Document:

exv10w21

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.

EXHIBIT 10.21

RESEARCH, DEVELOPMENT AND MARKETING

COLLABORATION AGREEMENT

     THIS RESEARCH, DEVELOPMENT AND MARKETING COLLABORATION AGREEMENT (the
“Agreement”) is made and entered into effective as of July 31, 1997, by and
between ONYX PHARMACEUTICALS, INC., a California corporation located at 3031
Research Drive, Richmond, California 94806 (“Onyx”), and WARNER-LAMBERT
COMPANY, a Delaware corporation located at 201 Tabor Road, Morris Plains, New
Jersey 07950 (“Warner”).

W I T N E S S E T H:

     WHEREAS, Onyx and Warner each has certain expertise in the discovery and
development of agents acting in the field of inflammation; and

     WHEREAS, Warner and Onyx each wish to enter into a collaborative effort to
share such expertise, to develop new expertise in the field of inflammation,
auto immunity and related pathological conditions, to research together
potential applications of such expertise as applied to specific protein targets
to identify potentially useful drug candidates and, if successful, to market
such drugs (the “Collaboration”);

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, covenants and conditions contained herein, Onyx and Warner agree as
follows:

ARTICLE 1

DEFINITIONS

     The following capitalized terms shall have the meanings indicated for
purposes of this Agreement:

     “1995 Agreement” shall mean the Research, Development and Marketing
Collaboration Agreement between Onyx and Warner dated May 2, 1995, as amended.

     “Affiliate” shall mean any corporation, association or other entity which
directly or indirectly controls, is controlled by or is under common control
with the party in

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question. As used herein the term “control” means possession of the power
to direct, or cause the direction of, the management and policies of a
corporation, association or other entity.

     “Collaboration Compound” shall mean any compound identified by either
party during the Research Term (or one year thereafter) as showing sufficient
activity against targets in the Field identified by the Research Management
Committee in assays contributed to or developed under the Collaboration such
that further research on such compound for such target is pursued, and any
analogs or derivatives of such compounds whenever identified.

     “Collaboration Lead Compound” shall mean any Collaboration Compound
selected by Warner for further development as provided in Section 5.1.

     “Collaboration Product” shall mean any Collaboration Lead Compound for
which an IND or foreign equivalent application has been filed, as provided in
Section 5.2.

     “Collaboration Product Exclusive Period” shall have the meaning set forth
in Section 6.4(b).

     “Effective Date” shall mean the date of this Agreement first written
above.

     “FDA” shall mean the United States Food and Drug Administration.

     “Field” shall mean research, drug discovery and development of therapeutic
agents that regulate, treat or prevent inflammation, autoimmunity and/or other
pathological conditions via the agonism, antagonism or other biochemical
interaction with one or more of the following molecular targets: [*] including
[*] and other kinases implicated in septic shock, and Wiscott-Aldrich Syndrome
Protein (WASP).

     The parties may agree during the Research Term to expand the Field by
designating additional targets, and it is their intention to do so in the event
logical extensions of the Field are identified and may be accommodated within
the resource commitment of the parties. Such expansion will be in writing
signed by all members of the Research Development Committee. However, neither
party shall be obligated to agree to expand the Field.

     For the avoidance of doubt, the parties agree that the Field will exclude:

	 	(a)	 	[*]
	 
	 	(b)	 	All molecular entities that are part of or that regulate [*] This
also includes [*] This also includes [*] This exclusion shall not include [*]
	 
	 	(c)	 	[*] except for the specific biological targets identified above;

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	 	(d)	 	[*]
	 
	 	(e)	 	[*]
	 
	 	(f)	 	[*]
	 
	 	(g)	 	[*]
	 
	 	(h)	 	[*]
	 
	 	(i)	 	[*] and
	 
	 	(j)	 	[*]

     [*] shall mean therapeutics where the active agent is [*] specifically
excludes [*]

     “IND” shall mean an Investigational New Drug Application.

     “Invention” shall mean any invention, idea, data, know-how or material
that is discovered or reduced to practice during the Term of this Agreement [*]
and that relates to the discovery, design, synthesis, delivery, development,
testing, use, manufacture or sale of agents acting in the Field.

     “Know-How” shall mean Onyx Know-How and/or Warner Know-How, as the case
may be.

     “MHW” shall mean the Ministry of Health and Welfare of Japan.

     “NDA” shall mean a New Drug Application.

     “Net Sales” shall mean the gross amount invoiced by a party hereto or one
of its Affiliates to customers who are not Affiliates of the selling party for
all Products sold to such customers, less the following deductions calculated
in accordance with United States generally accepted accounting principles and
Warner’s (or Onyx’s, as the case may be) normal internal accounting standards
consistently applied: (i) trade, quantity and cash discounts or rebates; (ii)
credits, rebates, charge-back rebates, reimbursements or similar payments
granted or given to wholesalers and other distributors, buying groups,
healthcare insurance carriers, governmental agencies and other institutions,
provided that such provisions will not grant a preference or otherwise favor
other products of Warner or Onyx, as the case may be, if based on the fact that
a royalty may be payable hereunder; (iii) credits or allowances for rejection
or return of such Product previously sold; (iv) any tax, tariff, duty or other
governmental charge (other than an income tax) levied on the sale,
transportation or delivery of a Product and borne by the seller thereof; (v)
payments or rebates paid in connection with state or federal Medicare, Medicaid
or similar programs; (vi) any charge for freight or insurance; and (vii)
allowance for bad debt

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expense. Any such deductions, if not for amounts actually incurred or
allowed with respect to the specific Products sold, shall be no greater than
the pro rata amount allocable to such Product, based on the invoices for
similar pharmaceutical products sold by the selling party, of the total amount
of such deductions allowed or incurred for all such similar products. In the
event that the selling party recognizes revenue due to excess balance sheet
reserves associated with the net sales deductions described above, the pro rata
amount of such revenue allocable to the Product shall be deemed Net Sales
hereunder, at the time such revenue is recognized.

     “Onyx Know-How” shall mean all technology, inventions, information, data,
know-how, compounds and materials that (i) are not Onyx Patents, (ii) Onyx owns
or otherwise has the right to license to Warner and (iii) relate to the
discovery, design, synthesis, delivery, development, testing, use, manufacture
or sale of agents with activity in the Field. Excluded from “Onyx Know-How”
are compounds and information relating to compounds that have been identified
by Onyx as candidates for cGLP/cGMP studies on or before the Effective Date, or
are hereafter so identified without material application of information
provided by Warner or developed by either party pursuant to the Collaboration.

     “Onyx Lead Compound” shall mean a Collaboration Compound that Onyx obtains
the right to develop independently as provided in Section 5.3.

     “Onyx Patents” shall mean all United States and foreign patents that are
owned by Onyx or that Onyx otherwise has the right to license to Warner and
that relate to the discovery, design, synthesis, delivery, development,
testing, use, manufacture or sale of agents with activity in the Field,
including, without limitation, all reissues, extensions, substitutions,
confirmations, registrations, revalidations, additions, continuations,
continuations-in-part, and divisions thereof. Excluded from “Onyx Patents” are
patents and patent applications that claim compounds and information relating
to compounds that have been identified by Onyx as candidates for cGLP/cGMP
studies on or before the Effective Date, or are hereafter so identified without
material application of information provided by Warner or developed pursuant to
the Collaboration.

     “Onyx Product” shall have the meaning set forth in Section 5.3.

     “Onyx Product Exclusive Period” shall have the meaning set forth in
Section 6.6(b).

     “Patents” shall mean Onyx Patents and/or Warner Patents, as the case may
be.

     “Products” shall mean Collaboration Products and/or Onyx Products, as
applicable.

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     “Research Management Committee” shall mean that entity organized and
acting pursuant to Section 3.1.

     “Research Plan” shall have the meaning set forth in Section 2.1.

     “Research Term” shall have the meaning set forth in Section 2.3.

     “Term of this Agreement” shall mean the period from the Effective Date
until the expiration of all licenses granted pursuant to this Agreement or
until this Agreement is otherwise terminated pursuant to its terms.

     “Warner Know-How” shall mean all technology, inventions, information,
data, know-how, compounds and materials that (i) are not Warner Patents, (ii)
Warner owns or otherwise has the right to license to Onyx and (iii) relate to
the discovery, design, synthesis, delivery, development, testing, use,
manufacture or sale of agents with activity in the Field. Excluded from
“Warner Know-How” are (i) Warner’s high-volume screening technology and (ii)
compounds and information relating to compounds that have been identified by
Warner as candidates for cGLP/cGMP studies on or before the Effective Date, or
are hereafter so identified without material application of information
provided by Onyx or developed by either party pursuant to the Collaboration.

     “Warner Patents” shall mean all United States and foreign patents that are
owned by Warner or that Warner otherwise has the right to license to Onyx and
that relate to the discovery, design, synthesis, delivery, development,
testing, use, manufacture or sale of agents with activity in the Field,
including, without limitation, all reissues, extensions, substitutions,
confirmations, registrations, revalidations, additions, continuations,
continuations-in-part, and divisions thereof. Excluded from “Warner Patents”
are patents and patent applications that claim (i) Warner’s high volume screen
technology and (ii) compounds and information relating to compounds that have
been identified by Warner as candidates for cGLP/cGMP studies on or before the
Effective Date, or are hereafter so identified without material application of
information provided by Onyx or developed pursuant to the Collaboration.

