Cuboid

Cuneiform, ankle

Metatarsal

Navicular (of ankle)

Patella

Phalanges of foot

Tarsal

 

170.9       Bone and articular
cartilage, site unspecified

 

171          Malignant neoplasm of connective and other soft tissue

 

Includes:                blood vessel

bursa

fascia

fat

ligament, except uterine

muscle

peripheral, sympathetic,
and parasympathetic nerves and ganglia

 

15

 

synovia

tendon (sheath)

 

Excludes:               cartilage (of):

articular (170.0-170.9)

larynx (161.3)

nose (160.0)

connective tissue:

breast (174.0-175.9)

internal organs code to
malignant neoplasm of the site [e.g., leiomyosarcoma of stomach, 151.9]

heart (164.1)

uterine ligament (183.4)

 

171.0       Head, face, and neck

Cartilage of:

ear

eyelid

 

171.2       Upper limb, including shoulder

Arm

Finger

Forearm

Hand

 

171.3       Lower limb, including
hip

Foot

Leg

Popliteal space

Thigh

Toe

 

171.4       Thorax

Axilla

Diaphragm

Great vessels

 

Excludes:               heart (164.1)

mediastinum
(164.2-164.9)

thymus (164.0)

 

171.5       Abdomen

Abdominal wall

Hypochondrium

 

Excludes:               peritoneum
(158.8)

retroperitoneum (158.0)

 

171.6       Pelvis

Buttock

Groin

Inguinal region

Perineum

 

Excludes:               pelvic
peritoneum (158.8)

retroperitoneum (158.0)

uterine ligament, any
(183.3-183.5)

 

171.7       Trunk, unspecified

Back NOS

 

16

 

Flank NOS

 

171.8       Other specified sites of
connective and other soft tissue

Malignant neoplasm of
contiguous or overlapping sites of connective tissue whose point of origin
cannot be determined

 

171.9       Connective and other soft
tissue, site unspecified

 

172          Malignant melanoma of skin

 

Includes:                melanocarcinoma

melanoma in situ of skin

melanoma (skin) NOS

 

Excludes:               skin of genital
organs (184.0-184.9, 187.1-187.9)

sites other than skin -
code to malignant neoplasm of the site

 

172.0       Lip

 

Excludes:               vermilion
border of lip (140.0-140.1, 140.9)

 

172.1       Eyelid, including
canthus

 

172.2       Ear and external
auditory canal

Auricle (ear)

Auricular canal, external

External [acoustic] meatus

Pinna

 

172.3       Other and unspecified
parts of face

Cheek (external)

Chin

Eyebrow

Forehead

Nose, external

Temple

 

172.4       Scalp and neck

 

172.5       Trunk, except scrotum

Axilla

Breast

Buttock

Groin

Perianal skin

Perineum

Umbilicus

 

Excludes:               anal canal
(154.2)

anus NOS (154.3)

scrotum (187.7)

 

172.6       Upper limb, including
shoulder

Arm

Finger

Forearm

Hand

 

172.7       Lower limb, including
hip

Ankle

Foot

 

17

 

Heel

Knee

Leg

Popliteal area

Thigh

Toe

 

172.8       Other specified sites of
skin

Malignant melanoma of
contiguous or overlapping sites of skin whose point of origin cannot be
determined

 

172.9       Melanoma of skin, site
unspecified

 

173          Other malignant neoplasm of skin

 

Includes:               malignant
neoplasm of:

sebaceous glands

sudoriferous,
sudoriparous glands

sweat glands

 

Excludes:               Kaposi’s
sarcoma (176.0-176.9)

malignant melanoma of
skin (172.0-172.9)

skin of genital organs
(184.0-184.9, 187.1-187.9)

 

173.0       Skin of lip

 

Excludes:               vermilion
border of lip (140.0-140.1, 140.9)

 

173.1       Eyelid, including
canthus

 

Excludes:               cartilage of
eyelid (171.0)

 

173.2       Skin of ear and external
auditory canal

Auricle (ear)

Auricular canal, external

External meatus

Pinna

 

Excludes:               cartilage of
ear (171.0)

 

173.3       Skin of other and
unspecified parts of face

Cheek, external

Chin

Eyebrow

Forehead

Nose, external

Temple

 

173.4       Scalp and skin of neck

 

173.5       Skin of trunk, except
scrotum

Axillary fold

Perianal skin

Skin of:

abdominal wall

anus

back

breast

buttock

chest wall

groin

 

18

 

perineum

Umbilicus

 

Excludes:               anal canal (154.2)

 

anus NOS (154.3)

skin of scrotum (187.7)

 

173.6                     Skin of upper limb, including shoulder

Arm

Finger

Forearm

Hand

 

173.7                     Skin of lower limb, including hip

Ankle

Foot

Heel

Knee

Leg

Popliteal area

Thigh

Toe

 

173.8                     Other specified sites of skin

Malignant neoplasm of
contiguous or overlapping sites of skin whose point of origin cannot be
determined

 

173.9                     Skin, site unspecified

 

174                              Malignant
neoplasm of female breast

 

Includes:                breast (female)

connective tissue

soft parts

Paget’s disease of:

breast

nipple

 

Use
additional code to identify estrogen receptor status (V86.0, V86.1)

 

Excludes:               skin of breast (172.5, 173.5)

 

174.0                     Nipple and areola

 

174.1                     Central portion

 

174.2                     Upper-inner quadrant

 

174.3                     Lower-inner quadrant

 

174.4                     Upper-outer quadrant

 

174.5                     Lower-outer quadrant

 

174.6                     Axillary tail

 

174.8                     Other specified sites of female breast

Ectopic sites

Inner breast

Lower breast

Midline of breast

 

19

 

Outer breast

Upper breast

Malignant neoplasm of
contiguous or overlapping sites of breast whose point of origin cannot be
determined

 

174.9                     Breast (female), unspecified

 

175                              Malignant
neoplasm of male breast

 

Use
additional code to identify estrogen receptor status (V86.0, V86.1)

 

Excludes:               skin of breast (172.5, 173.5)

 

175.0                     Nipple and areola

 

175.9                     Other and unspecified sites of male breast

Ectopic breast tissue, male

 

176                              Kaposi’s
sarcoma

 

176.0                     Skin

 

176.1                     Soft tissue

Blood vessel

Connective tissue

Fascia

Ligament

Lymphatic(s) NEC

Muscle

 

Excludes:               lymph glands and nodes (176.5)

 

176.2                     Palate

 

176.3                     Gastrointestinal sites

 

176.4                     Lung

 

176.5                     Lymph nodes

 

176.8                     Other specified sites

Oral cavity NEC

 

176.9                     Unspecified

Viscera NOS

 

MALIGNANT
NEOPLASM OF GENITOURINARY ORGANS (179-189)

 

Excludes:               carcinoma
in situ (233.1-233.9)

 

179                              Malignant
neoplasm of uterus, part unspecified

 

180                              Malignant
neoplasm of cervix uteri

 

Includes:                invasive malignancy [carcinoma]

Excludes:               carcinoma in situ (233.1)

 

180.0                     Endocervix

Cervical canal NOS

Endocervical canal

 

20

 

Endocervical gland

 

180.1                     Exocervix

 

180.8                     Other specified sites of cervix

Cervical stump

Squamocolumnar junction of
cervix

Malignant neoplasm of
contiguous or overlapping sites of cervix uteri whose point of origin cannot be
determined

 

180.9                     Cervix uteri, unspecified

 

181                              Malignant
neoplasm of placenta

Choriocarcinoma NOS

Chorioepithelioma NOS

 

Excludes:               chorioadenoma (destruens) (236.1)

hydatidiform mole (630)

malignant (236.1)

invasive mole (236.1)

male choriocarcinoma NOS (186.0-186.9)

 

182                              Malignant
neoplasm of body of uterus

 

Excludes:               carcinoma in situ (233.2)

 

182.0                     Corpus uteri, except isthmus

Cornu

Endometrium

Fundus

Myometrium

 

182.1                     Isthmus

Lower uterine segment

 

182.8                     Other specified sites of body of uterus

Malignant neoplasm of
contiguous or overlapping sites of body of uterus whose point of origin cannot
be determined

 

Excludes:               uterus NOS (179)

 

183                              Malignant
neoplasm of ovary and other uterine adnexa

 

Excludes:               Douglas’ cul-de-sac (158.8)

 

183.0                     Ovary

Use
additional code to identify any functional activity

 

183.2                     Fallopian tube

Oviduct

Uterine tube

 

183.3                     Broad ligament

Mesovarium

Parovarian region

 

183.4                     Parametrium

Uterine ligament NOS

Uterosacral ligament

 

21

 

183.5                     Round ligament

 

183.8                     Other specified sites of uterine adnexa

Tubo-ovarian

Utero-ovarian

Malignant neoplasm of
contiguous or overlapping sites of ovary and other uterine adnexa whose point
of origin cannot be determined

 

183.9                     Uterine adnexa, unspecified

 

184                              Malignant
neoplasm of other and unspecified female genital organs

 

Excludes:               carcinoma in situ (233.30-233.39)

 

184.0                     Vagina

Gartner’s duct

Vaginal vault

 

184.1                     Labia majora

Greater vestibular [Bartholin’s]
gland

 

184.2                     Labia minora

 

184.3                     Clitoris

 

184.4                     Vulva, unspecified

External
female genitalia NOS

Pudendum

 

184.8                     Other specified sites of female genital organs

Malignant neoplasm of
contiguous or overlapping sites of female genital organs whose point of origin
cannot be determined

 

184.9                     Female genital organ, site unspecified

Female genitourinary tract NOS

 

185                              Malignant
neoplasm of prostate

 

Excludes:               seminal vesicles (187.8)

 

186                              Malignant
neoplasm of testis

 

Use
additional code to identify any functional activity

 

186.0                     Undescended testis

Ectopic testis

Retained testis

 

186.9                     Other and unspecified testis

Testis:

NOS

descended

scrotal

 

187                              Malignant
neoplasm of penis and other male genital organs

 

187.1                     Prepuce

Foreskin

 

187.2                     Glans penis

 

22

 

187.3                     Body of penis

Corpus cavernosum

 

187.4                     Penis, part unspecified

Skin of penis NOS

 

187.5                     Epididymis

 

187.6                     Spermatic cord

Vas deferens

 

187.7                     Scrotum

Skin of scrotum

 

187.8                     Other specified sites of male genital organs

Seminal vesicle

Tunica vaginalis

Malignant neoplasm of
contiguous or overlapping sites of penis and other male genital organs whose
point of origin cannot be determined

 

187.9                     Male genital organ, site unspecified

Male genital organ or tract NOS

 

188                              Malignant
neoplasm of bladder

 

Excludes:               carcinoma in situ (233.7)

 

188.0                     Trigone of urinary bladder

 

188.1                     Dome of urinary bladder

 

188.2                     Lateral wall of urinary bladder

 

188.3                     Anterior wall of urinary bladder

 

188.4                     Posterior wall of urinary bladder

 

188.5                     Bladder neck

Internal urethral orifice

 

188.6                     Ureteric orifice

 

188.7                     Urachus

 

188.8                     Other specified sites of bladder

Malignant neoplasm of
contiguous or overlapping sites of bladder whose point of origin cannot be
determined

 

188.9                     Bladder, part unspecified

Bladder wall NOS

 

189                              Malignant
neoplasm of kidney and other and unspecified urinary organs

 

Excludes:               benign carcinoid tumor of kidney
(209.64)

 

malignant carcinoid
tumor of kidney (209.64)

 

189.0                     Kidney, except pelvis

Kidney NOS

Kidney parenchyma

 

