Document:

Exhibit 10.18

 

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Confidential Treatment Requested

Under 17 C.F.R.§§ 200.80 (b) (4)

And 240.24b-2

 

SEMI-EXCLUSIVE BNP DIAGNOSTIC
LICENSE AGREEMENT

between

BIOSITE DIAGNOSTICS INCORPORATED and SCIOS INC.

 

THIS LICENSE AGREEMENT
(the “Agreement”) is made effective the 30th day of December, 1996 (the “Effective
Date”), by and between BIOSITE DIAGNOSTICS INCORPORATED, a corporation
organized under the laws of Delaware with its principal place of business at
11030 Roselle Street, San Diego, California 92121 (“Biosite”), and SCIOS INC.,
a corporation organized under the laws of the State of Delaware with a
principal place of business at 2450 Bayshore Parkway, Mountain View, California
94043 (“Scios”).

 

BACKGROUND

 

A.                                   Scios
owns or controls certain Patent Rights and Know-how related to the human
protein known as B-type natriuretic peptide (“BNP”) and to reagents and methods
useful in assaying levels of BNP in human biological fluids; and

 

B.                                     Biosite
is in the business of developing, manufacturing and selling diagnostic products
and related equipment and is desirous of developing a diagnostic product for
assaying levels of BNP and marketing the product worldwide outside of Japan,
where the Patent Rights and Know-how have been previously licensed to [***];
and

 

C.                                     Scios
is willing, subject to the terms and conditions set forth herein, to grant
Biosite a semi-exclusive license under the Patent Rights and Know-how to make,
have made, use, offer for sale, sell and import such a diagnostic product;

 

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NOW, THEREFORE, Scios and
Biosite agree as follows:

 

1. DEFINITIONS

 

1.1                                 “Affiliate”
means, as to a party to this Agreement, any corporation, company, partnership,
joint venture or other entity which controls, is controlled by, or is under
common control with, such party. For purposes of this Section 1.1, control
shall mean, without limitation: (a) in the case of corporate entities, the
direct or indirect ownership of at least fifty percent (50%) of the stock or
participating shares entitled to vote for the election of directors; and (b) in
the case of a partnership, the power customarily held by a general partner to
direct the management and policies of such partnership.

 

1.2                                 “Expanded
Field” means the testing of biological samples to determine BNP levels,
which testing is carried out using [***], including without limitation [***]
for use on [***] and [***], excluding the Field.

 

1.3                                 “Field”
means the testing of biological samples to determine BNP levels, which testing
is carried out using [***] or [***] and [***], [***], and whether [***].

 

1.4                                 “Know-how”
means information and data of any type whatsoever, which is not generally
known, including but not limited to formulae, processes, protocols, techniques,
results of experimentation, amino acid and DNA sequences and testing and
biological materials, reagents and organisms (including monoclonal antibodies
and hybridoma cells) in the possession or control of Scios which relate to BNP
and/or assays for determining BNP levels in biological materials and which are
necessary or useful for the development, manufacture, use, regulatory approval
or sale of Licensed Product.

 

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1.5                                 “Licensed
Product” means any diagnostic test, reagent(s) or kit that (a) is
useful for carrying out [***] to determine levels of BNP in biological
materials, which assay [***] or a [***] of the [***] within the Territory, if [***];
and (b) (i) if made, used, offered for sale, sold or imported, absent
the license granted hereby, would infringe the valid claims of the Patent
Rights (if in an issued patent), or (ii) contains, incorporates, uses or
was developed using the Know how. As used herein, a “valid claim” is a claim
which has not been dedicated to the public or held invalid or unenforceable by
a non-appealed or non-appealable decision of a court of competent jurisdiction.