ARTICLE 2

RESEARCH PROGRAM

     2.1     Undertaking and Scope. From time to time the Research Management
Committee will agree on the general direction of the research to be performed
hereunder. The correspondence and other material documenting such agreement
are collectively referred to herein as the “Research Plan.” Each party agrees
to use its best efforts to perform the activities detailed in the Research
Plan, in a professional and timely manner. Onyx agrees to use its best efforts
at its cost (including the cost of any royalties or other amounts payable by
Onyx to third parties) to (i) develop
and transfer to Warner [*]

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screening assays per each year of the Research
Term for specific targets in the Field selected by the Research Management
Committee, (ii) supply protein required to run such screens and (iii) provide
for the testing of substantially all of Onyx’s compound library in such
screens. Onyx shall not knowingly provide or perform research on any compounds
the use of which would require a royalty or other payment to any third party,
unless the Research Management Committee agrees that such compound should be
provided and the parties agree in writing how such royalty or other payment
will be paid. Warner agrees to use its best efforts at its cost [*] to (i)
screen substantially all of its compound library with such screens provided by
Onyx and (ii) conduct medicinal chemistry and animal pharmacology as the
Research Management Committee deems appropriate. Promptly after the Effective
Date, Onyx and Warner will disclose to each other all information possessed by
it relevant to the Field and necessary or helpful to perform the work described
in the Research Plan. During the Research Term, or one year thereafter, the
Research Management Committee and either party individually may from time to
time declare any compound that meets the definition therefor in Article 1 to be
a Collaboration Compound. Notwithstanding the foregoing, neither party will be
required to offer the other party any compounds or information relating to
compounds that have been identified as candidates for cGLP/cGMP studies on or
before the Effective Date, or are hereafter so identified without material
application of information provided by the other party or developed pursuant to
the Collaboration. Neither party shall be required to screen under this
Collaboration or to offer to the other party any information regarding any
compounds identified as having activity in pathways expressly excluded from the
Field, if so identified prior to being designated a “Collaboration Compound”
hereunder.

     2.2     Personnel and Resources. Each party agrees to commit the personnel,
facilities, expertise and other resources needed to perform this Agreement in
accordance with its terms; provided, however, that neither party warrants that
the Collaboration shall achieve any of the research objectives contemplated by
them. During the Research Term, Warner and Onyx will each maintain at its cost
an average of about ten (10) full-time equivalents (“FTEs”) devoted to
cooperative work under the Research Plan. At the beginning of the first-year
of the Research Term, Onyx need maintain only 5 such FTEs; with Onyx adding
additional FTEs as needed to reach 10 FTEs actively working on the research by
January 1998. The scientific priorities and direction of such staff of both
parties will be determined by the Research Management Committee. Such staff
will include, as appropriate, scientists in the areas of [*]

     2.3     Research Term. Work under the Research Plan will commence as of the
date of this Agreement and, unless terminated earlier by either party pursuant
to the terms of this Agreement or extended by mutual agreement of the parties,
will terminate on the third anniversary hereafter (as terminated, expired or
extended, the “Research Term”). At least thirty (30) days prior to the
24-month anniversary of the Effective Date, Onyx will provide Warner a written
research proposal for continuation of the research project beyond the initial
Research Term. Promptly after Onyx provides such proposal,the

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Research Management Committee will conduct a formal review of such
proposal and of the status and success of the parties’ work on the Research
Plan. By the 24-month anniversary of the Effective Date (the “Evaluation
Date”), Warner shall decide in its sole discretion whether to extend the
collaborative research under the research proposal beyond the initial three
year term for at least one additional year, or not to extend the collaborative
research beyond such initial term, in which case the Agreement shall terminate
at the end of such initial three year Research Term. If Warner does not elect
in writing to extend the Research Term beyond such initial three year term,
then commencing on or promptly after the Evaluation Date the work conducted by
Onyx and Warner will be wound down and ended in an orderly twelve month phase
out period, ending on the first anniversary of the Evaluation Date, with Onyx
continuing the research efforts using [*] FTEs over such period. During such
phase-out period, Warner will be obligated to pay Onyx a total of [*] to
support Onyx’s research efforts using [*] FTEs over such phase-out period,
which amounts shall be paid in four equal installments in advance over such
year, commencing on the Evaluation Date, in lieu of the last four research
funding payments as specified in Section 8.2.

     2.4     Rights to Know-How and Patents for Research. Each party hereby grants
and agrees to grant to the other a non-exclusive, royalty-free license to use
such party’s Know-How and Patents that are conceived or reduced to practice
prior to the [*] anniversary of the end of the Research Term for (a) research
and development purposes in the Field and (b), beginning [*] after termination
of the Research Term, research and development outside of the Field; provided,
however, that the granting party may terminate such licenses granted by it
immediately upon its termination of this Agreement for cause. Notwithstanding
the foregoing, neither party is granted any interest in the other’s compounds
(or analogs or derivatives thereof) except as specifically set forth in this
Agreement. In the event that one party does nonetheless conceive or reduce to
practice any invention that is comprised of the other party’s compound (or
analog or derivative thereof) and if such invention is not in the Field, such
party will promptly assign its entire interest therein exclusively to the other
party without charge and will not be entitled to any milestones, royalties or
other consideration in connection therewith.

     2.5     Collaboration Expenses. [*] the costs and expenses of work done
pursuant to the Collaboration at [*]

ARTICLE 3

COMMITTEES

     3.1     Research Management Committee. Warner and Onyx will each appoint up
to 4 representatives to a research management committee (the “Research
Management Committee”), which will oversee the operational aspects of
performing the Research Plan. The Research Management Committee will assure
that agendas and minutes are prepared for each of its meetings. The personnel,
facilities, expertise and
other resources

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of each party to be used in performance of the Research
Plan shall be established by the Research Management Committee. The Research
Management Committee will meet quarterly, or more frequently if mutually
agreed. Warner’s and Onyx’s initial representatives to the Research Management
Committee will be appointed by each of them promptly after the date of this
Agreement. All actions taken and decisions made by the Research Management
Committee shall be by unanimous agreement. A party may change any of its
appointments to the Research Management Committee at any time upon giving
written notice to the other party.

     3.2     Meetings. The Research Management Committee may meet by telephone or
in person at such times as are agreeable to the members of each such committee.
Attendance at meetings shall be at the respective expense of the participating
parties. Warner and Onyx shall alternate the right to determine the location
of each meeting of the Research Management Committee, with Onyx determining the
location of the first meeting of such committee.

     3.3     SAB Attendance. During the Term of this Agreement, Warner will be
entitled to have up to three (3) of its representatives attend all meetings of
Onyx’s Scientific Advisory Board that relate directly to the Field and such
other general symposia that do not contain confidential information outside the
Field of Onyx or of any third party to which Onyx owes a duty of
confidentiality that would be breached by Warner’s attendance. Onyx will
provide Warner reasonable advance notice of all such meetings and will provide
Warner copies of all written material given to the members of the Scientific
Advisory Board in connection with such meetings. Attendance at such meetings
by Warner’s representatives will be at Warner’s expense. As a condition of
such attendance and access to such written material, Warner will execute
appropriate confidentiality agreements with respect to information disclosed at
such meetings and in such written material. The Warner representatives
provided for herein shall not be in addition to the representatives provided
for under Section 2.4 of the 1995 Agreement, though different individuals from
Warner may attend different meetings depending on the subject matter.

ARTICLE 4

PATENTS, KNOW-HOW, RIGHTS AND INVENTIONS

     4.1     Rights to Inventions.

          (a)     Ownership of all Inventions and any other technology, information,
data, know-how, compounds and material developed, discovered or made hereunder
shall be determined in accordance with United States laws of inventorship. The
owner (the “Inventor”) of any Invention shall have the right, at its option and
expense, to prepare, file and prosecute in its own name any patent applications
with respect to any Invention owned by it and to maintain any patents issued.
In connection therewith, the non-

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Inventor party agrees to cooperate with the Inventor at the Inventor’s
expense in the preparation and prosecution of all such patent applications and
in the maintenance of any patents issued. This obligation shall survive the
expiration or termination of this Agreement.

          (b)     The parties will co-own technology, inventions, information, data,
know-how, compounds and materials (whether or not patentable) that relate to
[*] and that are developed in connection with performance of the Research Plan
(“[*] Inventions”). The parties will cooperate in the joint filing of patent
applications claiming [*] Inventions. The parties will negotiate in good faith
regarding the collaborative commercial exploitation of the [*] Inventions;
provided, however, that each party will retain an undivided ownership interest
in the [*] Inventions and will be free to exploit the same without obligation
to the other party.

     4.2     Joint Inventions. Inventions that are jointly invented by Onyx and
Warner will be jointly owned by them; however, [*] will have the rights and
responsibilities of the “Inventor” as described in this Article IV in respect
of any such patentable, jointly owned Inventions, and [*] shall have the rights
and responsibilities of a non-Inventor therein. [*] shall pay all expenses in
connection with its preparation, filing and prosecution of patent applications
that claim patentable, jointly owned Inventions. [*] shall from time to time
notify [*] of the amount of such expenses, and [*] shall promptly thereafter
pay [*] of its out-of-pocket expenses. As used in the preceding sentence
“out-of-pocket expenses” shall mean direct costs, excluding internal labor
costs. Onyx may elect in writing to disclaim all interest in any jointly
invented Invention, in which case (i) such Invention will be solely owned by
Warner, and Onyx will co-operate to assure Warner’s sole ownership, (ii) Onyx
will have no further interest in such Invention, by ownership, license or
otherwise and (iii) [*] the date that Warner receives Onyx’s written
disclaimer. Warner may elect in writing to disclaim all interest in any
jointly invented Inventions, in which case (i) such Invention will be solely
owned by Onyx, and Warner will co-operate to assure Onyx’s sole ownership, (ii)
Warner will have no further interest in such Invention, by ownership, license
or otherwise and (iii) [*]

     4.3     Protection of Patent Rights.

          (a)     The Inventor shall keep the other party currently informed of all
steps to be taken in the preparation, prosecution and maintenance of all of its
patents and patent applications which claim an Invention and shall furnish the
other party with copies of patents and applications, amendments thereto and
other related correspondence relating to such Invention to and from patent
offices and permit the other party to offer its comments thereon before the
Inventor makes a submission to a patent office which could materially affect
the scope or validity of the patent coverage that may result. The non-Inventor
party shall offer its comments promptly. Onyx and Warner shall each promptly
notify the other of any infringement and/or unauthorized use of an Invention
which comes to its attention.