189.1                     Renal pelvis

 

23

 

Renal calyces

Ureteropelvic junction

 

189.2                     Ureter

 

Excludes:                                              ureteric
orifice of bladder (188.6)

 

189.3                     Urethra

 

Excludes:                                              urethral
orifice of bladder (188.5)

 

189.4                     Paraurethral glands

 

189.8                     Other specified sites of urinary organs

Malignant neoplasm of
contiguous or overlapping sites of kidney and other urinary organs whose point
of origin cannot be determined

 

189.9                     Urinary organ, site unspecified

Urinary system NOS

 

MALIGNANT
NEOPLASM OF OTHER AND UNSPECIFIED SITES (190-199)

 

Excludes:               carcinoma
in situ (234.0-234.9)

 

190                              Malignant
neoplasm of eye

 

Excludes:               carcinoma in situ (234.0)

 

dark area on retina and
choroid (239.81)

eyelid (skin) (172.1,
173.1)

cartilage (171.0)

optic nerve (192.0)

orbital bone (170.0)

retinal freckle (239.81)

 

190.0                     Eyeball, except conjunctiva, cornea, retina, and choroid

Ciliary body

Crystalline lens

Iris

Sclera

Uveal tract

 

190.1                     Orbit

Connective tissue of orbit

Extraocular muscle

Retrobulbar

 

Excludes:               bone of orbit (170.0)

 

190.2                     Lacrimal gland

 

190.3                     Conjunctiva

 

190.4                     Cornea

 

190.5                     Retina

 

190.6                     Choroid

 

190.7                     Lacrimal duct

Lacrimal sac

 

24

 

Nasolacrimal duct

 

190.8                     Other specified sites of eye

Malignant neoplasm of
contiguous or overlapping sites of eye whose point of origin cannot be
determined

 

190.9                     Eye, part unspecified

 

191                              Malignant
neoplasm of brain

 

Excludes:               cranial nerves (192.0)

 

retrobulbar area (190.1)

 

191.0                     Cerebrum, except lobes and ventricles

Basal ganglia

Cerebral cortex

Corpus striatum

Globus pallidus

Hypothalamus

Thalamus

 

191.1                     Frontal lobe

 

191.2                     Temporal lobe

Hippocampus

Uncus

 

191.3                     Parietal lobe

 

191.4                     Occipital lobe

 

191.5                     Ventricles

Choroid plexus

Floor of ventricle

 

191.6                     Cerebellum NOS

Cerebellopontine angle

 

191.7                     Brain stem

Cerebral peduncle

Medulla oblongata

Midbrain

Pons

 

191.8                     Other parts of brain

Corpus callosum

Tapetum

Malignant neoplasm of
contiguous or overlapping sites of brain whose point of origin cannot be
determined

 

191.9                     Brain, unspecified

Cranial fossa NOS

 

192                              Malignant
neoplasm of other and unspecified parts of nervous system

 

Excludes:               peripheral, sympathetic, and
parasympathetic nerves and ganglia (171.0-171.9)

 

192.0                     Cranial nerves

 

25

 

Olfactory bulb

 

192.1                     Cerebral meninges

Dura
(mater)

Falx
(cerebelli) (cerebri)

Meninges NOS

Tentorium

 

192.2                     Spinal cord

Cauda equina

 

192.3                     Spinal meninges

 

192.8                     Other specified sites of nervous system

Malignant neoplasm of
contiguous or overlapping sites of other parts of nervous system whose point of
origin cannot be determined

 

192.9                     Nervous system, part unspecified

Nervous system (central) NOS

 

Excludes:               meninges NOS (192.1)

 

193                              Malignant
neoplasm of thyroid gland

 

Thyroglossal duct

Use
additional code to identify any functional activity

 

194                              Malignant
neoplasm of other endocrine glands and related structures

 

Excludes:               islets of Langerhans (157.4)

neuroendocrine tumors
(209.00-209.69)

ovary (183.0)

testis (186.0-186.9)

thymus (164.0)

 

194.0                     Adrenal gland

Adrenal cortex

Adrenal medulla

Suprarenal gland

 

194.1                     Parathyroid gland

 

194.3                     Pituitary gland and craniopharyngeal duct

Craniobuccal pouch

Hypophysis

Rathke’s pouch

Sella turcica

 

194.4                     Pineal gland

 

194.5                     Carotid body

 

194.6                     Aortic body and other paraganglia

Coccygeal body

Glomus jugulare

Para-aortic body

 

194.8                     Other

Pluriglandular involvement NOS

 

Note:                   If the sites of multiple involvements are known, they should
be coded separately.

 

26

 

194.9                     Endocrine gland, site unspecified

 

195                              Malignant
neoplasm of other and ill-defined sites

 

Includes:                malignant neoplasms of
contiguous sites, not elsewhere classified, whose point of origin cannot be
determined

 

Excludes:               malignant neoplasm:

 

lymphatic and
hematopoietic tissue (200.0-208.9)

secondary sites
(196.0-198.8)

unspecified site
(199.0-199.1)

 

195.0                     Head, face, and neck

Cheek NOS

Jaw NOS

Nose NOS

Supraclavicular region NOS

 

195.1                     Thorax

Axilla

Chest (wall) NOS

Intrathoracic NOS

 

195.2                     Abdomen

Intra-abdominal NOS

 

195.3                     Pelvis

Groin

Inguinal region NOS

Presacral region

Sacrococcygeal region

Sites overlapping systems
within pelvis, as:

rectovaginal (septum)

rectovesical (septum)

 

195.4                     Upper limb

 

195.5                     Lower limb

 

195.8                     Other specified sites

Back NOS

Flank NOS

Trunk NOS

 

196                              Secondary
and unspecified malignant neoplasm of lymph nodes

 

Excludes:               any malignant neoplasm of lymph
nodes, specified as primary (200.0-202.9)

 

Hodgkin’s disease
(201.0-201.9)

lymphosarcoma (200.1)

reticulosarcoma (200.0)

other forms of lymphoma
(202.0-202.9)

secondary neuroendocrine
tumor of (distant) lymph nodes (209.71)

 

196.0                     Lymph nodes of head, face, and neck

Cervical

Cervicofacial

Scalene

Supraclavicular

 

27

 

196.1                     Intrathoracic lymph nodes

Bronchopulmonary

Intercostal

Mediastinal

Tracheobronchial

 

196.2                     Intra-abdominal lymph nodes

Intestinal

Mesenteric

Retroperitoneal

 

196.3                     Lymph nodes of axilla and upper limb

Brachial

Epitrochlear

Infraclavicular

Pectoral

 

196.5                     Lymph nodes of inguinal region and lower limb

Femoral

Groin

Popliteal

Tibial

 

196.6                     Intrapelvic lymph nodes

Hypogastric

Iliac

Obturator

Parametrial

 

196.8                     Lymph nodes of multiple sites

 

196.9                     Site unspecified

Lymph nodes NOS

 

197                              Secondary
malignant neoplasm of respiratory and digestive systems

 

Excludes:               lymph node metastasis
(196.0-196.9)

 

secondary neuroendocrine
tumor of liver (209.72)

secondary neuroendocrine
tumor of respiratory organs (209.79)

 

197.0                     Lung

Bronchus

 

197.1                     Mediastinum

 

197.2                     Pleura

 

197.3                     Other respiratory organs

Trachea

 

197.4                     Small intestine, including duodenum

 

197.5                     Large intestine and rectum

 

197.6                     Retroperitoneum and peritoneum

 

197.7                     Liver, specified as secondary

 

197.8                     Other digestive organs and spleen

 

28

 

198          Secondary malignant neoplasm of other specified sites

 

Excludes:               lymph node
metastasis (196.0-196.9)

secondary neuroendocrine
tumor of other specified sites (209.79)

 

198.0       Kidney

 

198.1       Other urinary organs

 

198.2       Skin

Skin of breast

 

198.3       Brain and spinal cord

 

198.4       Other parts of nervous
system

Meninges (cerebral) (spinal)

 

198.5       Bone and bone marrow

 

198.6       Ovary

 

198.7       Adrenal gland

Suprarenal gland

 

198.8       Other specified sites

 

198.81 Breast

 

Excludes:               skin of breast
(198.2)

 

198.82 Genital organs

 

198.89 Other

 

Excludes:               retroperitoneal
lymph nodes (196.2)

 

199          Malignant neoplasm without specification of site

 

Excludes:               malignant
carcinoid tumor of unknown primary site (209.20)

malignant (poorly
differentiated) neuroendocrine carcinoma, any site (209.30)

malignant (poorly
differentiated) neuroendocrine tumor, any site (209.30)

neuroendocrine carcinoma
(high grade), any site (209.30)

 

199.0       Disseminated

Carcinomatosis unspecified site
(primary) (secondary)

Generalized:

cancer unspecified site (primary)
(secondary)

malignancy unspecified site
(primary) (secondary)

Multiple cancer unspecified
site (primary) (secondary)

 

199.1       Other

Cancer unspecified site
(primary) (secondary)

Carcinoma unspecified site
(primary) (secondary)

Malignancy unspecified site
(primary) (secondary)

 

199.2       Malignant neoplasm
associated with transplanted organ

Code
first complication of transplanted organ (996.80-996.89)

Use
additional code for specific malignancy

 

MALIGNANT
NEOPLASM OF LYMPHATIC AND HEMATOPOIETIC TISSUE (200-208)

 

29

 

Excludes:               autoimmune lymphoproliferative syndrome (279.41)

secondary neoplasm of:

bone marrow (198.5)

spleen (197.8)

secondary and unspecified neoplasm of lymph nodes
(196.0-196.9)

 

The following fifth-digit subclassification is for use with
categories 200-202:

 

0  unspecified site, extranodal and solid organ sites

1  lymph nodes of head, face, and neck

2  intrathoracic lymph nodes

3  intra-abdominal lymph nodes

4  lymph nodes of axilla and upper limb

5  lymph nodes of inguinal region and lower limb

6  intrapelvic lymph nodes

7  spleen

8  lymph nodes of multiple sites

 

200          Lymphosarcoma and reticulosarcoma and other specified
malignant tumors of lymphatic tissue

 

Requires
fifth digit. See note before section 200 for codes and definitions.

 

200.0       Reticulosarcoma

[0-8]

 

Lymphoma (malignant):

histiocytic (diffuse):

nodular

pleomorphic cell type

reticulum cell type

Reticulum cell sarcoma:

NOS

pleomorphic cell type

 

200.1       Lymphosarcoma

[0-8]

 

Lymphoblastoma
(diffuse)

Lymphoma
(malignant):

lymphoblastic (diffuse)

lymphocytic (cell type)
(diffuse)

lymphosarcoma
type

Lymphosarcoma:

NOS

diffuse
NOS

lymphoblastic (diffuse)

lymphocytic (diffuse)

prolymphocytic

 

Excludes:               lymphosarcoma:

follicular or nodular
(202.0)

mixed cell type (200.8)

lymphosarcoma cell
leukemia (207.8)

 

200.2       Burkitt’s tumor or
lymphoma

[0-8]

 

Malignant lymphoma, Burkitt’s
type

 

200.3       Marginal zone lymphoma

[0-8]

 

30

 

Extranodal marginal zone B cell
lymphoma

Mucosa associated lymphoid
tissue [MALT]

Nodal marginal zone B cell
lymphoma

Splenic marginal zone B cell
lymphoma

 

200.4       Mantle cell lymphoma

[0-8]

 

200.5       Primary central nervous
system lymphoma

[0-8]

 

200.6       Anaplastic large cell
lymphoma

[0-8]

 

200.7       Large cell lymphoma

[0-8]

 

200.8       Other named variants

[0-8]

 

Lymphoma (malignant):

lymphoplasmacytoid type

mixed lymphocytic-histiocytic
(diffuse)

Lymphosarcoma, mixed cell type
(diffuse)

Reticulolymphosarcoma (diffuse)

 

201          Hodgkin’s disease

 

Requires
fifth digit. See note before section 200 for codes and definitions.