 

1.6                                 “Net
Sales” means the sum (without duplication) of:

 

(a)          invoiced
sales price of Licensed Products sold by Biosite and its sublicensees, if any,
to independent customers who are not Affiliates, less the following to the
extent paid or accrued by Biosite or its sublicensees, if any, and not
reimbursed (separate from the invoiced sales price) by or credited to the
independent customer: (i) credits, allowances, discounts and rebates to,
and chargebacks from the account of, such independent customers for spoiled,
damaged, out-dated, rejected or returned Licensed Products; (ii) actual
freight and insurance costs incurred in transporting Licensed Products to such
independent customers; (iii) reasonable and customary cash, quantity and
trade discounts, and other price reduction programs, actually given to the independent
customer; (iv) sales, use, value-added and other direct taxes, and (v) customs
duties, surcharges and other governmental charges incurred in connection with
the exportation or importation of Licensed Products;

 

(b)         any other
monetary consideration received by Biosite and its sublicensees, if any, from
independent customers for the use of Licensed Product where such consideration
is based upon the number of diagnostic tests carried out by the independent
customer to determine BNP levels in samples, including without limitation
charges designated as use, rental or installment purchase payments for

 

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3

 

automated
diagnostic testing equipment provided to the independent customer by Biosite or
its sublicensees or Affiliates; and

 

(c)          any amounts
received by Biosite and its sublicensees from independent customers who are not
Affiliates as fees for carrying out diagnostic tests to determine levels of BNP
in samples using Licensed Product, less the following to the extent paid or
accrued by Biosite or its sublicensees, if any, and not reimbursed (separate
from the invoiced sales price) by or credited to the independent customers (i) reasonable
and customary cash, quantity and trade discounts, and other price reduction
programs, actually given to the independent customer, and (ii) sales, use,
value-added and other direct taxes.

 

1.7                                 “Patent
Rights” means, collectively, (a) those existing patents and patent
applications listed on Appendix A attached hereto, (b) any patents which
have issued or in the future issue therefrom, (c) all substitutions,
extensions, reissues, renewals, divisions, continuations, or continuations-in-part for
or of the foregoing, (d) all foreign counterparts of the foregoing, and (e) any
additional patent applications or patents in the Territory that Scios owns
during the term of this Agreement and that claim compositions of matter or methods
useful in developing, making or using Licensed Products.

 

1.8                                 “PMA”
means an application to the United States Food and Drug Administration (“FDA”)
for premarketing approval of diagnostic product filed pursuant to 21 U.S.C. §513(f).

 

1.9                                 “510K”
means an application to the FDA seeking approval to market a Licensed Product
that is filed pursuant to 21 U.S.C. §510(k).

 

1.10                           “Territory”
means all countries of the world except Japan.

 

1.11                           “Third
Party” means a party other than Scios, its other licensees under the Know-how
and Patent Rights, Biosite and its sublicensees.

 

4

 

2. RIGHTS GRANTED

 

2.1                                 Grant. Scios
hereby grants to Biosite, subject to the terms and conditions set forth herein,
the semi-exclusive right and license under the Patent Rights and Know-how to develop
and seek regulatory approval for any diagnostic test, reagent(s) or kit that is
useful for carrying out [***] to determine levels of BNP in [***] materials,
and to [***] Licensed Products in the Field within the Territory. Specifically
excluded is any product containing BNP which is used or intended for use or
administered for therapeutic purposes, as to which Scios shall have complete
freedom to develop such therapeutic product itself or with others in any
manner.

 

2.2                                 Option for
Expanded Field. Scios hereby grants to Biosite, subject
to the terms and conditions set forth herein, an option, which may be
exercised by Biosite upon notice to Scios and payment of the option fee set
forth in Section 3.3, to modify the semi-exclusive right and license
granted in Section 2.1 to additionally include the Expanded Field. Such
modification shall apply prospectively from the date of notice and payment of
the option fee by Biosite. The modified semi-exclusive right and license shall
be subject to all other terms and conditions of this Agreement.