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           (b)     The non-Inventor party may request in writing that the Inventor take
specific, reasonable actions to (i) prepare, file or prosecute a patent
application with respect to an Invention, (ii) maintain any patents issued with
respect to an Invention, (iii) protect against abandonment of a patent or
application which claims an Invention or (iv) obtain a discontinuance of an
infringement or unauthorized use of such patent or application. If such
actions are not undertaken within thirty days of the Inventor’s receipt of such
written request and timely pursued thereafter, the Inventor shall permit, and
the non-Inventor party at its option and expense may undertake, such actions.
The party not undertaking such actions shall fully cooperate with the other
party and shall provide to the other party whatever assignments and other
documents that may be needed in connection therewith. The party not
undertaking such actions may require a suitable indemnity against all damages,
costs and expenses and impose such other reasonable conditions as such party’s
advisors may require.

          (c)     If either party commences any actions or proceedings (legal or
otherwise) pursuant to this Section, it shall prosecute the same vigorously at
its expense and shall not abandon or compromise them or fail to exercise any
rights of appeal without giving the other party the right to take over their
conduct at its own expense. The party finally conducting legal actions or
proceedings against an alleged infringer or other party shall be entitled to
any damages or costs awarded against such infringer or other party.

     4.4     Allegations of Infringement by Third Parties. In the event that
Warner or Onyx receives notice that any action by either of them under this
Agreement is alleged to be a violation of the patent or other intellectual
property rights of a third party, it shall notify the other party to this
Agreement, and they shall jointly determine an appropriate response and course
of action. The costs of such defense, and any damages, costs or expenses
resulting from such action, shall be paid [*] of all such costs relating to
allegations that it was aware of prior to the Effective Date. The Research
Management Committee will decide whether or not to continue any activity
following notice that such activity may be a violation of the patent or other
intellectual property rights of a third party.

ARTICLE 5

DESIGNATION OF LEAD COMPOUNDS AND MARKETING RIGHTS

     5.1     Designation of Lead Compound.

          (a)     From time to time, Warner may formally designate one or more
Collaboration Compounds for further development, and such designated compounds
shall be deemed Collaboration Lead Compounds. Such designation shall be made
under Warner’s then current standards for declaring one of its own compounds a
“lead compound.” Such designation generally indicates that Warner has
identified such compound as a candidate for cGLP/cGMP studies. Warner will
pursue the research and

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development of each Collaboration Lead Compound at its own expense and
under its sole direction. Warner will provide Onyx quarterly, written updates
regarding the status of each Collaboration Lead Compound.

          (b)     In the event Warner decides to pursue commercialization of a
Collaboration Product in Japan, [*] If [*] and if [*] then it shall [*]

     5.2     Collaboration Product. Each Collaboration Lead Compound shall be
referred to herein as a “Collaboration Product” from and after filing of an IND
in respect of such compound with the FDA or the filing of its equivalent in any
foreign country. The preparation, filing and prosecution of IND’s, NDA’s and
other regulatory filings required to be filed with the FDA and its foreign
equivalents in regard to any Collaboration Product will be at the sole expense
of, in the name of and under the direction of Warner. Warner does not warrant
that any regulatory filings will actually be filed or, if filed, will be
approved.

     5.3     Independent Development. From time to time, Onyx may request Warner
in writing to undertake specific research and development regarding a
Collaboration Compound or to declare a Collaboration Compound to be a
Collaboration Lead Compound. Warner will notify Onyx within [*] of receiving
Onyx’s written request if it determines before such date that it will not
undertake such specific research and development (or declare such Collaboration
Compound to be a Collaboration Lead Compound) within [*] of such request
(“Warner’s Notice to Decline”). If Warner does not so notify Onyx within such
[*] period, it will periodically review Onyx’s request and if it determines not
to undertake such specific research and development (or declare such
Collaboration Compound to be a Collaboration Lead Compound) then it shall
promptly so notify Onyx (also, “Warner’s Notice to Decline”). After either (i)
receipt of Warner’s Notice to Decline, or (ii) if Warner does not so notify
Onyx and if Warner does not itself undertake the requested action within [*] of
Onyx’s written request, then the date [*] after Warner’s receipt of Onyx’s
written request, then Onyx shall undertake continued research and development
(including the specific research and development requested by Onyx in its
request to Warner) of such Collaboration Compound independently (an “Onyx Lead
Compound”), at its sole cost and under its sole direction. Onyx may not
utilize the services of the personnel committed to the Collaboration pursuant
to Section 2.2 in performance of research or development of an Onyx Lead
Compound. Onyx may declare no more than [*] Onyx Lead Compounds during the
Term of this Agreement. Onyx will keep Warner currently informed of all
material information in its research and development of each Onyx Lead Compound
and will allow Warner to comment on the direction of such research and
development. Each Onyx Lead Compound is referred to herein as an “Onyx
Product” from and after filing of an IND in respect of such compound with the
FDA or the filing of its equivalent in any foreign country other than Japan.
Onyx will provide Warner a complete and accurate copy of the proposed filing,
together with any additional information that Warner may request regarding the
relevant Onyx

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Lead Compound, at least [*] prior to submitting such filing to the FDA or
its foreign equivalent. Onyx will be entitled to commercialize any Onyx
Product at its sole direction, alone or with another partner, subject to
Section 5.4 and the other terms of this Agreement.

     5.4     Warner’s Re-engagement Option. Warner may elect in writing to Onyx to
resume the research and development of an Onyx Lead Compound at its own cost
and under its sole direction at any time prior to [*] in respect of such
compound. In such event, such Onyx Lead Compound shall immediately become a
Collaboration Lead Compound for all purposes under this Agreement. Promptly
after Warner makes such election, Warner will pay Onyx [*] Onyx’s costs
incurred for research and development of such Onyx Lead Compound. For purposes
of this Section, Onyx’s cost for research and development will mean (i) Onyx’s
“Burdened Cost” (as defined below) for each professional research and
development FTE (not including the personnel committed to the Collaboration
pursuant to Section 2.2) dedicated to the research and development of such Onyx
Lead Compounds (with appropriate adjustment for staff members not fully
dedicated to such work or not working a full year) and (ii) payments made to
unaffiliated third parties, each to the extent incurred in connection with the
relevant compound on or after its declaration as an Onyx Lead Compound and to
the extent reasonably supported by invoices, time sheets or other appropriate
records. The “Burdened Cost” for each Onyx FTE shall mean [*] for work
performed during 1997, and will be revised for work performed during each
succeeding calendar year by the change in the Consumer Price Index (as
determined by the United States of America Department of Labor) during the
preceding calendar year (except that the Burdened Cost for work performed
during 1998 will be revised only by the change in the Consumer Price Index from
the Effective date to December 31, 1997).

ARTICLE 6

LICENSES AND ROYALTIES

     6.1     Grant by Onyx. Onyx hereby grants and agrees to grant to Warner
exclusive, worldwide licenses under the Onyx Patents solely to make, have made,
use and sell (with the right to sublicense) each compound designated as a
Collaboration Lead Compound or as a Collaboration Product. Such licenses with
respect to a Collaboration Lead Compound are co-exclusive between Onyx and
Warner. Such licenses with respect to a Collaboration Product are exclusive
even as to Onyx.

     6.2     Grant by Warner. Warner hereby grants and agrees to grant to Onyx
exclusive, worldwide licenses under the Warner Patents solely to make, have
made, use and sell (with the right to sublicense) each compound designated as
an Onyx Lead Compound or as an Onyx Product. Such licenses with respect to an
Onyx Lead Compound are co-exclusive between Onyx and Warner. Such licenses
with respect to an Onyx Product are exclusive even as to Warner.

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     6.3     Royalties Payable by Warner. In part consideration for all rights
granted to Warner and efforts undertaken by Onyx hereunder, Warner will pay
Onyx [*] of Net Sales as a royalty on worldwide sales of Collaboration
Products. If at the time of the first commercial sale of such Product in such
country a Patent exists that is necessary to sell such Product in such country,
or if at any time after such sale a composition of matter Patent necessary to
sell such Collaboration Product issues in such country, such [*] royalty shall
be payable in respect of sales in such country until the later of (a) the
expiration of the last such Patent to expire and (b) the date such [*] royalty
would expire under the provisions of the following sentence assuming that such
Patent did not exist. Subject to the terms of the preceding sentence, if in a
particular country there is never an issued Patent that is necessary to sell
such Product in such country, then such [*] royalty will be payable, for sales
of such Product in such country, until the earliest of (x) the later to occur
of (i) the [*] anniversary of such first sale in such country and (ii)
expiration of the last Patent necessary to make or use such Product in such
country, which Patent was in existence on the date of such first commercial
sale, (y) the first calendar quarter in which the sale in such country by any
one entity (together with its Affiliates), other than Warner or its Affiliates
or licensees, of one or more products containing the same active ingredient as
such Product, constitutes [*] or more of all units sold in such country
containing such active ingredient and (z) the first calendar quarter in which
the sale in such country by any entities (taken in the aggregate), other than
Warner or its Affiliates or licensees, of one or more products containing the
same active ingredient as the Product, constitutes [*] or more of all units
sold in such country containing such active ingredient (the period from first
commercial sale in each country until the earlier of (x), (y) and (z) above is
referred to herein as the “Collaboration Product Exclusive Period”). In the
case of (y) and (z) above, the [*] royalty will terminate as to Net Sales of
Product sold on or after the day following the end of the triggering calendar
quarter. Warner will pay Onyx [*] and [*] of Net Sales as a royalty on sales
of Collaboration Products in each country (except for Japan) for the [*]
respectively, following (a) such final Patent expiration (in the event that the
required Patent necessary to sell such Product in such country existed on the
date of first commercial sale or issued thereafter) or (b) the end of the
Collaboration Product Exclusive Period (if no such Patent existed or issued
thereafter, and provided that the Collaboration Product Exclusive Period lasted
at least seven years); provided, however, that no such royalty will be payable
in respect of Collaboration Products sold without the use of one or more
trademarks developed by Warner for such Product during the time that the [*]
royalty was applicable.