 

201.0       Hodgkin’s paragranuloma

[0-8]

 

201.1       Hodgkin’s granuloma

[0-8]

 

201.2       Hodgkin’s sarcoma

[0-8]

 

201.4       Lymphocytic-histiocytic
predominance

[0-8]

 

201.5       Nodular sclerosis

[0-8]

 

Hodgkin’s disease, nodular
sclerosis:

NOS

cellular phase

 

201.6       Mixed cellularity

[0-8]

 

201.7       Lymphocytic depletion

[0-8]

 

Hodgkin’s disease, lymphocytic
depletion:

NOS

diffuse fibrosis

reticular type

 

201.9       Hodgkin’s disease,
unspecified

 

31

 

[0-8]

 

Hodgkin’s:

disease NOS

lymphoma NOS

Malignant:

lymphogranuloma

lymphogranulomatosis

 

202          Other malignant neoplasms of lymphoid and histiocytic tissue

 

Requires
fifth digit. See note before section 200 for codes and definitions.

 

202.0       Nodular lymphoma

[0-8]

 

Brill-Symmers disease

Lymphoma:

follicular (giant) (large cell)

lymphocytic, nodular

Lymphosarcoma:

follicular (giant)

nodular

 

202.1       Mycosis fungoides

[0-8]

 

Excludes:               peripheral
T-cell lymphoma (202.7)

 

202.2       Sézary’s disease

[0-8]

 

202.3       Malignant histiocytosis

[0-8]

 

Histiocytic medullary
reticulosis

Malignant:

reticuloendotheliosis

reticulosis

 

202.4       Leukemic
reticuloendotheliosis

[0-8]

 

Hairy-cell leukemia

 

202.5       Letterer-Siwe disease

[0-8]

 

Acute:

differentiated progressive
histiocytosis

histiocytosis X (progressive)

infantile reticuloendotheliosis

reticulosis of infancy

 

Excludes:               Hand-Schüller-Christian
disease (277.89)

histiocytosis (acute)
(chronic) (277.89)

histiocytosis X
(chronic) (277.89)

 

202.6       Malignant mast cell
tumors

[0-8]

 

Malignant:

mastocytoma

mastocytosis

Mast cell sarcoma

 

32

 

Systemic tissue mast cell
disease

 

Excludes:               mast cell
leukemia (207.8)

 

202.7       Peripheral T cell
lymphoma

[0-8]

 

202.8       Other lymphomas

[0-8]

 

Lymphoma (malignant):

NOS

diffuse

 

Excludes:               benign lymphoma
(229.0)

 

202.9       Other and unspecified
malignant neoplasms of lymphoid and histiocytic tissue

[0-8]

 

Follicular dendritic cell
sarcoma

Interdigitating dendritic cell
sarcoma

Langerhans cell sarcoma

Malignant neoplasm of bone
marrow NOS

 

203          Multiple myeloma and immunoproliferative neoplasms

 

The following
fifth-digit subclassification is for use with category 203:

 

0  without mention of having achieved remission

failed remission

1  in remission

2  in relapse

 

203.0       Multiple myeloma

[0-2]

 

Kahler’s disease

Myelomatosis

 

Excludes:               solitary
myeloma (238.6)

 

203.1       Plasma cell leukemia

[0-2]

 

Plasmacytic leukemia

 

203.8       Other
immunoproliferative neoplasms

[0-2]

 

204          Lymphoid leukemia

 

Includes:               leukemia:

lymphatic

lymphoblastic

lymphocytic

lymphogenous

 

The following
fifth-digit subclassification is for use with category 204:

 

0  without mention of having achieved remission

failed remission

1  in remission

2  in relapse

 

204.0       Acute

[0-2]

 

33

 

Excludes:               acute
exacerbation of chronic lymphoid leukemia (204.1)

 

204.1       Chronic

[0-2]

 

204.2       Subacute

[0-2]

 

204.8       Other lymphoid leukemia

[0-2]

 

Aleukemic leukemia:

lymphatic

lymphocytic

lymphoid

 

204.9       Unspecified lymphoid
leukemia

[0-2]

 

205          Myeloid leukemia

 

Includes:               leukemia:

granulocytic

myeloblastic

myelocytic

myelogenous

myelomonocytic

myelosclerotic

myelosis

 

The following
fifth-digit subclassification is for use with category 205:

 

0  without mention of having achieved remission

failed remission

1  in remission

2  in relapse

 

205.0       Acute

[0-2]

 

Acute promyelocytic leukemia

 

Excludes:               acute
exacerbation of chronic myeloid leukemia (205.1)

 

205.1       Chronic

[0-2]

 

Eosinophilic leukemia

Neutrophilic leukemia

 

205.2       Subacute

[0-2]

 

205.3       Myeloid sarcoma

[0-2]

 

Chloroma

Granulocytic sarcoma

 

205.8       Other myeloid leukemia

[0-2]

 

Aleukemic leukemia:

granulocytic

myelogenous

 

34

 

myeloid

Aleukemic myelosis

 

205.9       Unspecified myeloid
leukemia

[0-2]

 

206          Monocytic leukemia

 

Includes:               leukemia:

histiocytic

monoblastic

monocytoid

 

The following
fifth-digit subclassification is for use with category 206:

 

0  without mention of having achieved remission

failed remission

1  in remission

2  in relapse

 

206.0       Acute

[0-2]

 

Excludes:               acute
exacerbation of chronic monocytic leukemia (206.1)

 

206.1       Chronic

[0-2]

 

206.2       Subacute

[0-2]

 

206.8       Other monocytic leukemia

[0-2]

 

Aleukemic:

monocytic leukemia

monocytoid leukemia

 

206.9       Unspecified monocytic
leukemia

[0-2]

 

207          Other specified leukemia

 

Excludes:               leukemic
reticuloendotheliosis (202.4)

plasma cell leukemia
(203.1)

 

The following
fifth-digit subclassification is for use with category 207:

 

0  without mention of having achieved remission

failed remission

1  in remission

2  in relapse

 

207.0       Acute erythremia and
erythroleukemia

[0-2]

 

Acute erythremic myelosis

Di Guglielmo’s disease

Erythremic myelosis

 

207.1       Chronic erythremia

[0-2]

 

Heilmeyer-Schöner disease

 

35

 

207.2       Megakaryocytic leukemia

[0-2]

 

Megakaryocytic myelosis

Thrombocytic leukemia

 

207.8       Other specified leukemia

[0-2]

 

Lymphosarcoma cell leukemia

 

208          Leukemia of unspecified cell type

 

The following
fifth-digit subclassification is for use with category 208:

 

0  without mention of having achieved remission

failed remission

1  in remission

2  in relapse

 

208.0       Acute

[0-2]

 

Acute leukemia NOS

Blast cell leukemia

Stem cell leukemia

 

Excludes:               acute
exacerbation of chronic unspecified leukemia (208.1)

 

208.1       Chronic

[0-2]

 

Chronic leukemia NOS

 

208.2       Subacute

[0-2]

 

Subacute leukemia NOS

 

208.8       Other leukemia of
unspecified cell type

[0-2]

 

208.9       Unspecified leukemia

[0-2]

 

Leukemia NOS

 

NEUROENDOCRINE TUMORS (209)

 

209          Neuroendocrine tumors

 

Code
first any associated multiple endocrine neoplasia syndrome (258.01-258.03)

Use
additional code to identify associated endocrine syndrome, such as:

carcinoid syndrome
(259.2)

 

Excludes:               benign
pancreatic islet cell tumors (211.7)

malignant pancreatic
islet cell tumors (157.4)

 

209.0       Malignant carcinoid
tumors of the small intestine

 

209.00 Malignant carcinoid
tumor of the small intestine, unspecified portion

 

209.01 Malignant carcinoid
tumor of the duodenum

 

209.02 Malignant carcinoid tumor
of the jejunum

 

36

 

209.03 Malignant carcinoid
tumor of the ileum

 

209.1       Malignant carcinoid
tumors of the appendix, large intestine, and rectum

 

209.10 Malignant carcinoid
tumor of the large intestine, unspecified portion

Malignant carcinoid tumor of
the colon NOS

 

209.11 Malignant carcinoid
tumor of the appendix

 

209.12 Malignant carcinoid
tumor of the cecum

 

209.13 Malignant carcinoid
tumor of the ascending colon

 

209.14 Malignant carcinoid
tumor of the transverse colon

 

209.15 Malignant carcinoid
tumor of the descending colon

 

209.16 Malignant carcinoid
tumor of the sigmoid colon

 

209.17 Malignant carcinoid
tumor of the rectum

 

209.2       Malignant carcinoid
tumors of other and unspecified sites

 

209.20 Malignant carcinoid
tumor of unknown primary site

 

209.21 Malignant carcinoid
tumor of the bronchus and lung

 

209.22 Malignant carcinoid
tumor of the thymus

 

209.23 Malignant carcinoid
tumor of the stomach

 

209.24 Malignant carcinoid
tumor of the kidney

 

209.25 Malignant carcinoid
tumor of the foregut NOS

 

209.26 Malignant carcinoid
tumor of the midgut NOS

 

209.27 Malignant carcinoid
tumor of the hindgut NOS

 

209.29 Malignant carcinoid
tumors of other sites

 

209.3       Malignant poorly
differentiated neuroendocrine tumors

 

209.30 Malignant poorly
differentiated neuroendocrine carcinoma, any site

High grade neuroendocrine
carcinoma, any site

Malignant poorly differentiated
neuroendocrine tumor NOS

 

Excludes:               Merkel cell
carcinoma (209.31-209.36)

 

209.31 Merkel cell carcinoma of
the face

Merkel cell carcinoma of the
ear

Merkel cell carcinoma of the
eyelid, including canthus

Merkel cell carcinoma of the
lip

 

209.32 Merkel cell carcinoma of
the scalp and neck

 

209.33 Merkel cell carcinoma of
the upper limb

 

209.34 Merkel cell carcinoma of
the lower limb

 

209.35 Merkel cell carcinoma of
the trunk

 

37

 

209.36 Merkel cell carcinoma of
other sites

Merkel cell carcinoma of the
buttock

Merkel cell carcinoma of the
genitals

Merkel cell carcinoma NOS

 

209.4       Benign carcinoid tumors
of the small intestine

 

209.40 Benign carcinoid tumor
of the small intestine, unspecified portion

 

209.41 Benign carcinoid tumor
of the duodenum

 

209.42 Benign carcinoid tumor
of the jejunum

 

209.43 Benign carcinoid tumor
of the ileum

 

209.5       Benign carcinoid tumors
of the appendix, large intestine, and rectum

 

209.50 Benign carcinoid tumor
of the large intestine, unspecified portion

Benign carcinoid tumor of the
colon NOS

 

209.51 Benign carcinoid tumor
of the appendix

 

209.52 Benign carcinoid tumor
of the cecum

 

209.53 Benign carcinoid tumor
of the ascending colon

 

209.54 Benign carcinoid tumor
of the transverse colon

 

209.55 Benign carcinoid tumor
of the descending colon

 

209.56 Benign carcinoid tumor
of the sigmoid colon

 

209.57 Benign carcinoid tumor
of the rectum

 