 

2.3                                 Sublicenses. In any
country within the Territory, Biosite may grant [***] under the rights
granted in Section 2.1 and Section 2.2 to [***] (which may, but need
not be, [***] Biosite), provided [***] or [***]. Any sublicense shall be
consistent in all respects with the license provisions of this Agreement. A
copy of each sublicense (with any financial, technical or other confidential
information redacted) shall be sent to Scios within [***] days of signature. [***]
 Upon any termination of this Agreement
between Biosite and Scios prior to its full term, all sublicenses shall
terminate; provided

 

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5

 

that,
if Biosite has granted any sublicense in the [***], Scios agrees to allow the
sublicensee to continue its activity as [***] under this Agreement in the
territory of its sublicense from Biosite.

 

2.4                                 Additional
Licenses. Scios reserves the right to grant as to the Territory
additional licenses under the Patent Rights and Know-how permitting the
creation of competing diagnostic products; provided, however, that Scios agrees
that a maximum of three entities (inclusive of Biosite [***]) shall be
authorized at any time under licenses granted by Scios under the Patent Rights
and Know-how within the Territory to [***] Licensed Products in any country.

 

3. PAYMENTS AND
ROYALTIES

 

3.1                                 Initial
Payment. In consideration of the license rights set forth herein,
Biosite shall pay to Scios an initial payment of [***] ($[***]) upon execution
of this Agreement. The foregoing amount shall not be refundable or creditable
against any other amount payable hereunder.

 

3.2                                 Milestone
Payments. Biosite shall make the following payments to Scios, [***]
shall be [***] against any other amount payable hereunder, within [***] of the
date or event indicated:

 

(a)                                  [***] ($[***])
upon [***] of a Licensed Product or [***] from the Effective Date, whichever
occurs first;

 

(b)                                 [***] ($[***])
upon the first commercial sale of a Licensed Product in any country within the
Territory,

 

(c)                                  [***] ($[***])
upon approval by the FDA to market a Licensed Product for [***].

 

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3.3                                 Option
Payment. In the event that Biosite exercises the option to modify
the semi-exclusive right and license to additionally include the Expanded
Field, as provided for in Section 2.2, Biosite shall pay Scios an option
exercise fee of [***] ($[***]) [***] notifies Scios that it is exercising the
option. Such option exercise fee shall [***] against any other amount payable
hereunder.

 

3.4                                 Royalties. Within [***]
following the end of each calendar quarter during the term of this Agreement,
Biosite shall pay to Scios earned royalties based on Net Sales of Licensed Products
during the previous calendar quarter. Royalties shall be paid at the following
rate, [***]:

 

	
  (a)

  	
  [***]

  	
   

  	
  [***]%

  
	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
  [***]

  	
   

  	
  [***]%

  
	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
  [***]

  	
   

  	
  [***]%

  

 

3.5                                 Term of
Royalty Obligation. Subject to the termination provisions
of Sections 11.2 and 11.3 below, Biosite’s obligation to pay royalties will
expire, on a country-by-country basis, on [***] (a) the date when the last
Patent Right in such country expires, lapses or is invalidated, or (b) [***]
on which sales of Licensed Product [***], unless applicable law requires that
the obligation expire sooner, in which case the obligation shall continue for
the maximum period allowed by law.

 

3.6                                 Most Favored
Licensee. In the event that Scios grants a license to a Third Party
to sell Licensed Product under the Patent Rights and Know-how having a more
favorable royalty rate than that set forth in Section 3.4 of this
Agreement, this Agreement shall be modified by replacing the royalty rates in Section 3.4
with the royalty rates in such Third Party agreement. Biosite shall not have
the right to require modification of any other financial terms of this
Agreement to conform to any terms of any agreement between Scios and a
Third Party relating to the subject matter of this Agreement.

 

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3.7                                 Place of
Payment; Currency Conversion. All royalty payments due Scios shall be
payable in United States dollars at Scios’ office in Mountain View, California,
or such other place as may be designated by Scios from time to time. For
sales made in a currency other than United States dollars, royalties payable
under this Agreement shall be determined by converting the total royalty on Net
Sales computed in the currency of sale for a calendar quarter into United
States dollars using the closing spot exchange rate between the two currencies
quoted in The Wall Street Journal (United States edition) on the last day of
the applicable calendar quarter.