     6.4     Royalties Payable by Onyx. Onyx will pay Warner [*] of Net Sales as a
royalty on worldwide sales of Onyx Products. If at the time of the first
commercial sale of such Product in such country a Patent exists that is
necessary to sell such Product in such country, or if at any time after such
sale a composition of matter Patent necessary to sell such Collaboration
Product issues in such country, such [*] royalty shall be payable in respect of
sales in such country until the later of (a) the expiration of the last such
Patent to expire and (b) the date such [*] royalty would expire under the
provisions of the

13

 

following sentence assuming that such Patent did not exist.
Subject to the terms of the preceding sentence, if in a particular country
there is never an issued Patent that is necessary to sell such Product in such
country, then such [*] royalty will be payable, for sales of such Product in
such country, until the earliest of (x) the later to occur of (i) the [*]
anniversary of such first sale in such country and (ii) expiration of the last
Patent necessary to make or use such Product in such country, which Patent was
in existence on the date of such first commercial sale, (y) the first calendar
quarter in which the sale in such country by any one entity (together with its
Affiliates), other than Warner or its Affiliates or licensees, of one or more
products containing the same active ingredient as the Product, constitutes [*]
or more of all units sold in such country containing such active ingredient and
(z) the first calendar quarter in which the sale in such country by any
entities (taken in the aggregate), other than Onyx or its Affiliates or
licensees, of one or more products containing the same active ingredient as the
Product, constitutes [*] or more of all units sold in such country containing
such active ingredient (the period from first commercial sale in each country
until the earliest of (x), (y) and (z) above is referred to herein as the “Onyx
Product Exclusive Period”). In the case of (y) and (z) above, the [*] royalty
will terminate as to Net Sales of Product sold on or after the day following
the end of the triggering calendar quarter. Onyx will pay Warner [*] of Net
Sales as a royalty on sales of Onyx Products in each country (except for Japan)
for the [*] respectively, following (a) such final Patent expiration (in the
event that the required Patent necessary to sell such Product in such country
existed on the date of first commercial sale or issued thereafter) or (b) the
end of the Onyx Product Exclusive Period (if no such Patent existed or issued
thereafter, and provided that the Onyx Product Exclusive Period lasted at least
[*] years); provided, however, that no such royalty will be payable in respect
of an Onyx Product sold without the use of one or more trademarks developed by
Onyx for such Product during the time that the [*] royalty was applicable.

     6.5     Third-Party Royalties. Warner understands and agrees that Onyx has
pre-existing royalty obligations to the third parties listed on Schedule 1
with respect to certain in-licensed Onyx Patents. In the event that the use
and sale of Collaboration Products triggers such pre-existing third-party
royalty obligations, [*] responsible for payment of [*] of such third-party
royalties, and [*] will pay [*] Until the expiration of Warner royalty
obligation pursuant to Section 6.4, Onyx shall not modify the pre-existing
royalty rates disclosed on Schedule 1 without the prior written consent of
Warner.

     6.6     Currency of Payment. All payments to be made under this Agreement
shall be made in United States dollars in the United States to a bank account
designated by the party to be paid. Royalties earned shall first be determined
in the currency of the country in which they are earned and then converted to
its equivalent in United States currency. Such conversion shall be based on
the average buying rates of exchange for the currencies involved into the
currency of the United States quoted by Citibank (or its successor in interest)
in New York, New York at the close of business on each business day of the
quarterly period in which the royalties were earned.

14

 

     6.7     Payment and Reporting. The royalties due under Section 6.3 or Section
6.5 shall be paid quarterly, within 45 days after the close of each calendar
quarter immediately following each quarterly period in which such royalties are
earned, or earlier if practical. With each such quarterly payment, the payor
shall furnish the payee a royalty statement, setting forth on a
country-by-country basis the total number of units and Net Sales of each
royalty-bearing Product made, used and/or sold hereunder for the quarterly
period for which the royalties are due. In addition, the payor shall furnish
such a royalty statement on a country-by-country basis for the first quarter
during which payor makes sales of Product for which no royalty payment in
respect of such country is due hereunder, and shall state the basis for such
sales then being free of royalty obligations hereunder. The payor shall
thereafter have no further obligation to report the number of units or Net
Sales of such Product made, used and/or sold in such country.

     6.8     Records. The royalty paying party shall keep accurate books and
accounts of record in connection with the manufacture, use and/or sale by or
for it of the Products hereunder in sufficient detail to permit accurate
determination of all figures necessary for verification of royalty obligations
set forth in this Article VI. Such records shall be maintained for a period of
3 years from the end of each year in which sales occurred. The payee, at its
expense, through a certified public accountant, shall have the right to access
such books and records for the sole purpose of verifying the royalty
statements; such access shall be conducted after reasonable prior notice by the
payee to the payor during the payor’s ordinary business hours and shall not be
more frequent than once during each calendar year. Said accountant shall not
disclose to the payee or any other party any information except that which
should properly be contained in a royalty report required under this Agreement.
If such accounting determines that a party’s error resulted in the other party
receiving at least 5% less than properly due in respect of any quarter, then
the party in error will reimburse such amount and reimburse the other party for
the costs of such accounting (including the fees and expenses of the certified
public accountant).

     6.9     Taxes Withheld. Any income or other tax that one party hereunder, its
Affiliates or sublicensees is required to withhold (the “Withholding Party”)
and pay on behalf of the other party hereunder (the “Withheld Party”) with
respect to the royalties payable under this Agreement shall be deducted from
and offset against said royalties prior to remittance to the Withheld Party;
provided, however, that in regard to any tax so deducted, the Withholding Party
shall give or cause to be given to the Withheld Party such assistance as may
reasonably be necessary to enable the Withheld Party to claim exemption
therefrom or credit therefor, and in each case shall furnish the Withheld Party
proper evidence of the taxes paid on its behalf.

     6.10     Computation of Royalties. All sales of Onyx Products between Onyx
and any of its Affiliates and sublicensees shall be disregarded for purposes of
computing royalties under this Article VI, but in such instances royalties
shall be payable
only upon

15

 

sales to unlicensed third parties. Nothing herein contained
shall obligate Onyx to pay Warner more than one royalty on any unit of an Onyx
Product. All sales of Collaboration Products between Warner and any of its
Affiliates and sublicensees shall be disregarded for purposes of computing
royalties under this Article VI, but in such instances royalties shall be
payable only upon sales to unlicensed third parties. Nothing herein contained
shall obligate Warner to pay Onyx more than one royalty on any unit of a
Collaboration Product or a Warner Product.

     6.11     Licenses to Affiliates. Each party shall, at the other party’s
request, sign license and/or royalty agreements directly with the other party’s
Affiliates and sublicensees in those situations where such agreements would not
decrease the amount of royalties which would be owed hereunder. Such
agreements shall contain the same language as contained herein with appropriate
changes in parties and territory. No such license and/or royalty agreement
will relieve Warner or Onyx, as the case may be, of its obligations hereunder,
and such party will guarantee the obligations of its Affiliate or sublicensee
in any such agreement. Royalties received directly from one party’s Affiliates
and sublicensees shall be credited towards such party’s royalty obligations
under Section 6.3 or 6.5 hereof, as applicable.

     6.12     Restrictions on Payment. The obligation to pay royalties under this
Agreement shall be waived and excused to the extent that statutes, laws, codes
or government regulations in a particular country prevent such royalty payments
by the seller of Products; provided, however, that if legally permissible, the
seller of Products shall pay the royalties owed to the other party hereto by
depositing such amounts in a bank account in such country that has been
designated by the party owed such royalties.

ARTICLE 7

FDA

     7.1     Side Effects. Each party shall promptly advise the other by telefax
or overnight delivery service addressed to the attention of its Vice President,
Medical Affairs (or, in Onyx’s case, the party with similar responsibilities),
of any unexpected side effect, adverse reaction or injury which has been
brought to that party’s attention at any place and which is alleged to have
been caused by a Collaboration Product or an Onyx Product. Warner, with
respect to Collaboration Products, and Onyx, with respect to Onyx Products,
shall have all rights and responsibility to report such side effect, adverse
reaction or injury to regulatory authorities and others as appropriate.

     7.2     Regulatory and other Inquiries. Upon being contacted by the FDA or
any drug regulatory agency for any regulatory purpose pertaining to this
Agreement or to a Collaboration Product, Onyx and Warner shall immediately
notify and consult with one another and Warner shall provide a response as it
deems appropriate. Warner shall have sole responsibility for responding to all
inquiries to Warner or Onyx regarding the

16

 

benefits, side effects and other characteristics of Collaboration
Products, and Onyx shall have sole responsibility for responding to all
inquiries to Warner or Onyx regarding the benefits, side effects and other
characteristics of Onyx Products.

     7.3     Product Recall. Warner shall have the responsibility for, and make
the final determination regarding, any recall or other removal of the
Collaboration Product or any lot or lots thereof from the market and shall be
responsible for the cost and expense of notifying customers and the cost and
expense associated with return of the recalled Collaboration Product from a
customer. Onyx shall have the responsibility for, and make the final
determination regarding, any recall or other removal of the Onyx Product or any
lot or lots thereof from the market and shall be responsible for the cost and
expense of notifying customers and the cost and expense associated with return
of the recalled Onyx Product from a customer.

ARTICLE 8

RESEARCH FUNDING FEES AND MILESTONES

     8.1     License Fees. Warner will pay Onyx a noncreditable license fee of
$2,000,000 payable in three installments as specified below:

	 	 	 	 	 
	First Payment Date
	 	$	500,000	 
	January 1, 1999
	 	$	1,000,000	 
	January 1, 2000
	 	$	500,000	 

     As used herein, the “First Payment Date” shall mean the date that is the
earlier of (a) the seven (7) month anniversary of the Effective Date, or (b)
the date Onyx hires a Project Director who is approved by Warner, as provided
in Section 11.3(a), but in no event shall such date be earlier than January 1,
1998.