209.6       Benign carcinoid tumors
of other and unspecified sites

 

209.60 Benign carcinoid tumor
of unknown primary site

Carcinoid tumor NOS

Neuroendocrine tumor NOS

 

209.61 Benign carcinoid tumor
of the bronchus and lung

 

209.62 Benign carcinoid tumor
of the thymus

 

209.63 Benign carcinoid tumor
of the stomach

 

209.64 Benign carcinoid tumor
of the kidney

 

209.65 Benign carcinoid tumor
of the foregut NOS

 

209.66 Benign carcinoid tumor
of the midgut NOS

 

209.67 Benign carcinoid tumor
of the hindgut NOS

 

209.69 Benign carcinoid tumors
of other sites

 

209.7       Secondary neuroendocrine
tumors

Secondary carcinoid tumors

 

209.70 Secondary neuroendocrine
tumor, unspecified site

 

209.71 Secondary neuroendocrine
tumor of distant lymph nodes

 

38

 

Mesentery metastasis of
neuroendocrine tumor

 

209.72 Secondary neuroendocrine
tumor of liver

 

209.73 Secondary neuroendocrine
tumor of bone

 

209.74 Secondary neuroendocrine
tumor of peritoneum

 

209.75 Secondary Merkel cell carcinoma

Merkel
cell carcinoma nodal presentation

Merkel
cell carcinoma visceral metastatic presentation

Secondary Merkel cell
carcinoma, any site

 

209.79 Secondary neuroendocrine
tumor of other sites

 

BENIGN NEOPLASMS (210-229)

 

210          Benign neoplasm of lip, oral cavity, and pharynx

 

Excludes:               cyst (of):

jaw (526.0-526.2,
526.89)

oral soft tissue (528.4)

radicular (522.8)

 

210.0       Lip

Frenulum labii

Lip (inner aspect) (mucosa)
(vermilion border)

 

Excludes:               labial commissure
(210.4)

skin of lip (216.0)

 

210.1       Tongue

Lingual tonsil

 

210.2       Major salivary glands

Gland:

parotid

sublingual

submandibular

 

Excludes:               benign
neoplasms of minor salivary glands:

NOS (210.4)

buccal mucosa (210.4)

lips (210.0)

palate (hard) (soft)
(210.4)

tongue (210.1)

tonsil, palatine (210.5)

 

210.3       Floor of mouth

 

210.4       Other and unspecified
parts of mouth

Gingiva

Gum (upper) (lower)

Labial commissure

Oral cavity NOS

Oral mucosa

Palate (hard) (soft)

Uvula

 

Excludes:               benign
odontogenic neoplasms of bone (213.0-213.1)

 

39

 

developmental
odontogenic cysts (526.0)

mucosa of lips (210.0)

nasopharyngeal
[posterior] [superior] surface of soft palate (210.7)

 

210.5       Tonsil

Tonsil (faucial) (palatine)

 

Excludes:               lingual tonsil
(210.1)

pharyngeal tonsil
(210.7)

tonsillar:

fossa (210.6)

pillars (210.6)

 

210.6       Other parts of
oropharynx

Branchial cleft or vestiges

Epiglottis, anterior aspect

Fauces NOS

Mesopharynx NOS

Tonsillar:

fossa

pillars

Vallecula

 

Excludes:               epiglottis:

NOS (212.1)

suprahyoid portion
(212.1)

 

210.7       Nasopharynx

Adenoid tissue

Lymphadenoid tissue

Pharyngeal tonsil

Posterior nasal septum

 

210.8       Hypopharynx

Arytenoid fold

Laryngopharynx

Postcricoid region

Pyriform fossa

 

210.9       Pharynx, unspecified

Throat NOS

 

211          Benign neoplasm of other parts of digestive system

 

Excludes:               benign stromal
tumors of digestive system (215.5)

 

211.0       Esophagus

 

211.1       Stomach

Body of stomach

Cardia of stomach

Fundus of stomach

Cardiac orifice

Pylorus

 

Excludes:               benign carcinoid
tumors of the stomach (209.63)

 

211.2       Duodenum, jejunum, and
ileum

Small intestine NOS

 

Excludes:               ampulla of
Vater (211.5)

 

40

 

benign carcinoid tumors
of the small intestine (209.40-209.43)

ileocecal valve (211.3)

 

211.3       Colon

Appendix

Cecum

Ileocecal
valve

Large intestine NOS

 

Excludes:               benign
carcinoid tumors of the large intestine (209.50-209.56)

rectosigmoid junction
(211.4)

 

211.4       Rectum and anal canal

Anal canal or sphincter

Anus NOS

Rectosigmoid junction

 

Excludes:               anus:

margin (216.5)

skin (216.5)

perianal skin (216.5)

benign carcinoid tumors
of the rectum (209.57)

 

211.5       Liver and biliary
passages

Ampulla of Vater

Common bile duct

Cystic duct

Gallbladder

Hepatic duct

Sphincter of Oddi

 

211.6       Pancreas, except islets
of Langerhans

 

211.7       Islets of Langerhans

Islet cell tumor

 

Use
additional code to identify any functional activity

 

211.8       Retroperitoneum and
peritoneum

Mesentery

Mesocolon

Omentum

Retroperitoneal tissue

 

211.9       Other and unspecified
site

Alimentary tract NOS

Digestive system NOS

Gastrointestinal tract NOS

Intestinal tract NOS

Intestine NOS

Spleen, not elsewhere
classified

 

212          Benign neoplasm of respiratory and intrathoracic organs

 

212.0       Nasal cavities, middle
ear, and accessory sinuses

Cartilage of nose

Eustachian tube

Nares

Septum of nose

Sinus:

 

41

 

ethmoidal

frontal

maxillary

sphenoidal

 

Excludes:               auditory canal
(external) (216.2)

bone of:

ear (213.0)

nose [turbinates]
(213.0)

cartilage of ear (215.0)

ear (external) (skin)
(216.2)

nose NOS (229.8)

skin (216.3)

olfactory bulb (225.1)

polyp of:

accessory sinus (471.8)

ear (385.30-385.35)

nasal cavity (471.0)

posterior margin of
septum and choanae (210.7)

 

212.1       Larynx

Cartilage:

arytenoid

cricoid

cuneiform

thyroid

Epiglottis (suprahyoid portion)
NOS

Glottis

Vocal cords (false) (true)

 

Excludes:               epiglottis,
anterior aspect (210.6)

polyp of vocal cord or
larynx (478.4)

 

212.2       Trachea

 

212.3       Bronchus and lung

Carina

Hilus of lung

 

Excludes:               benign
carcinoid tumors of bronchus and lung (209.61)

 

212.4       Pleura

 

212.5       Mediastinum

 

212.6       Thymus

 

Excludes:               benign
carcinoid tumors of thymus (209.62)

 

212.7       Heart

 

Excludes:               great vessels
(215.4)

 

212.8       Other specified sites

 

212.9       Site unspecified

Respiratory organ NOS

Upper respiratory tract NOS

 

Excludes:               intrathoracic
NOS (229.8)

thoracic NOS (229.8)

 

42

 

213                              Benign
neoplasm of bone and articular cartilage

 

Includes:                cartilage (articular) (joint)

periosteum

 

Excludes:               cartilage of:

ear (215.0)

eyelid (215.0)

larynx (212.1)

nose (212.0)

exostosis NOS (726.91)

synovia (215.0-215.9)

 

213.0                     Bones of skull and face

 

Excludes:               lower jaw bone (213.1)

 

213.1                     Lower jaw bone

 

213.2                     Vertebral column, excluding sacrum and coccyx

 

213.3                     Ribs, sternum, and clavicle

 

213.4                     Scapula and long bones of upper limb

 

213.5                     Short bones of upper limb

 

213.6                     Pelvic bones, sacrum, and coccyx

 

213.7                     Long bones of lower limb

 

213.8                     Short bones of lower limb

 

213.9                     Bone and articular cartilage, site unspecified

 

214                              Lipoma

 

Includes:                angiolipoma

fibrolipoma

hibernoma

lipoma (fetal) (infiltrating) (intramuscular)

myelolipoma

myxolipoma

 

214.0                     Skin and subcutaneous tissue of face

 

214.1                     Other skin and subcutaneous tissue

 

214.2                     Intrathoracic organs

 

214.3                     Intra-abdominal organs

 

214.4                     Spermatic cord

 

214.8                     Other specified sites

 

214.9                     Lipoma, unspecified site

 

215                              Other
benign neoplasm of connective and other soft tissue

 

Includes:                blood vessel

bursa

 

43

 

fascia

ligament

muscle

peripheral, sympathetic,
and parasympathetic nerves and ganglia

synovia

tendon (sheath)

 

Excludes:               cartilage:

articular (213.0-213.9)

larynx (212.1)

nose (212.0)

connective tissue of:

breast (217)

internal organ, except
lipoma and hemangioma - code to benign neoplasm of the site

lipoma (214.0-214.9)

 

215.0                     Head, face, and neck

 

215.2                     Upper limb, including shoulder

 

215.3                     Lower limb, including hip

 

215.4                     Thorax

 

Excludes:               heart (212.7)

mediastinum (212.5)

thymus (212.6)

 

215.5                     Abdomen

Abdominal wall

Benign stromal tumors of
abdomen

Hypochondrium

 

215.6                     Pelvis

Buttock

Groin

Inguinal region

Perineum

 

Excludes:               uterine:

leiomyoma (218.0-218.9)

ligament, any (221.0)

 

215.7                     Trunk, unspecified

Back NOS

Flank NOS

 

215.8                     Other specified sites

 

215.9                     Site unspecified

 

216                              Benign
neoplasm of skin

 

Includes:                blue nevus

dermatofibroma

hydrocystoma

pigmented nevus

syringoadenoma

syringoma

 

Excludes:               skin of genital organs
(221.0-222.9)

 

44

 

216.0                     Skin of lip

 

Excludes:               vermilion border of lip (210.0)

 

216.1                     Eyelid, including canthus

 

Excludes:               cartilage of eyelid (215.0)

 

216.2                     Ear and external auditory canal

Auricle (ear)

Auricular canal, external

External meatus

Pinna

 

Excludes:               cartilage of ear (215.0)

 

216.3                     Skin of other and unspecified parts of face

Cheek, external

Eyebrow

Nose, external

Temple

 

216.4                     Scalp and skin of neck

 

216.5                     Skin of trunk, except scrotum

Axillary fold

Perianal skin

Skin of:

abdominal wall

anus

back

breast

buttock

chest wall

groin

perineum

Umbilicus

 

Excludes:               anal canal (211.4)

anus NOS (211.4)

skin of scrotum (222.4)

 

216.6                     Skin of upper limb, including shoulder

 

216.7                     Skin of lower limb, including hip

 

216.8                     Other specified sites of skin

 

216.9                     Skin, site unspecified

 

217                              Benign
neoplasm of breast

 

Breast (male) (female)

connective tissue

glandular tissue

soft parts

 

Excludes:               adenofibrosis (610.2)

benign cyst of breast
(610.0)

fibrocystic disease
(610.1)

skin of breast (216.5)

 

45

 

218                              Uterine
leiomyoma

 

Includes:                fibroid (bleeding) (uterine)

uterine:

fibromyoma

myoma

 

218.0                     Submucous leiomyoma of uterus

 

218.1                     Intramural leiomyoma of uterus

Interstitial leiomyoma of
uterus

 

218.2                     Subserous leiomyoma of uterus

Subperitoneal leiomyoma of
uterus

 

218.9                     Leiomyoma of uterus, unspecified

 

219                              Other
benign neoplasm of uterus

 

219.0                     Cervix uteri

 