 

3.8                                 Taxation of
Royalties.

 

(a)                                  Scios shall
be solely responsible for and shall bear all withholding, value-added or other
taxes, levies or charges (other than United States taxes) with respect to any
royalties owing to Scios hereunder which are required by any governmental
authority to be paid or withheld by Biosite or its sublicensees. Scios hereby
authorizes Biosite to withhold such taxes from the payments which are payable
to Scios in accordance with this Agreement if Biosite is either required to do
so under the tax laws of the country of sale or the United States or directed
to do so by an agency of either such government. Whenever Biosite deducts such
tax from any payments due Scios, then Biosite shall furnish Scios with an
original or copy of tax certificate, as required by the United States Internal
Revenue Service, showing the payment of such tax.

 

(b)                                 In the event
any royalty payments which are due to Scios under this Agreement are subject to
any tax other than specified in Section 3.8(a), Biosite shall bear such
tax.

 

3.9                                 Restrictions
on Remittance. lf, at any time, legal restrictions
prevent the prompt remittance of part or all royalties with respect to any
country in the Territory where Licensed Product is sold, Biosite shall have the
right to make such payments by depositing the amount thereof in local currency
to Scios’ account in a bank or other depository institution in such country.

 

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3.10                           [***]. Without
the prior consent of Scios, Biosite shall not [***] any [***] in [***] for the [***]
other than as would be [***] of such [***] at the [***] thereof.

 

4. REPORTS

 

4.1                                 Milestones. Biosite
shall report to Scios within [***] of its occurrence (a) the date on which
any event listed in Section 3.2 occurred and (b) the date of [***] of
each Licensed Product in each country.

 

4.2                                 Quarterly
Sales Reports. With each quarterly payment made under Section 3.4,
Biosite shall deliver a full and accurate accounting of all [***] of Licensed
Products by Biosite for the quarterly calendar period. Each such report shall
include at least the following information: (a) gross invoiced [***] from
sales of Licensed Products and [***]; (b) any [***] from gross [***] used
to arrive at [***] as defined in Section 1.6; and (c) Biosite’s
computation of the aggregate [***] payable to Scios.

 

5. DILIGENCE

 

5.1                                 Responsibility
of Biosite. Biosite shall have the full
responsibility for the development of Licensed Products, including all testing
and filings required to seek regulatory approval to market such Licensed
Products, the manufacture of Licensed Product (subject to Scios’ right to
supply BNP for use in Licensed Product as set forth in Section 8.1) and
distribution of Licensed Product. Biosite shall bear the expense for all such
activities.

 

5.2                                 Diligence
Milestones. Biosite shall use commercially
reasonable efforts consistent with sound business judgment to develop and
market Licensed Products within

 

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the
Territory and to accomplish each of the following objectives [***]:

 

(a)          [***] with a
[***] or [***] from [***]

 

(b)         [***] from
the [***].

 

(c)          [***]
Licensed Product in [***], other than [***], [***] from the [***];

 

(d)         [***] (if a [***]
for [***] in the [***]) or a [***] (if a [***] for [***] in the [***]) [***]
from the [***].

 

If Biosite does not
achieve either of the objectives stated in (a) or (b) [***], then
Scios shall have the right to terminate this Agreement effective upon [***]
prior written notice to Biosite; provided, however, if during such [***]
period, Biosite provides Scios with reasonably satisfactory evidence that the
delay in achieving the objective was not due to a lack of diligence on the part of
Biosite and was due to [***] beyond the reasonable control of Biosite, then [***]
of such objectives shall be extended for such [***] as the parties mutually
agree, which shall not be [***]. If, at the end of such additional period,
Biosite shall not have achieved the objective(s) due to be completed, or Scios
and Biosite have not agreed on a [***] for completion of such objectives, Scios
shall have the right to terminate the Agreement, which termination shall take
effect upon [***] prior written notice from Scios to Biosite. Scios’ right to
terminate this Agreement shall be its sole and exclusive remedy for any breach
by Biosite of the diligence obligations under this Section 5.2.