     8.2     Research Funding. Warner will pay Onyx the following amounts on the
following dates during the Research Term in consideration for work performed by
Onyx prior to the Effective Date and to provide support for Onyx’s work under
the Research Plan:

	 	 	 	 	 	 
	Later of six month anniversary of the Effective Date or January 1, 1998
	 	$	129,000	 
	Nine month anniversary of the Effective Date
	 	$	562,000	 
	Twelve month anniversary of the Effective Date
	 	$	562,000	 
	Fifteen month anniversary of the Effective Date
	 	$	562,000	 
	Eighteen month anniversary of the Effective Date
	 	$	562,000	 
	Twenty-one month anniversary of the Effective Date
	 	$	562,000	 
	Twenty-four month anniversary of the Effective Date
	 	$	562,000	 
	Twenty-seven month anniversary of the Effective Date
	 	$	562,000	 

17

 

	 	 	 	 	 	 
	Thirty month anniversary of the Effective Date
	 	$	562,000	 
	Thirty-three month anniversary of the Effective Date
	 	$	562,000	 
	 
	 	 	
	 
	 
	 	$	5,187,000	 

    8.3      Milestones.

          (a)     Warner will pay Onyx the following amounts with respect to the first
Collaboration Product to achieve each stated milestone:

	 	 	 	 	 
	Certification by the RMC that the first screening assay
has been completed and the hits analyzed
	 	 	[*]	 
	Commencement of Phase I clinical trials by or on behalf of
Warner anywhere in the world
	 	 	[*]	 
	Commencement of Phase II clinical trials by or on
behalf of Warner anywhere in the world
	 	 	[*]	 
	Commencement of Phase III clinical trials by or on
behalf of Warner anywhere in the world
	 	 	[*]	 
	The FDA’s acceptance for filing of an NDA
	 	 	[*]	 
	Acceptance for filing of an MAA applicable to any of
the following countries: (i) United Kingdom, (ii) Spain,
(iii) Italy, (iv) France and (v) Germany (each a
	 	 	[*] 	country, up to
	 “Major European Country”)
	 	 	[*]	total
	Approval by the FDA of an NDA
	 	 	[*]	 
	Approval of an MAA applicable to a Major European
	 	 	[*]	country, up to
	Country
	 	 	[*]	total
	Approval by the MHW of the Collaboration Product in Japan
(subject to Warner retaining rights in Japan under
Section 5.1(b))
	 	 	[*]	 

          (b)     Warner will pay Onyx [*] upon the approval by the FDA of an NDA for
the second and each subsequent Collaboration Product so approved and [*] upon
the approval of an MAA applicable to each Major European Country, up to [*] for
the second and each subsequent Collaboration Product so approved, provided each
such Collaboration Product is a different chemical entity.

          (c)     Subject to Warner retaining rights in Japan under Section 5.1(b),
Warner will pay Onyx [*] upon the approval by the MHW of the second and each
subsequent Collaboration Product so approved in Japan, provided each such
Collaboration Product is a different chemical entity.

18

 

          (d)     Onyx will pay Warner [*] upon the approval by the FDA of an NDA for
each Onyx Product and [*] upon the approval of an MAA applicable to each Major
European Country, up to [*] and [*] upon approval by the MHW in Japan.

ARTICLE 9

CONFIDENTIALITY

     9.1     Confidentiality.

          (a)     Except as specifically permitted hereunder, each party hereby agrees
to hold in confidence and not use on behalf of itself or others all data,
samples, technical and economic information (including the economic terms
hereof), commercialization, clinical and research strategies and know-how
provided by the other party (the “Disclosing Party”) during the Term of this
Agreement and all data, results and information developed pursuant to the
Collaboration and solely owned by the other party (collectively the
“Confidential Information”), except that the term “Confidential Information”
shall not include:

               (i)       information that is or becomes part of the public domain through no
fault of the non-Disclosing Party or its Affiliates;

               (ii)      information that is obtained after the date hereof by the
non-Disclosing Party or one of its Affiliates from any third party which is
lawfully in possession of such Confidential Information and not in violation of
any contractual or legal obligation to the Disclosing Party with respect to
such Confidential Information;

               (iii)     Information that is known to the non-Disclosing Party or one or more
of its Affiliates prior to disclosure by the Disclosing Party, as evidenced by
the non-Disclosing Party’s written records; and

               (iv)     information that is necessary to be disclosed to any governmental
authorities or pursuant to any regulatory filings, provided that in such case
the non-Disclosing Party notifies the Disclosing Party reasonably in advance of
such disclosure and cooperates with the Disclosing Party to minimize the scope
or content of such disclosure.

          (b)     The obligations of this Section 9.1 shall survive the expiration or
termination of this Agreement.

     9.2     Publicity. All publicity, press releases and other announcements
relating to this Agreement or the transactions contemplated hereby shall be
reviewed in advance by, and subject to the approval of, both parties; provided,
however, that either party may (i) publicize the existence and general subject
matter of this Agreement without the other party’s approval and (ii) disclose
the terms of this Agreement insofar as
required to

19

 

comply with applicable securities laws, provided that in the
case of such securities disclosures the disclosing party notifies the other
party reasonably in advance of such disclosure and cooperates to minimize the
scope and content of such disclosure.

     9.3     Publication. The parties shall cooperate in appropriate publication
of the results of research and development work performed pursuant to this
Agreement, but subject to the predominating interest to obtain patent
protection for any patentable subject matter. To this end, it is agreed that
prior to any public disclosure, the party proposing disclosure shall send the
other party a copy of the information to be disclosed, and shall allow the
other party [*] from the date of receipt in which to determine whether the
information to be disclosed contains subject matter for which patent protection
should be sought prior to disclosure. If notification is not received during
the [*] period, the party proposing disclosure shall be free to proceed with
the disclosure. If due to a valid business reason or a belief by the
nondisclosing party that the disclosure contains subject matter for which a
patentable invention should be sought, then prior to the expiration of the [*]
period, the nondisclosing party shall so notify the disclosing party, who shall
then delay public disclosure of the information for an additional period of up
to [*] to permit the preparation and filing of a patent application on the
subject matter to be disclosed or other action to be taken. The party
proposing disclosure shall thereafter be free to publish or disclose the
information. The determination of authorship for any paper shall be in
accordance with accepted scientific practice. In no event may any publication
or other disclosure contain a party’s Confidential Information without such
party’s prior written consent.

ARTICLE 10

REPRESENTATIONS AND WARRANTIES

     10.1     Legal Authority. Each party represents and warrants to the other
that it has the legal power, authority and right to enter into this Agreement
and to perform its respective obligations set forth herein.

     10.2     No Conflicts. Each party represents and warrants that as of the date
of this Agreement it is not a party to any agreement or arrangement with any
third party or under any obligation or restriction, including pursuant to its
Certificate of Incorporation or By-Laws, which in any way limits or conflicts
with its ability to fulfill any of its obligations under this Agreement.

     10.3     Others Bound. Each party represents and warrants that anyone
performing services under this Agreement on its behalf shall be bound by all of
the conditions of this Agreement, to the extent necessary to give full effect
to this Agreement.

     10.4     Third Party Rights. Each party represents and warrants that to the
best of its knowledge its performance of the work under the Collaboration as
contemplated by

20

 

this Agreement will not infringe the patent, trade secret or
other proprietary rights of any third party except insofar as any infringement
may relate to technology, data or information provided by the other party
hereunder.

     10.5     Survival. The foregoing representations and warranties shall survive
the execution, delivery and performance of this Agreement, notwithstanding any
investigation by or on behalf of either party.

     10.6     Disclaimer. Except as otherwise expressly stated herein, Warner
hereby disclaims any warranty expressed or implied as to any Onyx Product sold
or placed in commerce by or on behalf of Onyx. Except as otherwise expressly
stated herein, Onyx hereby disclaims any warranty expressed or implied as to
any Collaboration Product sold or placed in commerce by or on behalf of Warner.

     10.7     Exclusivity. During the Research Term and for one year thereafter
(i) neither party will conduct any research or development in the Field except
pursuant to this Agreement, (ii) neither party will license (or otherwise
permit access to) any of its Patents or Know-How for research or development in
the Field to (or otherwise collaborate on research or development in the Field
with) any other person or entity and (iii) Onyx will not license (or otherwise
permit access to) any assay developed by it pursuant to the Collaboration to
any other person or entity. In respect of (i), above, each party shall have
the right to conduct its own research and development in the Field during the
one year following the end of the Research Term, provided that all results of
such work discovered during such period (including without limitation compounds
and assays), and analogs and derivatives of compounds identified during such
period whenever identified, are promptly disclosed to the other party and are
covered by the licenses granted under Sections 2.4, 6.1 and 6.2, as applicable.

ARTICLE 11

TERMINATION

     11.1     Termination for Breach. In the event of a material breach of the
provisions of this Agreement described below, the breaching party shall have 30
days after receipt of written notice from the non-breaching party to cure such
breach.

          (a)     In the event of an uncured material breach of Article II, the
non-breaching party may terminate the Research Term.

          (b)     In the event of an uncured material breach of Section 6.3 by Warner in
respect of a Collaboration Product, Onyx may (i) terminate the licenses granted
by it pursuant to Section 6.1 in respect of such Product and (ii) require
Warner to grant it an
exclusive (even as to Warner), worldwide license (with the right to
sublicense) under the

21

 

Patents relating to such Product and owned or controlled
by Warner, to the extent necessary to make, use or sell such Product.

          (c)     In the event of an uncured material breach of Section 6.5 by Onyx in
respect of an Onyx Product, Warner may (i) terminate the licenses granted by it
pursuant to Section 6.2 in respect of such Product and (ii) require Onyx to
grant it an exclusive (even as to Onyx), worldwide license (with the right to
sublicense) under the Patents relating to such Product and owned or controlled
by Onyx, to the extent necessary to make, use or sell such Product.

     11.2     Effect of Bankruptcy. If either party files a voluntary petition in
bankruptcy, is adjudicated a bankrupt, makes a general assignment for the
benefit of creditors, admits in writing that it is insolvent or fails to
discharge within 15 days an involuntary petition in bankruptcy filed against
it, then the other party will have 60 days to determine whether or not the
Research Term shall immediately terminate.