219.1                     Corpus uteri

Endometrium

Fundus

Myometrium

 

219.8                     Other specified parts of uterus

 

219.9                     Uterus, part unspecified

 

220                              Benign
neoplasm of ovary

 

Use
additional code to identify any functional activity (256.0-256.1)

 

Excludes:               cyst:

corpus albicans (620.2)

corpus luteum (620.1)

endometrial (617.1)

follicular (atretic)
(620.0)

graafian follicle
(620.0)

ovarian NOS (620.2)

retention (620.2)

 

221                              Benign
neoplasm of other female genital organs

 

Includes:                adenomatous polyp

benign teratoma

 

Excludes:               cyst:

epoophoron (752.11)

fimbrial (752.11)

Gartner’s duct (752.11)

parovarian (752.11)

 

221.0                     Fallopian tube and uterine ligaments

Oviduct

Parametrium

Uterine ligament (broad)
(round) (uterosacral)

Uterine
tube

 

46

 

221.1                     Vagina

 

221.2                     Vulva

Clitoris

External
female genitalia NOS

Greater vestibular [Bartholin’s]
gland

Labia (majora) (minora)

Pudendum

 

Excludes:               Bartholin’s (duct) (gland) cyst
(616.2)

 

221.8                     Other specified sites of female genital organs

 

221.9                     Female genital organ, site unspecified

Female genitourinary tract NOS

 

222                              Benign
neoplasm of male genital organs

 

222.0                     Testis

 

Use
additional code to identify any functional activity

 

222.1                     Penis

Corpus cavernosum

Glans penis

Prepuce

 

222.2                     Prostate

 

Excludes:               adenomatous hyperplasia of
prostate (600.20-600.21)

prostatic:

adenoma (600.20-600.21)

enlargement
(600.00-600.01)

hypertrophy
(600.00-600.01)

 

222.3                     Epididymis

 

222.4                     Scrotum

Skin of scrotum

 

222.8                     Other specified sites of male genital organs

Seminal vesicle

Spermatic cord

 

222.9                     Male genital organ, site unspecified

Male genitourinary tract NOS

 

223                              Benign
neoplasm of kidney and other urinary organs

 

223.0                     Kidney, except pelvis

Kidney NOS

 

Excludes:               benign carcinoid tumors of kidney
(209.64)

renal:

calyces (223.1)

pelvis (223.1)

 

223.1                     Renal pelvis

 

223.2                     Ureter

 

Excludes:               ureteric orifice of bladder
(223.3)

 

47

 

223.3                     Bladder

 

223.8                     Other specified sites of urinary organs

 

223.81   Urethra

 

Excludes:               urethral orifice of bladder (223.3)

 

223.89   Other

Paraurethral glands

 

223.9                     Urinary organ, site unspecified

Urinary system NOS

 

224                              Benign
neoplasm of eye

 

Excludes:               cartilage of eyelid (215.0)

eyelid (skin) (216.1)

optic nerve (225.1)

orbital bone (213.0)

 

224.0                     Eyeball, except conjunctiva, cornea, retina, and choroid

Ciliary body

Iris

Sclera

Uveal tract

 

224.1                     Orbit

 

Excludes:               bone of orbit (213.0)

 

224.2                     Lacrimal gland

 

224.3                     Conjunctiva

 

224.4                     Cornea

 

224.5                     Retina

 

Excludes:               hemangioma of retina (228.03)

 

224.6                     Choroid

 

224.7                     Lacrimal duct

Lacrimal sac

Nasolacrimal duct

 

224.8                     Other specified parts of eye

 

224.9                     Eye, part unspecified

 

225                              Benign
neoplasm of brain and other parts of nervous system

 

Excludes:               hemangioma (228.02)

neurofibromatosis
(237.7)

peripheral, sympathetic,
and parasympathetic nerves and ganglia (215.0-215.9)

retrobulbar (224.1)

 

225.0                     Brain

 

225.1                     Cranial nerves

 

225.2                     Cerebral meninges

 

48

 

Meninges NOS

Meningioma (cerebral)

 

225.3                     Spinal cord

Cauda equina

 

225.4                     Spinal meninges

Spinal meningioma

 

225.8                     Other specified sites of nervous system

 

225.9                     Nervous system, part unspecified

Nervous system (central) NOS

 

Excludes:               meninges NOS (225.2)

 

226                              Benign
neoplasm of thyroid glands

 

Use
additional code to identify any functional activity

 

227                              Benign
neoplasm of other endocrine glands and related structures

 

Use
additional code to identify any functional activity

 

Excludes:               ovary (220)

pancreas (211.6)

testis (222.0)

 

227.0                     Adrenal gland

Suprarenal gland

 

227.1                     Parathyroid gland

 

227.3                     Pituitary gland and craniopharyngeal duct (pouch)

Craniobuccal pouch

Hypophysis

Rathke’s pouch

Sella turcica

 

227.4                     Pineal gland

Pineal body

 

227.5                     Carotid body

 

227.6                     Aortic body and other paraganglia

Coccygeal body

Glomus jugulare

Para-aortic body

 

227.8                     Other

 

227.9                     Endocrine gland, site unspecified

 

228                              Hemangioma
and lymphangioma, any site

 

Includes:                angioma (benign) (cavernous)
(congenital) NOS

cavernous nevus

glomus tumor

hemangioma (benign)
(congenital)

 

Excludes:               benign neoplasm of spleen, except
hemangioma and lymphangioma (211.9)

 

49

 

glomus jugulare (227.6)

nevus:

NOS (216.0-216.9)

blue or pigmented
(216.0-216.9)

vascular (757.32)

 

228.0                     Hemangioma, any site

 

228.00   Of
unspecified site

 

228.01   Of
skin and subcutaneous tissue

 

228.02   Of
intracranial structures

 

228.03   Of
retina

 

228.04   Of
intra-abdominal structures

Peritoneum

Retroperitoneal tissue

 

228.09   Of
other sites

Systemic angiomatosis

 

228.1                     Lymphangioma, any site

Congenital lymphangioma

Lymphatic nevus

 

229                              Benign
neoplasm of other and unspecified sites

 

229.0                     Lymph nodes

 

Excludes:               lymphangioma (228.1)

 

229.8                     Other specified sites

Intrathoracic NOS

Thoracic NOS

 

229.9                     Site unspecified

 

CARCINOMA
IN SITU (230-234)

 

Includes:               Bowen’s
disease

erythroplasia

Queyrat’s erythroplasia

 

Excludes:               leukoplakia
- see Alphabetic Index

 

230                              Carcinoma
in situ of digestive organs

 

230.0                     Lip, oral cavity, and pharynx

Gingiva

Hypopharynx

Mouth [any part]

Nasopharynx

Oropharynx

Salivary gland or duct

Tongue

 

Excludes:               aryepiglottic fold or
interarytenoid fold, laryngeal aspect (231.0)

 

50

 

epiglottis:

NOS (231.0)

suprahyoid portion
(231.0)

skin of lip (232.0)

 

230.1                     Esophagus

 

230.2                     Stomach

Body of stomach

Cardia of stomach

Fundus of stomach

Cardiac orifice

Pylorus

 

230.3                     Colon

Appendix

Cecum

Ileocecal valve

Large intestine NOS

 

Excludes:               rectosigmoid junction (230.4)

 

230.4                     Rectum

Rectosigmoid junction

 

230.5                     Anal canal

Anal sphincter

 

230.6                     Anus, unspecified

 

Excludes:               anus:

margin (232.5)

skin (232.5)

perianal skin (232.5)

 

230.7                     Other and unspecified parts of intestine

Duodenum

Ileum

Jejunum

Small intestine NOS

 

Excludes:               ampulla of Vater (230.8)

 

230.8                     Liver and biliary system

Ampulla of Vater

Common bile duct

Cystic duct

Gallbladder

Hepatic duct

Sphincter of Oddi

 

230.9                     Other and unspecified digestive organs

Digestive organ NOS

Gastrointestinal tract NOS

Pancreas

Spleen

 

231                              Carcinoma
in situ of respiratory system

 

231.0                     Larynx

 

51

 

Cartilage:

arytenoid

cricoid

cuneiform

thyroid

Epiglottis:

NOS

posterior surface

suprahyoid portion

Vocal cords (false) (true)

 

Excludes:               aryepiglottic fold or
interarytenoid fold:

NOS (230.0)

hypopharyngeal aspect
(230.0)

marginal zone (230.0)

 

231.1                     Trachea

 

231.2                     Bronchus and lung

Carina

Hilus of lung

 

231.8                     Other specified parts of respiratory system

Accessory sinuses

Middle ear

Nasal cavities

Pleura

 

Excludes:               ear (external) (skin) (232.2)

nose NOS (234.8)

skin (232.3)

 

231.9                     Respiratory system, part unspecified

Respiratory organ NOS

 

232                              Carcinoma
in situ of skin

 

Includes:                pigment cells

 

Excludes:               melanoma in situ of skin
(172.0-172.9)

 

232.0                     Skin of lip

 

Excludes:               vermilion border of lip (230.0)

 

232.1                     Eyelid, including canthus

 

232.2                     Ear and external auditory canal

 

232.3                     Skin of other and unspecified parts of face

 

232.4                     Scalp and skin of neck

 

232.5                     Skin of trunk, except scrotum

Anus, margin

Axillary fold

Perianal skin

Skin of:

abdominal wall

anus

back

breast

 

52

 

buttock

chest wall

groin

perineum

Umbilicus

 

Excludes:               anal canal (230.5)

anus NOS (230.6)

skin of genital organs
(233.30-233.39, 233.5-233.6)

 

232.6                     Skin of upper limb, including shoulder

 

232.7                     Skin of lower limb, including hip

 

232.8                     Other specified sites of skin

 

232.9                     Skin, site unspecified

 

233                              Carcinoma
in situ of breast and genitourinary system

 

233.0                     Breast

 

Excludes:               Paget’s disease (174.0-174.9)

 

skin of breast (232.5)

 

233.1                     Cervix uteri

Adenocarcinoma
in situ of cervix

Cervical intraepithelial
glandular neoplasia, grade III

Cervical intraepithelial
neoplasia III [CIN III]

Severe dysplasia of cervix

 

Excludes:               cervical intraepithelial
neoplasia II [CIN II] (622.12)

cytologic evidence of
malignancy without histologic confirmation (795.06)

high grade squamous
intraepithelial lesion (HGSIL) (795.04)

moderate dysplasia of
cervix (622.12)

 

233.2                     Other and unspecified parts of uterus

 

233.3                     Other and unspecified female genital organs

 

233.30   Unspecified
female genital organ

 

233.31   Vagina

Severe dysplasia of vagina

Vaginal intraepithelial
neoplasia [VAIN III]

 

233.32   Vulva

Severe dysplasia of vulva

Vulvar intraepithelial
neoplasia [VIN III]

 

233.39   Other
female genital organ

 

233.4                     Prostate

 

233.5                     Penis

 

233.6                     Other and unspecified male genital organs

 

233.7                     Bladder

 

233.9                     Other and unspecified urinary organs

 

53

 

234                              Carcinoma
in situ of other and unspecified sites

 

234.0                     Eye

 

Excludes:                                              cartilage of
eyelid (234.8)

eyelid (skin) (232.1)

optic nerve (234.8)

orbital bone (234.8)

 

234.8                     Other specified sites

Endocrine gland [any]

 

234.9                     Site unspecified

Carcinoma in situ NOS

 

NEOPLASMS
OF UNCERTAIN BEHAVIOR (235-238)

 

Note:                   Categories 235-238 classify by site certain
histo-morphologically well-defined neoplasms, the subsequent behavior of which
cannot be predicted from the present appearance.