 

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5.3                                 Diligence
Reports. Within [***] after each anniversary of the Effective Date
until the [***], Biosite shall provide Scios with a written report summarizing
Biosite’s development activities during the [***] period preceding the
anniversary date. Such reports shall constitute confidential information which
shall be treated as provided in Section 10.1. In addition, if requested by
Scios, Biosite shall meet with Scios annually to review progress in the
development of Licensed Products.

 

6. BOOKS AND RECORDS

 

6.1                                 Books and
Records; Audits. Biosite shall keep full and accurate
accounting records containing all particulars that may be necessary for
the purpose of calculating all royalties accrued to Scios. Upon the written
request of Scios and not more than once in each calendar year, Biosite shall
permit an independent certified public accounting firm of nationally recognized
standing, selected by Scios and reasonably acceptable to Biosite, to have
access during normal business hours to such of the records of Biosite as may be
reasonably necessary to verify the accuracy of the royalty reports hereunder
for any year ending not more than thirty-six (36) months prior to the date of
such request. The accounting firm shall disclose to Scios only whether the
reports are correct or not and the specific details concerning any
discrepancies. No other information shall be shared. An adjusting payment shall
be made upon accurate demonstration of any underpayment.

 

6.2                                 Cost of
Audits. The fees and expenses of Scios or Scios’ designee
performing an examination pursuant to Section 6.1 shall be borne by Scios;
provided, however, that if any audit accurately shall show that Biosite
underpaid the royalties due to Scios under this Agreement as to the period
being audited by more than [***] of the amount that was payable for such
period, then Biosite shall, in addition to immediately paying to Scios any such
deficiency, reimburse Scios for the cost of such audit.

 

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6.3                                 Period to be
Kept. Books and records required to be maintained by Biosite
hereunder shall be preserved for at least [***] from the date of the royalty
payment to which they pertain.

 

7. TRANSFER OF
KNOW-HOW

 

7.1                                 Development,
Use and Sale of Licensed Product. Biosite acknowledges that certain
information relating to [***] for [***] and [***] on its [***] for [***], which
constitute Know-how hereunder, has been transferred to it by Scios prior to the
Effective Date pursuant to a certain Confidential Disclosure Agreement between
the parties dated October 15, 1996. All Know-how transferred prior to the
Effective Date shall be considered Know-how subject to the provisions of this
Agreement. Scios shall deliver to Biosite, within [***] of the Effective Date
the [***] listed on [***] and upon the request of Biosite, any additional
Know-how that is needed by Biosite to develop a prototype Licensed Product from
the [***] received from Scios. The manner in which such Know-how is transferred
shall be [***]. Scios shall devote up to [***], as needed, to accomplish the
initial transfer of such Know-how at no cost to Biosite. Any additional time
provided shall be [***] at a [***] (which is [***] as of [***]) upon receipt of
an [***]. Except to the extent necessary to enable Biosite to obtain marketing
approval within the Territory, Know-how related to the manufacture of BNP shall
not be transferred unless Biosite undertakes the recombinant manufacture of BNP
pursuant to the provisions of Section 8.4.

 

7.2                                 Manufacture
of BNP. In the event that Biosite or a [***] of Biosite undertakes
the manufacture of BNP pursuant to Section 8.4, upon request by Biosite or
its [***] Scios shall, at no cost to Biosite or its [***], transfer to Biosite
or its [***] the [***] Scios used to produce BNP [***] and other Know-how related
to the [***] manufacture of BNP. Because of the highly

 

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proprietary
nature and great competitive value of the [***], Biosite specifically (a) acknowledges
that all information concerning the [***] provided by Scios to Biosite or its [***]
shall be subject to the confidentiality provisions of Section 10.1 and (b) agrees
that Biosite or its [***] shall use such [***] and related information (and
each part thereof) solely for its own manufacture of BNP for use in
Licensed Products and not for the manufacture of any other biological material
or product and shall not transfer such [***] to any Third Party except as
otherwise provided herein.