     11.3     Key Personnel.

          (a)     Promptly after the Effective Date, Onyx shall recruit and hire an
employee (the “Project Director”) to have overall responsibility for the
success of the collaboration. Warner shall have the right to approve the
hiring of such Project Director prior to such hiring, which approval shall not
be unreasonably withheld or delayed. In the event that Onyx has not hired such
Project Director approved by Warner by the six month anniversary of the
Effective Date, then by notice delivered to Onyx during the one week period
after such date, Warner may voluntarily terminate the Research Term, effective
immediately, if in its sole opinion it does not wish to continue the Research
Plan without such employee. Such termination shall terminate all obligations
to make any payments under Sections 8.1, 8.2 and 8.3, except that Warner shall
remain obligated to make payment for any milestones under Section 8.3(a) that
were earned prior to the effective date of such termination. If the first
screening assay has been transferred by Onyx but the hits have not yet been
analyzed by Warner prior to the termination date, then the first [*] milestone
is still due to Onyx once the hits are analyzed by Warner, which analysis shall
be performed diligently. In addition, if Warner and Onyx mutually agree to do
so, then the work conducted by Onyx may be wound down and ended in an orderly
six month phase out period after the date of such termination, during which
time Onyx will make best efforts to transfer specified assays currently under
development at Onyx, and Warner shall pay Onyx a total of [*] to support such
research efforts, in two equal quarterly payments commencing upon such
termination. Onyx agrees further to hire [*] as a consultant on the project
hereunder for [*] following the Effective Date.

          (b)     In the event that on or before the second anniversary of the Effective
Date [*] or the Project Director (i) is physically and mentally capable of
overseeing Onyx’s work under the Research Plan but (ii) for any reason fails to
oversee such work,
then Onyx shall immediately notify Warner thereof and Onyx will have up to
six months

22

 

after such failure to hire a replacement for [*] or the Project
Director, as applicable (the “Search Period”). By notice delivered to Onyx
during the one week period after the end of the Search Period, Warner may
voluntarily terminate the Research Term, effective 90 days after the end of the
Search Period, if in its sole opinion it does not wish to continue the Research
Plan with such replacement (or with [*] or the Project Director if they become
available again). Warner will be required to make any license fee payments
under Section 8.1 and research funding payments under Section 8.2 that come due
on or before the effective date of such termination, and Onyx will continue to
be obligated under the terms of Section 2.2 during such period.

          (c)     In the event Warner terminates the Research Term under this Section
11.3, then the term “Collaboration Compound” as used under this Agreement
shall, in addition to the definition provided in Article 1 hereof, be deemed to
cover any compound whose activity in the Field was initially identified based
on screening in assays transferred to Warner by Onyx under this Agreement.
Onyx and Warner will be released from the provisions of Section 10.7
immediately upon termination of the Research Term pursuant to this Section
11.3.

     11.4     Remedies. In the event of any breach of any provision of this
Agreement, in addition to the termination rights set forth herein, each party
shall have all other rights and remedies at law or equity to enforce this
Agreement.

     11.5     Voluntary Termination. Warner may terminate this Agreement by
providing written notice thereof to Onyx on the eighteen month anniversary of
the Effective Date. In such event, the Term of this Agreement will
automatically terminate. Notwithstanding the voluntary termination of the Term
of this Agreement, Warner will make all research payments to Onyx that are due
before the second anniversary of the Effective Date pursuant to Section 8.2
(payable on the dates that such payments are due). If Warner terminates the
Agreement under this Section 11.5, then: (i) Warner will grant Onyx an
exclusive (even as to Warner), world-wide, fully-paid, perpetual license under
Warner’s Patents and Warner’s Know-How discovered or reduced to practice prior
to the one year anniversary of the termination of the Term of this Agreement
that are necessary to make, use and sell any Collaboration Compound for
therapeutic or diagnostic use in the Field, (ii) the licenses granted under
Section 6.1 will terminate and (iii) the licenses granted to Warner under
Section 2.4 will terminate.

ARTICLE 12

GENERAL PROVISIONS

     12.1     Indemnification. Each of Warner and Onyx agrees to indemnify and
hold harmless the other party and its Affiliates and their respective
employees, agents, officers, directors and permitted assigns (such party’s
“Indemnified Group”) from
and against any claims, judgments, expenses (including reasonable
attorney’s fees), damages

23

 

and awards (collectively a “Claim”) arising out of or
resulting from (i) its negligence or misconduct in regard to any Product, (ii)
a breach of any of its representations or warranties hereunder or (iii) the
manufacture, use or sale of a Collaboration Product (in the case of Warner) or
an Onyx Product (in the case of Onyx), except to the extent that such Claim
arises out of or results from the negligence or misconduct of a party seeking
to be indemnified and held harmless or the negligence or misconduct of a member
of such party’s Indemnified Group. A condition of this obligation is that,
whenever an indemnified party has information from which it may reasonably
conclude an incident has occurred which could give rise to a Claim, such
indemnified party shall immediately give notice to the indemnifying party of
all pertinent data surrounding such incident and, in the event claim is made or
suit is brought, all indemnified parties shall assist the indemnifying party
and cooperate in the gathering of information with respect to the time, place
and circumstances and in obtaining the names and addresses of any injured
parties and available witnesses. No indemnified party shall, except at its own
cost, voluntarily make any payment or incur any expense in connection with any
such Claim or suit without the prior written consent of the indemnifying party.
The obligations set forth in this Section shall survive the expiration or
termination of this Agreement.

     12.2     Assignment. This Agreement shall not be assignable by either party
without the prior written consent of the other party, such consent not to be
unreasonably withheld. In no event will any assignment relieve the assigning
party of its obligations hereunder. This Agreement shall be binding upon and,
subject to the terms of the foregoing sentence, inure to the benefit of the
parties’ successors, legal representatives and assigns. Notwithstanding the
foregoing, Warner may assign this Agreement to any of its wholly-owned
subsidiaries or any entity succeeding to a majority of its Parke-Davis
business, and either party may assign this Agreement to its successor in
connection with any merger, consolidation or sale of all or substantially all
of its assets.

     12.3     Non-Waiver. The waiver by either of the parties of any breach of any
provision hereof by the other party shall not be construed to be a waiver of
any succeeding breach of such provision or a waiver of the provision itself.

     12.4     Research Dispute Resolution. The parties recognize that the
collaborative research program under the Research Plan may require the
resolution of certain issues or the negotiation of additional agreements in the
future. In the event the Research Management Committee is unable to resolve a
dispute under the Research Plan, either party may have the dispute referred to
the President of Onyx and the senior officer of Warner’s pharmaceutical
business for good faith resolution.

     12.5     Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of New York, other than those provisions
governing conflicts of law.

24

 

     12.6     Partial Invalidity. If and to the extent that any court or tribunal
of competent jurisdiction holds any of the terms or provisions of this
Agreement, or the application thereof to any circumstances, to be invalid or
unenforceable in a final nonappealable order, the parties shall use their best
efforts to reform the portions of this Agreement declared invalid to realize
the intent of the parties as fully as practical, and the remainder of this
Agreement and the application of such invalid term or provision to
circumstances other than those as to which it is held invalid or unenforceable
shall not be affected thereby, and each of the remaining terms and provisions
of this Agreement shall remain valid and enforceable to the fullest extent of
the law.

     12.7     Notice. Any notice to be given to a party under or in connection
with this Agreement shall be in writing and shall be (i) personally delivered,
(ii) delivered by a nationally recognized overnight courier or (iii) delivered
by certified mail, postage prepaid, return receipt requested to the party at
the address set forth below for such party:

	 	 	 	 	 	 
	To Warner:

	 	To Onyx:

	 	 	 
	Senior Vice President, Research

	 	Hollings Renton

	Parke Davis Pharmaceutical

	 	President & CEO

	 	Research Division,

	 	Onyx Corporation

	Warner Lambert Company

	 	3031 Research Drive

	2800 Plymouth Road

	 	Building A

	Ann Arbor, MI 48105

	 	Richmond, CA  94806

	 	 	 
	with a copy to:

	 	with a copy to:

	 	 	 
	President, Parke Davis

	 	Robert L. Jones, Esq.

	 	United States and Mexico

	 	Cooley Godward LLP

	Warner Lambert Company

	 	5 Palo Alto Square

	201 Tabor Road

	 	4th Floor

	Morris Plains, NJ 07950

	 	Palo Alto, CA  94306

	 	 	 
	and a copy to:

	 	 	 	 
	 	 	 
	Vice President and General Counsel

	 	 	 	 
	Warner Lambert Company

	 	 	 	 
	201 Tabor Road

	 	 	 	 
	Morris Plains, NJ 07950
	 	 	 	 

     or to such other address as to which the party has given notice thereof.
Such notices shall be deemed given upon receipt.

     12.8     Vaccines and Diagnostics. Pursuant to an Agreement, between Chiron
Corporation (“Chiron”) and Onyx, dated April 24, 1992, Chiron has certain
rights to Vaccines and Diagnostics developed by Onyx. Warner and Onyx agree
that,

25

 

notwithstanding any other term or provision of this Agreement to the
contrary, neither party shall license to the other any Patents or Know-How to
make, use or sell Vaccines or Diagnostics. Furthermore, each party hereto may
make, use or sell Vaccines and Diagnostics in the Field without obligation to
the other party, including as it relates to payment of milestones and
royalties. As used in this Section, (i) “Vaccines” shall mean [*] and (ii)
“Diagnostics” shall mean [*]

     12.9     Headings. The headings appearing herein have been inserted solely
for the convenience of the parties hereto and shall not affect the
construction, meaning or interpretation of this Agreement or any of its terms
and conditions.

     12.10     No Implied Licenses or Warranties. No right or license under any
patent application, issued patent, know-how or other proprietary information is
granted or shall be granted by implication. All such rights or licenses are or
shall be granted only as expressly provided in the terms of this Agreement.
Neither party warrants the success of any clinical or other studies undertaken
by it.