 

235      Neoplasm
of uncertain behavior of digestive and respiratory systems

 

Excludes:                                              stromal tumors
of uncertain behavior of digestive system (238.1)

 

235.0                     Major salivary glands

Gland:

parotid

sublingual

submandibular

 

Excludes:                                              minor salivary
glands (235.1)

 

235.1                     Lip, oral cavity, and pharynx

Gingiva

Hypopharynx

Minor salivary glands

Mouth

Nasopharynx

Oropharynx

Tongue

 

Excludes:                                              aryepiglottic
fold or interarytenoid fold, laryngeal aspect (235.6)

epiglottis:

NOS (235.6)

suprahyoid portion
(235.6)

skin of lip (238.2)

 

235.2                     Stomach, intestines, and rectum

 

235.3                     Liver and biliary passages

Ampulla of Vater

Bile ducts [any]

Gallbladder

Liver

 

235.4                     Retroperitoneum and peritoneum

 

235.5                     Other and unspecified digestive organs

Anal:

canal

 

54

 

sphincter

Anus NOS

Esophagus

Pancreas

Spleen

 

Excludes:                                              anus:

margin (238.2)

skin (238.2)

perianal skin (238.2)

 

235.6                     Larynx

 

Excludes:                                              aryepiglottic
fold or interarytenoid fold:

NOS (235.1)

hypopharyngeal aspect
(235.1)

marginal zone (235.1)

 

235.7                     Trachea, bronchus, and lung

 

235.8                     Pleura, thymus, and mediastinum

 

235.9                     Other and unspecified respiratory organs

Accessory sinuses

Middle ear

Nasal cavities

Respiratory organ NOS

 

Excludes:                                              ear (external)
(skin) (238.2)

nose (238.8)

skin (238.2)

 

236                              Neoplasm
of uncertain behavior of genitourinary organs

 

236.0                     Uterus

 

236.1                     Placenta

Chorioadenoma (destruens)

Invasive mole

Malignant hydatid(iform) mole

 

236.2                     Ovary

 

Use
additional code to identify any functional activity

 

236.3                     Other and unspecified female genital organs

 

236.4                     Testis

 

Use
additional code to identify any functional activity

 

236.5                     Prostate

 

236.6                     Other and unspecified male genital organs

 

236.7                     Bladder

 

236.9                     Other and unspecified urinary organs

 

236.90   Urinary
organ, unspecified

 

236.91   Kidney
and ureter

 

55

 

236.99   Other

 

237                              Neoplasm
of uncertain behavior of endocrine glands and nervous system

 

237.0                     Pituitary gland and craniopharyngeal duct

 

Use
additional code to identify any functional activity

 

237.1                     Pineal gland

 

237.2                     Adrenal gland

Suprarenal gland

 

Use
additional code to identify any functional activity

 

237.3                     Paraganglia

Aortic body

Carotid body

Coccygeal body

Glomus jugulare

 

237.4                     Other and unspecified endocrine glands

Parathyroid gland

Thyroid gland

 

237.5                     Brain and spinal cord

 

237.6                     Meninges

Meninges:

NOS

cerebral

spinal

 

237.7                     Neurofibromatosis

von Recklinghausen’s disease

 

237.70   Neurofibromatosis,
unspecified

 

237.71   Neurofibromatosis,
type 1 [von Recklinghausen’s disease]

 

237.72   Neurofibromatosis,
type 2 [acoustic neurofibromatosis]

 

237.9                     Other and unspecified parts of nervous system

Cranial nerves

 

Excludes:                                              peripheral,
sympathetic, and parasympathetic nerves and ganglia (238.1)

 

238                              Neoplasm
of uncertain behavior of other and unspecified sites and tissues

 

238.0                     Bone and articular cartilage

 

Excludes:                                              cartilage:

ear (238.1)

eyelid (238.1)

larynx (235.6)

nose (235.9)

synovia (238.1)

 

238.1                     Connective and other soft tissue

Peripheral, sympathetic, and
parasympathetic nerves and ganglia

Stromal tumors of digestive
system

 

56

 

Excludes:                                              cartilage (of):

articular (238.0)

larynx (235.6)

nose (235.9)

connective tissue of
breast (238.3)

 

238.2                     Skin

 

Excludes:                                              anus NOS
(235.5)

skin of genital organs
(236.3, 236.6)

vermilion border of lip
(235.1)

 

238.3                     Breast

 

Excludes:                                              skin of breast
(238.2)

 

238.4                     Polycythemia vera

 

238.5                     Histiocytic and mast cells

Mast cell tumor NOS

Mastocytoma NOS

 

238.6                     Plasma cells

Plasmacytoma NOS

Solitary myeloma

 

238.7                     Other lymphatic and hematopoietic tissues

 

Excludes:                                              acute
myelogenous leukemia (205.0)

chronic myelomonocytic
leukemia (205.1)

myelosclerosis NOS
(289.89)

myelosis:

NOS (205.9)

megakaryocytic (207.2)

 

238.71   Essential
thrombocythemia

Essential hemorrhagic
thrombocythemia

Essential thrombocytosis

Idiopathic (hemorrhagic)
thrombocythemia

Primary thrombocytosis

 

238.72   Low
grade myelodysplastic syndrome lesions

Refractory anemia (RA)

Refractory anemia with excess
blasts-1 (RAEB-1)

Refractory anemia with ringed
sideroblasts (RARS)

Refractory cytopenia with
multilineage dysplasia (RCMD)

Refractory cytopenia with
multilineage dysplasia and ringed sideroblasts (RCMD-RS)

 

238.73   High
grade myelodysplastic syndrome lesions

Refractory anemia with excess blasts-2
(RAEB-2)

 

238.74   Myelodysplastic
syndrome with 5q deletion

5q minus syndrome NOS

 

Excludes:                                              constitutional
5q deletion (758.39)

high grade
myelodysplastic syndrome with 5q deletion (238.73)

 

238.75   Myelodysplastic
syndrome, unspecified

 

238.76   Myelofibrosis
with myeloid metaplasia

 

57

 

Agnogenic myeloid metaplasia

Idiopathic myelofibrosis
(chronic)

Myelosclerosis with myeloid
metaplasia

Primary myelofibrosis

 

Excludes:                                              myelofibrosis
NOS (289.83)

myelophthisic anemia
(284.2)

myelophthisis (284.2)

secondary myelofibrosis
(289.83)

 

238.77   Post-transplant
lymphoproliferative disorder (PTLD)

 

Code
first complications of transplant (996.80-996.89)

 

238.79   Other
lymphatic and hematopoietic tissues

Lymphoproliferative disease
(chronic) NOS

Megakaryocytic myelosclerosis

Myeloproliferative disease
(chronic) NOS

Panmyelosis (acute)

 

238.8                     Other specified sites

Eye

Heart

 

Excludes:                                              eyelid (skin)
(238.2)

cartilage (238.1)

 

238.9                     Site unspecified

 

NEOPLASMS
OF UNSPECIFIED NATURE (239)

 

239                              Neoplasms
of unspecified nature

 

Note:                   Category 239 classifies by site neoplasms of unspecified
morphology and behavior. The term “mass,” unless otherwise stated, is not to be
regarded as a neoplastic growth.

 

Includes:                                               “growth” NOS

neoplasm NOS

new growth NOS

tumor NOS

 

239.0                     Digestive system

 

Excludes:                                              anus:

margin (239.2)

skin (239.2)

perianal skin (239.2)

 

239.1                     Respiratory system

 

239.2                     Bone, soft tissue, and skin

 

Excludes:                                              anal canal
(239.0)

anus NOS (239.0)

bone marrow (202.9)

cartilage:

larynx (239.1)

nose (239.1)

connective tissue of
breast (239.3)

skin of genital organs
(239.5)

vermilion border of lip
(239.0)

 

58

 

239.3                     Breast

 

Excludes:                                              skin of breast
(239.2)

 

239.4                     Bladder

 

239.5                     Other genitourinary organs

 

239.6                     Brain

 

Excludes:                                              cerebral
meninges (239.7)

cranial nerves (239.7)

 

239.7                     Endocrine glands and other parts of nervous system

 

Excludes:                                              peripheral,
sympathetic, and parasympathetic nerves and ganglia (239.2)

 

239.8                     Other specified sites

 

Excludes:                                              eyelid (skin)
(239.2)

cartilage (239.2)

great vessels (239.2)

optic nerve (239.7)

 

239.81   Retina
and choroid

Dark area on retina

Retinal freckle

 

239.89   Other
specified sites

 

239.9                     Site unspecified

 

4.  DISEASES OF THE BLOOD AND BLOOD-FORMING
ORGANS (280-289)

 

280                              Iron
deficiency anemias

 

Includes:                                               anemia:

asiderotic

hypochromic-microcytic

sideropenic

 

Excludes:                                              familial
microcytic anemia (282.49)

 

280.0                     Secondary to blood loss (chronic)

Normocytic anemia due to blood
loss

 

Excludes:                                              acute
posthemorrhagic anemia (285.1)

 

280.1                     Secondary to inadequate dietary iron intake

 

280.8                     Other specified iron deficiency anemias

Paterson-Kelly syndrome

Plummer-Vinson syndrome

Sideropenic dysphagia

 

280.9                     Iron deficiency anemia, unspecified

Anemia:

achlorhydric

chlorotic

idiopathic hypochromic

iron [Fe] deficiency NOS

 

59

 

281                              Other
deficiency anemias

 

281.0                     Pernicious anemia

Anemia:

Addison’s

Biermer’s

congenital pernicious

Congenital intrinsic factor
[Castle’s] deficiency

 

Excludes:                                              combined system
disease without mention of anemia (266.2)

subacute degeneration of
spinal cord without mention of anemia (266.2)

 

281.1                     Other vitamin B12 deficiency anemia

Anemia:

vegan’s

vitamin B12 deficiency (dietary)

due to selective vitamin B12
malabsorption with proteinuria

Syndrome:

Imerslund’s

Imerslund-Gräsbeck

 

Excludes:                                              combined system
disease without mention of anemia (266.2)

subacute degeneration of
spinal cord without mention of anemia (266.2)

 

281.2                     Folate-deficiency anemia

Congenital
folate malabsorption

Folate or folic acid deficiency
anemia:

NOS

dietary

drug-induced

Goat’s milk anemia

Nutritional megaloblastic
anemia (of infancy)

 

Use
additional E code to identify drug

 

281.3                     Other specified megaloblastic anemias, not elsewhere
classified

Combined B12 and
folate-deficiency anemia

 

281.4                     Protein-deficiency anemia

Amino-acid-deficiency anemia

 

281.8                     Anemia associated with other specified nutritional deficiency

Scorbutic anemia

 

281.9                     Unspecified deficiency anemia

Anemia:

dimorphic

macrocytic

megaloblastic NOS

nutritional NOS

simple chronic

 

282                              Hereditary
hemolytic anemias

 

282.0                     Hereditary spherocytosis

Acholuric (familial) jaundice

Congenital hemolytic anemia
(spherocytic)

Congenital spherocytosis

 

60

 

Minkowski-Chauffard syndrome

Spherocytosis (familial)

 

Excludes:                                              hemolytic
anemia of newborn (773.0-773.5)

 

282.1                     Hereditary elliptocytosis

Elliptocytosis (congenital)

Ovalocytosis (congenital)
(hereditary)

 

282.2                     Anemias due to disorders of glutathione metabolism

Anemia:

6-phosphogluconic dehydrogenase
deficiency

enzyme deficiency, drug-induced

erythrocytic glutathione
deficiency

glucose-6-phosphate
dehydrogenase [G-6-PD] deficiency

glutathione-reductase deficiency

hemolytic nonspherocytic
(hereditary), type I

Disorder of pentose phosphate
pathway

Favism

 

282.3                     Other hemolytic anemias due to enzyme deficiency

Anemia:

hemolytic nonspherocytic
(hereditary), type II

hexokinase deficiency

pyruvate kinase [PK] deficiency

triosephosphate isomerase
deficiency

 

282.4                     Thalassemias

 

Excludes:                                              sickle-cell:

disease (282.60-282.69)

trait (282.5)

 

282.41   Sickle-cell
thalassemia without crisis

Sickle-cell thalassemia NOS

Thalassemia Hb-S disease
without crisis

 

282.42   Sickle-cell
thalassemia with crisis

Sickle-cell thalassemia with
vaso-occlusive pain

Thalassemia Hb-S disease with
crisis

 

Use
additional code for type of crisis, such as:

Acute chest syndrome
(517.3)

Splenic sequestration
(289.52)

 

282.49   Other
thalassemia

Cooley’s anemia

Hb-Bart’s disease

Hereditary leptocytosis

Mediterranean anemia (with
other hemoglobinopathy)

Microdrepanocytosis

Thalassemia (alpha) (beta)
(intermedia) (major) (minima) (minor) (mixed) (trait) (with other
hemoglobinopathy)

Thalassemia NOS

 

282.5                     Sickle-cell trait

Hb-AS genotype

Hemoglobin S [Hb-S] trait

Heterozygous:

 

61

 

hemoglobin S

Hb-S

 

Excludes:                                              that with other
hemoglobinopathy (282.60-282.69)

that with thalassemia
(282.49)

 

282.6                     Sickle-cell disease

Sickle-cell anemia

 

Excludes:                                              sickle-cell
thalassemia (282.41-282.42)

sickle-cell trait
(282.5)

 

282.60   Sickle-cell
disease, unspecified

Sickle-cell anemia NOS

 

282.61   Hb-SS
disease without crisis

 

282.62   Hb-SS
disease with crisis

Hb-SS disease with
vaso-occlusive pain

Sickle-cell crisis NOS

 

Use
additional code for type of crisis, such as:

Acute chest syndrome
(517.3)

Splenic sequestration
(289.52)

 

282.63   Sickle-cell/Hb-C
disease without crisis

Hb-S/Hb-C disease without
crisis

 

282.64   Sickle-cell/HB-C
disease with crisis

Hb-S/Hb-C disease with crisis

Sickle-cell/Hb-C disease with
vaso-occlusive pain

 

Use
additional code for types of crisis, such as:

Acute chest syndrome
(517.3)

Splenic sequestration
(289.52)

 

282.68   Other
sickle-cell disease without crisis

Hb-S/Hb-D disease without
crisis

Hb-S/Hb-E disease without
crisis

Sickle-cell/Hb-D disease
without crisis

Sickle-cell/Hb-E disease
without crisis

 

282.69   Other
sickle-cell disease with crisis

Hb-S/Hb-D disease with crisis

Hb-S/Hb-E disease with crisis

Sickle-cell/Hb-D disease with
crisis

Sickle-cell/Hb-E disease with
crisis

Other sickle-cell disease with
vaso-occlusive pain

 

Use
additional code for type of crisis, such as:

Acute chest syndrome
(517.3)

Splenic sequestration
(289.52)

 

282.7                     Other hemoglobinopathies

Abnormal hemoglobin NOS

Congenital Heinz-body anemia

Disease:

hemoglobin C [Hb-C]

hemoglobin
D [Hb-D]

hemoglobin
E [Hb-E]

 

62

 

hemoglobin Zurich [Hb-Zurich]

Hemoglobinopathy NOS

Hereditary persistence of fetal
hemoglobin [HPFH]

Unstable hemoglobin hemolytic
disease

 

Excludes:                                              familial
polycythemia (289.6)

hemoglobin M [Hb-M]
disease (289.7)

high-oxygen-affinity
hemoglobin (289.0)

 

282.8                     Other specified hereditary hemolytic anemias

Stomatocytosis

 

282.9                     Hereditary hemolytic anemia, unspecified

Hereditary hemolytic anemia NOS

 

283                              Acquired
hemolytic anemias

 

283.0                     Autoimmune hemolytic anemias

Autoimmune hemolytic disease
(cold type) (warm type)

Chronic cold hemagglutinin
disease

Cold agglutinin disease or
hemoglobinuria

Hemolytic anemia:

cold type (secondary)
(symptomatic)

drug-induced

warm type (secondary)
(symptomatic)

 

Use
additional E code to identify cause, if drug-induced

 

Excludes:                                              Evans’ syndrome
(287.32)

hemolytic disease of
newborn (773.0-773.5)

 

283.1                     Non-autoimmune hemolytic anemias

 

283.10   Non-autoimmune
hemolytic anemia, unspecified

 

283.11   Hemolytic-uremic
syndrome

 

283.19   Other
non-autoimmune hemolytic anemias

Hemolytic anemia:

mechanical

microangiopathic

toxic

 

Use
additional E code to identify cause

 

283.2                     Hemoglobinuria due to hemolysis from external causes

Acute intravascular hemolysis

Hemoglobinuria:

from exertion

march

paroxysmal (cold) (nocturnal)

due to other hemolysis

Marchiafava-Micheli syndrome

 

Use
additional E code to identify cause

 

283.9                     Acquired hemolytic anemia, unspecified

Acquired hemolytic anemia NOS

Chronic idiopathic hemolytic
anemia

 

63

 

284                              Aplastic anemia and other
bone marrow failure syndromes

 

284.0                     Constitutional aplastic anemia

 

284.01   Constitutional
red blood cell aplasia

Aplasia, (pure) red cell:

congenital

of infants

primary

Blackfan-Diamond syndrome

Familial hypoplastic anemia

 

284.09   Other
constitutional aplastic anemia

Fanconi’s anemia

Pancytopenia with malformations

 

284.1                     Pancytopenia

 

Excludes:                                              pancytopenia
(due to) (with):

aplastic anemia NOS
(284.9)

bone marrow infiltration
(284.2)

constitutional red blood
cell aplasia (284.01)

drug induced (284.89)

hairy cell leukemia
(202.4)

human immunodeficiency
virus disease (042)

leukoerythroblastic
anemia (284.2)

malformations (284.09)

myelodysplastic
syndromes (238.72-238.75)

myeloproliferative
disease (238.79)

other constitutional aplastic
anemia (284.09)

 

284.2                     Myelophthisis

Leukoerythroblastic anemia

Myelophthisic anemia

 

Code
first the underlying disorder, such as:

malignant neoplasm of
breast (174.0-174.9, 175.0-175.9)

tuberculosis
(015.0-015.9)

 

Excludes:                                              idiopathic
myelofibrosis (238.76)

myelofibrosis NOS
(289.83)

myelofibrosis with
myeloid metaplasia (238.76)

primary myelofibrosis
(238.76)

secondary myelofibrosis
(289.83)

 

284.8                     Other specified aplastic anemias

 

284.81   Red
cell aplasia (acquired) (adult) (with thymoma)

Red cell aplasia NOS

 

284.89   Other
specified aplastic anemias

Aplastic anemia (due to):

chronic systemic disease

drugs

infection

radiation

toxic (paralytic)

 

Use
additional E code to identify cause

 

64

 

284.9                     Aplastic anemia, unspecified

Anemia:

aplastic (idiopathic) NOS

aregenerative

hypoplastic NOS

nonregenerative

Medullary hypoplasia

 

Excludes:                                              refractory
anemia (238.72)

 

285                              Other and unspecified
anemias

 

285.0                     Sideroblastic anemia

Anemia:

hypochromic with iron loading

sideroachrestic

sideroblastic:

acquired

congenital

hereditary

primary

secondary (drug-induced) (due
to disease)

sex-linked hypochromic

vitamin B6-responsive

Pyridoxine-responsive
(hypochromic) anemia

 

Excludes:                                              refractory
sideroblastic anemia (238.72)

Use
additional E code to identify cause, if drug-induced

 

285.1                     Acute posthemorrhagic anemia

Anemia due to acute blood loss

 

Excludes:                                              anemia due to
chronic blood loss (280.0)

blood loss anemia NOS
(280.0)

 

285.2                     Anemia of chronic disease

Anemia in (due to) (with)
chronic illness

 

285.21   Anemia
in chronic kidney disease

Anemia in end-stage renal
disease

Erythropoietin-resistant
anemia (EPO resistant anemia)

 

285.22   Anemia in neoplastic disease

 

Excludes:          anemia
due to antineoplastic chemotherapy (285.3)

 

285.29   Anemia
of other chronic disease

Anemia in other chronic illness

 

285.3                     Antineoplastic chemotherapy induced anemia

Anemia due to antineoplastic
chemotherapy

 

Excludes:          anemia
due to drug NEC - code to type of anemia

anemia in neoplastic
disease (285.22)

aplastic anemia due to
antineoplastic chemotherapy (284.89)

 

285.8                     Other specified anemias

Anemia:

dyserythropoietic (congenital)

dyshematopoietic (congenital)

 

65

 

von Jaksch’s

Infantile pseudoleukemia

 

285.9                     Anemia, unspecified

Anemia:

NOS

essential

normocytic, not due to blood
loss

profound

progressive

secondary

Oligocythemia

 

Excludes:                                              anemia (due
to):

blood loss:

acute (285.1)

chronic or unspecified
(280.0)

iron deficiency
(280.0-280.9)

 

286                              Coagulation defects

 

286.0                     Congenital factor VIII disorder

Antihemophilic globulin [AHG]
deficiency

Factor VIII (functional)
deficiency

Hemophilia:

NOS

A

classical

familial

hereditary

Subhemophilia

 

Excludes:                                              factor VIII
deficiency with vascular defect (286.4)

 

286.1                     Congenital factor IX disorder

Christmas disease

Deficiency:

factor IX (functional)

plasma thromboplastin component
[PTC]

Hemophilia B

 

286.2                     Congenital factor XI deficiency

Hemophilia C

Plasma thromboplastin
antecedent [PTA] deficiency

Rosenthal’s disease

 

286.3                     Congenital deficiency of other clotting factors

Congenital afibrinogenemia

Deficiency:

AC globulin

factor:

I [fibrinogen]

II [prothrombin]

V [labile]

VII [stable]

X [Stuart-Prower]

XII [Hageman]

XIII [fibrin stabilizing]

 

66

 

Laki-Lorand factor

proaccelerin

Disease:

Owren’s

Stuart-Prower

Dysfibrinogenemia (congenital)

Dysprothrombinemia
(constitutional)

Hypoproconvertinemia

Hypoprothrombinemia
(hereditary)

Parahemophilia

 

286.4                     von Willebrand’s disease

Angiohemophilia (A) (B)

Constitutional thrombopathy

Factor VIII deficiency with
vascular defect

Pseudohemophilia type B

Vascular hemophilia

von Willebrand’s (-Jürgens’)
disease

 

Excludes:                                              factor VIII
deficiency:

NOS (286.0)

with functional defect (286.0)

hereditary capillary
fragility (287.8)

 

286.5                     Hemorrhagic disorder due to intrinsic circulating
anticoagulants

Antithrombinemia

Antithromboplastinemia

Antithromboplastino-genemia

Hyperheparinemia

Increase
in:

anti-VIIIa

anti-IXa

anti-Xa

anti-XIa

antithrombin

Secondary hemophilia

Systemic lupus erythematosus
[SLE] inhibitor

 