     12.11     Force Majeure. No failure or omission by the parties hereto in the
performance of any obligation of this Agreement shall be deemed a breach of
this Agreement nor shall it create any liability if the same shall arise from
any cause or causes beyond the reasonable control of the affected party,
including, but not limited to, the following, which for purposes of this
Agreement shall be regarded as beyond the control of the party in question:
acts of nature; acts or omissions 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; invasion; strikes; and lockouts or the
like; provided that the party so affected shall use its best efforts to avoid
or remove such causes or nonperformance and shall continue performance
hereunder with the utmost dispatch whenever such causes are removed.

     12.12     Survival. The representations and warranties contained in this
Agreement as well as those rights and/or obligations contained in the terms of
this Agreement which by their intent or meaning have validity beyond the term
of this Agreement shall survive the termination or expiration of this
Agreement.

     12.13     Entire Agreement. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter contained
herein and supersedes any and all prior agreements, understandings and
arrangements whether oral or written between the parties relating to the
subject matter hereof. This Agreement will control in the event of any
conflict between this Agreement and the Research Plan.

     12.14     Amendments. No amendment, change, modification or alteration of the
terms and conditions of this Agreement shall be binding upon either party
unless in writing and signed by the party to be charged.

26

 

     12.15     Independent Contractors. It is understood that both parties hereto
are independent contractors and engage in the operation of their own respective
businesses, and neither party hereto is to be considered the agent or partner
of the other party for any purpose whatsoever. Neither party has any authority
to enter into any contracts or assume any obligations for the other party or
make any warranties or representations on behalf of the other party.

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

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.

	 	 	 
	Onyx Pharmaceuticals, Inc.	 	Warner-Lambert Company
	 	 	 
	By: /s/ Hollings C. Renton

Name:  Hollings C. Renton

Title:  President & CEO

	 	
By:  /s/ Ronald M. Cresswell

Name:  Ronald M. Cresswell

Title:  Vice President and Chairman

Parke-Davis Pharmaceutical Research

Warner-Lambert Company

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

27

 

SCHEDULE 1

PRE-EXISTING THIRD-PARTY ROYALTY OBLIGATIONS

	 	 	 	 	 	 	 
	 	 	 	
1	)	 	Research and Option Agreement Between the Research Foundation
of State University of New York and ONYX Pharmaceuticals dated
January 1, 1996.
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Royalty cap of [*] on net sales of products arising from research
sponsored by Onyx.
	 	 	 	 	 	 	 
	 	 	 	
2	)	 	Option Agreement with the Babraham Institute dated September
25, 1995 and extended on May 13, 1996.
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Royalty of [*] of the end user price of a product arising from work
performed by Dr. Len Stephens for or in collaboration with Onyx.

     [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.

 

 

RESEARCH, DEVELOPMENT AND MARKETING

COLLABORATION AGREEMENT

DATED AS OF JULY
   , 1997

BETWEEN

ONYX PHARMACEUTICALS, INC.

AND

WARNER-LAMBERT COMPANY

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	PAGE
	ARTICLE 1
	 	     DEFINITIONS	 	 	1	 
	ARTICLE 2
	 	     RESEARCH PROGRAM	 	 	5	 
	 	2.1
	 	Undertaking and Scope	 	 	5	 
	 	2.2
	 	Personnel and Resources	 	 	6	 
	 	2.3
	 	Research Term	 	 	6	 
	 	2.4
	 	Rights to Know-How and Patents for Research	 	 	7	 
	 	2.5
	 	Collaboration Expenses	 	 	7	 
	ARTICLE 3
	 	     COMMITTEES	 	 	7	 
	 	3.1
	 	Research Management Committee	 	 	7	 
	 	3.2
	 	Meetings	 	 	7	 
	 	3.3
	 	SAB Attendance	 	 	8	 
	ARTICLE 4
	 	     PATENTS, KNOW-HOW, RIGHTS AND INVENTIONS	 	 	8	 
	 	4.1
	 	Rights to Inventions	 	 	8	 
	 	4.2
	 	Joint Inventions	 	 	8	 
	 	4.3
	 	Protection of Patent Rights	 	 	9	 
	 	4.4
	 	Allegations of Infringement by Third Parties	 	 	10	 
	ARTICLE 5
	 	     DESIGNATION OF LEAD COMPOUNDS AND MARKETING RIGHTS	 	 	10	 
	 	5.1
	 	Designation of Lead Compound	 	 	10	 
	 	5.2
	 	Collaboration Product	 	 	10	 
	 	5.3
	 	Independent Development	 	 	11	 
	 	5.4
	 	Warner's Re-engagement Option	 	 	11	 
	ARTICLE 6
	 	     LICENSES AND ROYALTIES	 	 	12	 
	 	6.1
	 	Grant by Onyx	 	 	12	 
	 	6.2
	 	Grant by Warner	 	 	12	 
	 	6.3
	 	Royalties Payable by Warner	 	 	12	 
	 	6.4
	 	Royalties Payable by Onyx	 	 	13	 
	 	6.5
	 	Third-Party Royalties	 	 	13	 
	 	6.6
	 	Currency of Payment	 	 	14	 

-i-

 

TABLE OF CONTENTS

(CONTINUED)

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	PAGE
	 	6.7
	 	Payment and Reporting	 	 	14	 
	 	6.8
	 	Records	 	 	14	 
	 	6.9
	 	Taxes Withheld	 	 	14	 
	 	6.10
	 	Computation of Royalties	 	 	15	 
	 	6.11
	 	Licenses to Affiliates	 	 	15	 
	 	6.12
	 	Restrictions on Payment	 	 	15	 
	ARTICLE 7
	 	     FDA	 	 	15	 
	 	7.1
	 	Side Effects	 	 	15	 
	 	7.2
	 	Regulatory and other Inquiries	 	 	15	 
	 	7.3
	 	Product Recall	 	 	16	 
	ARTICLE 8
	 	     RESEARCH FUNDING FEES AND MILESTONES	 	 	16	 
	 	8.1
	 	License Fees	 	 	16	 
	 	8.2
	 	Research Funding	 	 	16	 
	 	8.3
	 	Milestones	 	 	17	 
	ARTICLE 9
	 	     CONFIDENTIALITY	 	 	18	 
	 	9.1
	 	Confidentiality	 	 	18	 
	 	9.2
	 	Publicity	 	 	18	 
	 	9.3
	 	Publication	 	 	18	 
	ARTICLE 10
	 	     REPRESENTATIONS AND WARRANTIES	 	 	19	 
	 	10.1
	 	Legal Authority	 	 	19	 
	 	10.2
	 	No Conflicts	 	 	19	 
	 	10.3
	 	Others Bound	 	 	19	 
	 	10.4
	 	Third Party Rights	 	 	19	 
	 	10.5
	 	Survival	 	 	19	 
	 	10.6
	 	Disclaimer	 	 	19	 
	 	10.7
	 	Exclusivity	 	 	20	 
	ARTICLE 11
	 	     TERMINATION	 	 	20	 
	 	11.1
	 	Termination for Breach	 	 	20	 

-ii-

 

TABLE OF CONTENTS

(CONTINUED)

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	PAGE
	 	11.2
	 	Effect of Bankruptcy	 	 	20	 
	 	11.3
	 	Key Personnel	 	 	21	 
	 	11.4
	 	Remedies	 	 	21	 
	 	11.5
	 	Voluntary Termination	 	 	22	 
	ARTICLE 12
	 	     GENERAL PROVISIONS	 	 	22	 
	 	12.1
	 	Indemnification	 	 	22	 
	 	12.2
	 	Assignment	 	 	22	 
	 	12.3
	 	Non-Waiver	 	 	23	 
	 	12.4
	 	Research Dispute Resolution	 	 	23	 
	 	12.5
	 	Governing Law	 	 	23	 
	 	12.6
	 	Partial Invalidity	 	 	23	 
	 	12.7
	 	Notice	 	 	23	 
	 	12.8
	 	Vaccines and Diagnostics	 	 	24	 
	 	12.9
	 	Headings	 	 	24	 
	 	12.10
	 	No Implied Licenses or Warranties	 	 	24	 
	 	12.11
	 	Force Majeure	 	 	24	 
	 	12.12
	 	Survival	 	 	25	 
	 	12.13
	 	Entire Agreement	 	 	25	 
	 	12.14
	 	Amendments	 	 	25	 
	 	12.15
	 	Independent Contractors	 	 	25	 
	 	12.16
	 	Counterparts	 	 	25	 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.

-iii-exv10w23

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.

EXHIBIT 10.23

AMENDMENT

          AMENDMENT dated December 15, 1997 (this “Amendment”), to the Amended and
Restated Research, Development and Marketing Collaboration Agreement between
Onyx Pharmaceuticals, Inc., a California corporation (“Onyx”) and
Warner-Lambert Company, a Delaware corporation (“Warner”), which Amended and
Restated Agreement (the “Agreement”) was executed during July 1997.

W I T N E S S E T H:

          WHEREAS, Onyx and Warner desire, among other things to modify the field of
their cell cycle control collaboration under the Agreement, extend the term of
the Agreement and modify their mutual rights under the Agreement to Japan,

          NOW, THEREFORE, the parties hereby agree as follows:

          1.     Definitions. (a) Capitalized terms used but not defined in this
Amendment will have the meanings ascribed thereto in the Agreement.

               (b) The following definitions are hereby added to Article 1 of the
Agreement:

	 	 	“Generation 1 Collaboration Compounds” shall mean Collaboration
Compounds that are initially identified under the Collaboration as
having activity against any of the following targets: [*].
	 
	 	 	“Generation 2 Collaboration Compounds” shall mean Collaboration
Compounds that are initially identified under the Collaboration as
having activity against any targets in the Field other than those
set forth in the definition of Generation 1 Collaboration
Compounds.

          2.     Field. The definition of “Field” found in Article 1 of the Agreement
is hereby amended by deleting the third and all later paragraphs thereof in
their entirety and replacing the same by the following:

	 	 	Field

1.