286.6                     Defibrination syndrome

Afibrinogenemia, acquired

Consumption coagulopathy

Diffuse or disseminated
intravascular coagulation [DIC syndrome]

Fibrinolytic hemorrhage,
acquired

Hemorrhagic fibrinogenolysis

Pathologic fibrinolysis

Purpura:

fibrinolytic

fulminans

 

Excludes:                                              that
complicating:

abortion (634-638 with
..1, 639.1)

pregnancy or the
puerperium (641.3, 666.3)

disseminated
intravascular coagulation in newborn (776.2)

 

286.7                     Acquired coagulation factor deficiency

Deficiency of coagulation
factor due to:

liver disease

vitamin K deficiency

 

67

 

Hypoprothrombinemia, acquired

Excludes:                                              vitamin K
deficiency of newborn (776.0)

 

Use additional
E-code to identify cause, if drug-induced

 

286.9                     Other and unspecified coagulation defects

Defective coagulation NOS

Deficiency, coagulation factor
NOS

Delay, coagulation

Disorder:

coagulation

hemostasis

 

Excludes:                                              abnormal
coagulation profile (790.92)

hemorrhagic disease of
newborn (776.0)

that complicating:

abortion (634-638 with
..1, 639.1)

pregnancy or the
puerperium (641.3, 666.3)

 

287                              Purpura and other
hemorrhagic conditions

 

Excludes:                                              hemorrhagic
thrombocythemia (238.79)

purpura fulminans (286.6)

 

287.0                     Allergic purpura

Peliosis rheumatica

Purpura:

anaphylactoid

autoimmune

Henoch’s

nonthrombocytopenic:

hemorrhagic

idiopathic

rheumatica

Schönlein-Henoch

vascular

Vasculitis, allergic

 

Excludes:                                              hemorrhagic
purpura (287.39)

purpura annularis telangiectodes
(709.1)

 

287.1                     Qualitative platelet defects

Thrombasthenia (hemorrhagic)
(hereditary)

Thrombocytasthenia

Thrombocytopathy (dystrophic)

Thrombopathy (Bernard-Soulier)

 

Excludes:                                              von Willebrand’s
disease (286.4)

 

287.2                     Other nonthrombocytopenic purpuras

Purpura:

NOS

senile

simplex

 

287.3                     Primary thrombocytopenia

 

Excludes:                                              thrombotic
thrombocytopenic purpura (446.6)

transient
thrombocytopenia of newborn (776.1)

 

287.30   Primary
thrombocytopenia unspecified

 

68

 

Megakaryocytic hypoplasia

 

287.31   Immune
thrombocytopenic purpura

Idiopathic thrombocytopenic
purpura

Tidal platelet dysgenesis

 

287.32   Evans’
syndrome

 

287.33   Congenital
and hereditary thrombocytopenic purpura

Congenital and hereditary
thrombocytopenia

Thrombocytopenia with absent
radii (TAR) syndrome

 

Excludes:                                              Wiskott-Aldrich
syndrome (279.12)

 

287.39   Other
primary thrombocytopenia

 

287.4                     Secondary thrombocytopenia

Posttransfusion purpura

Thrombocytopenia (due to):

dilutional

drugs

extracorporeal circulation of
blood

massive blood transfusion

platelet alloimmunization

 

Use
additional E code to identify cause

 

Excludes:                                              heparin-induced
thrombocytopenia (HIT) (289.84)

transient
thrombocytopenia of newborn (776.1)

 

287.5                     Thrombocytopenia, unspecified

 

287.8                     Other specified hemorrhagic conditions

Capillary fragility
(hereditary)

Vascular pseudohemophilia

 

287.9                     Unspecified hemorrhagic conditions

Hemorrhagic diathesis
(familial)

 

288                              Diseases of white blood
cells

 

Excludes:                                              leukemia
(204.0-208.9)

 

288.0                     Neutropenia

Decreased Absolute Neutrophil
Count (ANC)

 

Use
additional code for any associated:

fever (780.61)

mucositis (478.11,
528.00-528.09, 538, 616.81)

 

Excludes:                                              neutropenic
splenomegaly (289.53)

transitory neonatal
neutropenia (776.7)

 

288.00   Neutropenia,
unspecified

 

288.01   Congenital
neutropenia

Congenital agranulocytosis

Infantile genetic
agranulocytosis

Kostmann’s syndrome

 

288.02   Cyclic
neutropenia

Cyclic hematopoiesis

 

69

 

Periodic neutropenia

 

288.03   Drug
induced neutropenia

 

Use
additional E code to identify drug

 

288.04   Neutropenia
due to infection

 

288.09   Other
neutropenia

Agranulocytosis

Neutropenia:

immune

toxic

 

288.1                     Functional disorders of polymorphonuclear neutrophils

Chronic (childhood)
granulomatous disease

Congenital dysphagocytosis

Job’s syndrome

Lipochrome histiocytosis
(familial)

Progressive septic
granulomatosis

 

288.2                     Genetic anomalies of leukocytes

Anomaly (granulation)
(granulocyte) or syndrome:

Alder’s (-Reilly)

Chédiak-Steinbrinck (-Higashi)

Jordan’s

May-Hegglin

Pelger-Huet

Hereditary:

hypersegmentation

hyposegmentation

leukomelanopathy

 

288.3                     Eosinophilia

Eosinophilia

allergic

hereditary

idiopathic

secondary

Eosinophilic leukocytosis

 

Excludes:                                              Löffler’s
syndrome (518.3)

pulmonary eosinophilia
(518.3)

 

288.4                     Hemophagocytic syndromes

Familial hemophagocytic
lymphohistiocytosis

Familial hemophagocytic
reticulosis

Hemophagocytic syndrome,
infection-associated

Histiocytic syndromes

Macrophage activation syndrome

 

288.5                     Decreased white blood cell count

 

Excludes:                                              neutropenia
(288.01-288.09)

 

288.50   Leukocytopenia,
unspecified

Decreased leukocytes,
unspecified

Decreased white blood cell
count, unspecified

Leukopenia NOS

 

70

 

288.51   Lymphocytopenia

Decreased lymphocytes

 

288.59   Other
decreased white blood cell count

Basophilic leukopenia

Eosinophilic leukopenia

Monocytopenia

Plasmacytopenia

 

288.6                     Elevated white blood cell count

 

Excludes:          eosinophilia
(288.3)

 

288.60   Leukocytosis,
unspecified

Elevated leukocytes,
unspecified

Elevated white blood cell
count, unspecified

 

288.61   Lymphocytosis
(symptomatic)

Elevated lymphocytes

 

288.62   Leukemoid
reaction

Basophilic leukemoid reaction

Lymphocytic leukemoid reaction

Monocytic leukemoid reaction

Myelocytic leukemoid reaction

Neutrophilic leukemoid reaction

 

288.63   Monocytosis
(symptomatic)

 

Excludes:          infectious
mononucleosis (075)

 

288.64   Plasmacytosis

 

288.65   Basophilia

 

288.66   Bandemia

Bandemia without diagnosis of
specific infection

 

Excludes:          confirmed
infection - code to infection

leukemia  (204.00-208.9)

 

288.69   Other
elevated white blood cell count

 

288.8                     Other specified disease of white blood cells

 

Excludes:                                              decreased white
blood cell counts (288.50-288.59)

elevated white blood
cell counts (288.60-288.69)

immunity disorders
(279.0-279.9)

 

288.9                     Unspecified disease of white blood cells

 

289                              Other diseases of blood and
blood-forming organs

 

289.0                     Polycythemia, secondary

High-oxygen-affinity hemoglobin

Polycythemia:

acquired

benign

due to:

fall in plasma volume

high altitude

 

71

 

emotional

erythropoietin

hypoxemic

nephrogenous

relative

spurious

stress

 

Excludes:                                              polycythemia:

neonatal (776.4)

primary (238.4)

vera (238.4)

 

289.1                     Chronic lymphadenitis

Chronic:

adenitis any lymph node, except
mesenteric

lymphadenitis any lymph node,
except mesenteric

 

Excludes:                                              acute
lymphadenitis (683)

mesenteric (289.2)

enlarged glands NOS
(785.6)

 

289.2                     Nonspecific mesenteric lymphadenitis

Mesenteric lymphadenitis
(acute) (chronic)

 

289.3                     Lymphadenitis, unspecified, except mesenteric

 

289.4                     Hypersplenism

“Big spleen” syndrome

Dyssplenism

Hypersplenia

 

Excludes:                                              primary splenic
neutropenia (289.53)

 

289.5                     Other diseases of spleen

 

289.50   Disease
of spleen, unspecified

 

289.51   Chronic
congestive splenomegaly

 

289.52   Splenic
sequestration

 

Code
first sickle-cell disease in crisis (282.42, 282.62, 282.64, 282.69)

 

289.53   Neutropenic
splenomegaly

 

289.59   Other

Lien migrans

Perisplenitis

Splenic:

abscess

atrophy

cyst

fibrosis

infarction

rupture, nontraumatic

Splenitis

Wandering spleen

 

Excludes:                                              bilharzial
splenic fibrosis (120.0-120.9)

hepatolienal fibrosis
(571.5)

splenomegaly NOS (789.2)

 

72

 

289.6                     Familial polycythemia

Familial:

benign polycythemia

erythrocytosis

 

289.7                     Methemoglobinemia

Congenital NADH
[DPNH]-methemoglobin-reductase deficiency

Hemoglobin M [Hb-M] disease

Methemoglobinemia:

NOS

acquired (with
sulfhemoglobinemia)

hereditary

toxic

Stokvis’ disease

Sulfhemoglobinemia

 

Use
additional E code to identify cause

 

289.8                     Other specified diseases of blood and blood-forming organs

 

289.81   Primary
hypercoagulable state

Activated protein C resistance

Antithrombin III deficiency

Factor V Leiden mutation

Lupus anticoagulant

Protein C deficiency

Protein S deficiency

Prothrombin gene mutation

 

289.82   Secondary
hypercoagulable state

 

Excludes:                                              heparin-induced
thrombocytopenia (HIT) (289.84)

 

289.83   Myelofibrosis

Myelofibrosis NOS

Secondary myelofibrosis

 

Code
first the underlying disorder, such as:

malignant neoplasm of
breast (174.0-174.9, 175.0-175.9)

 

Use
additional code for associated therapy-related myelodysplastic syndrome, if
applicable (238.72, 238.73)

 

Use
additional external cause code if due to anti-neoplastic chemotherapy (E933.1)

 

Excludes:          idiopathic
myelofibrosis (238.76)

leukoerythroblastic
anemia (284.2)

myelofibrosis with
myeloid metaplasia (238.76)

myelophthisic anemia
(284.2)

myelophthisis (284.2)

primary myelofibrosis
(238.76)

 

289.84   Heparin-induced
thrombocytopenia (HIT)

 

289.89   Other
specified diseases of blood and blood-forming organs

Hypergammaglobulinemia

Pseudocholinesterase deficiency

 

289.9                     Unspecified diseases of blood and blood-forming organs

Blood dyscrasia NOS

Erythroid hyperplasia

 

73

 

*** Confidential material redacted
and filed separately with the Commission.

 

Schedule 1.43

 

***

 

***

 

2

 

*** Confidential material redacted
and filed separately with the Commission.

 

***

 

3

 

*** Confidential material redacted
and filed separately with the Commission.

 

***

 

4

 

*** Confidential material redacted
and filed separately with the Commission.

 

***

 

5

 

*** Confidential material redacted
and filed separately with the Commission.

 

Schedule 1.48

 

Initial
Licensed Back-Up Compounds

 

***

***

***

***

 

6

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