 

	 	 	The Field will consist of [*]. The field shall also include [*]
The Field will also include the [*] as well as targets that
control the activity of [*]
	 
	 	 	Exclusions
	 
	 	 	Notwithstanding the general description of the Field provided
above, the Field will exclude:

	 	(a)	 	All molecular entities that are part of or that regulate [*]
This includes but is not restricted to [*] This also includes
molecules that directly or indirectly regulate the aforementioned
molecules, [*] This also includes [*] This exception shall not
include (by way of example and not limitation) [*]

3.     Term of Research Collaboration. Section 2.3 of the Agreement is hereby
deleted in its entirety and replaced by the following:

	 	 	        2.3      Research Term. Work under the Research Plan will
commence as of May 2, 1995 and, unless terminated earlier by
either party pursuant to the terms of this Agreement or extended
by mutual agreement of the parties, will terminate on the sixth
anniversary thereafter (as terminated, expired or extended, the
“Term of the Research Collaboration”). At least thirty (30) days
prior to the five-year anniversary of the Effective Date, Onyx
will provide Warner a written research proposal for continuation
of the research project beyond such initial six-year Term of the
Research Collaboration. Promptly after Onyx provides such
proposal, the Research Management Committee will conduct a formal
review of such proposal and of the status and success of the
parties’ work on the Research Plan. By the five-year anniversary
of the Effective Date (the “Evaluation Date”), Warner shall decide
in its sole discretion whether to extend the collaborative
research under the research proposal beyond the initial six-year
term for at least one additional year, or not to extend the
collaborative research beyond such initial term, in which case the
Agreement shall terminate at the end of such initial six-year Term
of the Research Collaboration. If Warner does not elect in
writing to extend the Term of the Research Collaboration beyond
such initial six-year term, then commencing on or promptly after
the Evaluation Date, the work conducted by Onyx and Warner will be
wound down and ended in an orderly twelve-month phase-out period,
ending on the first anniversary of the Evaluation Date, with Onyx
continuing the research efforts using [*] FTEs over such period.
During such phase-out period, Warner will be obligated to pay Onyx
a total of [*] to support Onyx’s research efforts using [*] FTEs
over such phase-out period, which amounts shall be paid in four
equal installments in advance over such year, commencing on the
Evaluation Date, in lieu of the last four research funding
payments as specified in Section 9.1. Furthermore, during the
phase-out period, Warner may modify or eliminate its FTE and other
commitments under Section 2.2 in its sole discretion. In the
event of a phase-out during the

2.

 

	 	 	final year of the Term of the Research Collaboration, the
terms of this Section 2.3 will supersede those of Section 2.2.

          4.     Research Funding. Section 9.1 of the Agreement is hereby amended by
the addition of the following funding commitments:

	 	 	 	 	 
	May 2, 1998
	 	$	562,500	 
	August 2, 1998
	 	 	562,500	 
	November 2, 1998
	 	 	562,500	 
	February 2, 1999
	 	 	843,750	 
	May 2, 1999
	 	 	843,750	 
	August 2, 1999
	 	 	843,750	 
	November 2, 1999
	 	 	843,750	 
	February 2, 2000
	 	 	843,750	 
	May 2, 2000
	 	 	843,750	 
	August 2, 2000
	 	 	843,750	 
	November 2, 2000
	 	 	843,750	 
	February 2, 2001
	 	 	843,750	 
	 
	 	 	
	 
	 
	 	$	9,281,250	 

          5.     Generation 1 Milestones. The phrase “Collaboration Product” found
throughout Section 9.2(a) and Section 9.2(b) of the Agreement is hereby deleted
in each instance and replaced by the phrase “Generation 1 Collaboration
Product.” The parenthetical “(provided that each such Generation 1
Collaboration Product is a different chemical entity)” is hereby added
immediately after the two places where the word “approved” is found in Section
9.2(b) of the Agreement.

          6.     Generation 2 Milestones. The following is hereby added as a new
Section 9.3 of the Agreement:

	 	 	9.3   Generation 2 Collaboration Products. (a) Warner will pay Onyx
the following amounts with respect to the first Generation 2
Collaboration Product to achieve each stated milestone:

	 	 	 	 	 
	Commencement of Phase I clinical trials by or on behalf of
Warner anywhere in the world
	 	[*]	 
	 
	Commencement of Phase II clinical trials by or on behalf of
Warner anywhere in the world
	 	[*]	 
	 
	Commencement of Phase III clinical trials by or on behalf
of Warner anywhere in the world
	 	[*]	 
	 
	The FDA’s acceptance for filing of an NDA
	 	[*]	 
	 
	Acceptance for filing of an MAA applicable to any of the
following countries: (i) United Kingdom, (ii)
	 	 	 	 

3.

 

	 	 	 	 	 
	Spain, (iii)Italy, (iv) France and (v) Germany
(each a “Major European Country”)
	 	[*]	 
	 
	 	country up to
	 
	 	[*] total
	 
	 	 
	Approval by the FDA of an NDA
	 	[*]	 
	 
	 	 
	Approval of an MAA applicable to a Major European Country
	 	[*]	 
	 
	 	country, up to
	 
	 	[*] total

	 	 	(b) Warner will pay Onyx [*] upon the approval by the FDA of an
NDA for the second and each subsequent Generation 2 Collaboration
Product so approved (provided that each such Generation 2
Collaboration Product is a different chemical entity) and [*] upon
the approval of an MAA applicable to each Major European Country,
up to [*] for the second and each subsequent Collaboration Product
so approved (provided that each such Generation 2 Collaboration
Product is a different chemical entity).
	 
	 	 	(c) Warner will pay Onyx [*] upon certification by the Research
Management Committee that the first screening assay for the
Generation 2 Targets has been completed and the hits analyzed.

             7.   Japanese Milestones. The following is hereby added as a new Section
9.4 of the Agreement:

	 	 	 	Section 9.4 Japanese Milestones. (a) Warner will pay Onyx the
following amounts with respect to the first Collaboration Product
to achieve each stated milestone:

	 	 	 	 	 
	Commencement of Phase I clinical trials by or on behalf of Warner in
Japan
	 	 	[*]	 
	 
	 	 	 	 
	Commencement of Phase II clinical trials by or on behalf of Warner in
Japan
	 	 	[*]	 
	 
	 	 	 	 
	Commencement of Phase III clinical trials by or on behalf of Warner in
Japan
	 	 	[*]	 
	 
	 	 	 	 
	Acceptance for filing by the MHW of an MAA in Japan
	 	 	[*]	 

	 	 	(b) Warner will pay Onyx [*] upon approval of each Collaboration Product
for sale in Japan by the MHW, provided each such Collaboration Product is
a different chemical entity.

4.

 

             8.   Japan. The parenthetical “(except for Japan)” found in Sections 6.1,
6.2, 6.3 and 6.4 of the Agreement is in each instance hereby deleted. The
phrase “other than Japan” found in the antepenultimate sentence of Section 5.3
of the Agreement is hereby deleted. Sections 11.1, 11.2 and 11.3 of the
Agreement are hereby deleted in their entirety.

            9.   Exclusivity. Section 12.7 of the Agreement is hereby deleted in its
entirety and replaced by the following:

            12.7
   Exclusivity.

	 	 	        "(a)    Except as otherwise provided in subsection (b) below, during
the Term of the Research Collaboration and for one year thereafter (i)
neither party will conduct any research or development in the Field
except pursuant to this Agreement, (ii) neither party will license (or
otherwise permit access to) any of its Patents or Know-How for research
or development in the Field to (or otherwise collaborate on research or
development in the Field with) any other person or entity and (iii) Onyx
will not license (or otherwise permit access to) any assay developed by
it pursuant to the Collaboration to any other person or entity. In
respect of (i), above, each party shall have the right to conduct its own
research and development in the Field during the one year following the
end of the Term of the Research Collaboration, provided that all results
of such work discovered during such period (including without limitation
compounds and assays), and analogs and derivatives of compounds
identified during such period whenever identified, are promptly disclosed
to the other party and are covered by the licenses granted under Sections
1.4, 5.1 and 5.2, as applicable.
	 
	 	 	        "(b)    If Warner elects at the Evaluation Date, as provided in Section
2.3, not to extend the Term of the Research Collaboration beyond the end
of the initial six year Term of the Research Collaboration, then as of
the Evaluation Date the provisions of subsection (a) above will be
modified as follows: (i) the phrase “during the Term of the Research
Collaboration and for one year thereafter” in the first sentence of
subsection (a) shall be modified to read “during the Term of the Research
Collaboration and for six months thereafter;” (ii) for any new targets in
the Field (the “New Targets”) that Onyx proposed to Warner, in the
written research proposal submitted by Onyx to Warner under Section 2.3,
to be the subject of the Research Collaboration (i.e., targets within the
Field that are not, as of the Evaluation Date, the subject of
collaborative research under the Research Collaboration) then commencing
at the end of the Term of the Research Collaboration and thereafter, the
restrictions in subsections 12.7(b)(i) and 12.7(b)(ii) shall not apply to
all such New Targets; and (iii) the last sentence of subsection (a) shall
only apply for six months after the end of the Term of the Research
Collaboration, and shall not apply to any work conducted by a party after
the end of the Term of the Research Collaboration with respect to New
Targets, or to any results of such work (including without limitation
compounds and assays, and analogs and derivatives of compounds
identified).”

5.

 

	 	 	        IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized officers as of the date first written above.

	 	 	 
	ONYX PHARMACEUTICALS, INC.
	 	
WARNER-LAMBERT COMPANY

	 	 	 
	By:  /s/ Hollings C. Renton

	 	
By:  /s/ Wendell Wieranga, Ph.D.

	 	 	 
	Name:    Hollings C. Renton	 	
Name:    Wendell Wieranga, Ph.D.
	 	 	 
	Title:      President and CEO	 	
Title:    Senior Vice President, Worldwide

Preclinical Research, Development and
Technologies

Parke-Davis Pharmaceutical
Research

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.

6.

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