 

8. SUPPLY

 

8.1                                 Supply by
Scios. Prior to the first commercial sale of Licensed Product,
Scios agrees to supply Biosite with BNP for development of Licensed Product
upon placement of purchase orders, at a cost of [***] ($[***]) per milligram,
not to exceed [***] ([***]) mg in each calendar year. Biosite shall notify
Scios not less than [***] in advance of its intention to file [***] for [***]
of a Licensed Product [***]. Scios shall have an option, exercisable within [***]
business [***] of its receipt of such notice, to [***] with respect to BNP on
the terms described in Section 8.3.

 

8.2                                 Specifications. BNP
supplied by Scios to Biosite shall conform to the specifications set forth
on Appendix C, attached hereto. Scios shall have the right to alter such
specifications on [***] ([***]) days prior notice to Biosite, to the extent
reasonably necessary to [***] of [***].

 

8.3                                 Supply
Agreement. Any supply agreement negotiated [***] shall be on terms
and conditions mutually acceptable to both parties and shall provide for (a) Biosite
to purchase from Scios, and Scios to supply, all their requirements of BNP for
use in Licensed Products, (b) the price of BNP not to exceed the lesser of
[***]

 

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dollars
($[***]) per milligram and [***] ([***]) of [***] of [***], (c) Biosite to
have a reasonable time period (not to exceed [***]) after delivery of any
shipment of BNP by Scios within which to accept or reject such shipment for
conformity with specifications, which acceptance shall release Scios from any
on-going responsibility to Biosite with respect to Biosite’s use of the BNP in
the shipment or sale of Licensed Product containing such BNP, (d) Biosite
to have a right of termination if it can establish to Scios’ reasonable
satisfaction that [***] (i.e., [***]) manufactured BNP is more suitable than [***]
manufactured BNP for use in Licensed Product or if Scios notifies Biosite that
Scios is altering the specifications of BNP pursuant to its right to do so
under Section 8.2 and Biosite does not desire to incorporate such
modifications into Licensed Products, and (e) other reasonable and
customary terms, including appropriate assurances of inventory and future
supply and the right on the part of Scios to terminate supply on terms
consistent with Section 8.4. Acceptance by Biosite of any alteration of
the specifications of BNP shall be reflected in an amendment to Appendix C and
such acceptance by Biosite shall be deemed to be Biosite’s agreement that, for
purposes of this Section 8.3, Biosite can incorporate the modified
specifications into Licensed Product and Biosite has foregone the right to
assume manufacturing of BNP triggered by such modification.

 

8.4                                 Manufacture
of BNP by Biosite and Sublicensees. In the event that Scios is or becomes
unable or unwilling to supply BNP to Biosite, or in the event that Biosite
exercises a right of termination of the supply agreement as described in Section 8.3(d),
Biosite’s license and any sublicense hereunder shall be deemed to include the
right to manufacture or have manufactured BNP solely for use by Biosite and its
sublicensees, if any, in Licensed Product.

 

8.5                                 Recombinant
Manufacture by Third Party. If the supply agreement is not entered
into or is terminated and Biosite or a sublicensee of Biosite elects to have
BNP manufactured [***] by a Third Party, Biosite or a sublicensee of Biosite may transfer
the manufacturing Know-how, including the [***] and other Know-how

 

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related
to the manufacture of BNP, to such Third Party solely for use in manufacturing
BNP for the uses permitted under this Agreement provided Biosite or a
sublicensee of Biosite shall have entered into an agreement with such Third
Party imposing upon such Third Party obligations of non-disclosure and non-use
at least as stringent as those set forth in Article 10 with respect to the
Know-how, including the [***]. Additionally, such agreement shall provide that
it shall terminate upon termination of this Agreement between Scios and Biosite
and that, upon termination, the Third Party will return to Scios or destroy any
Know-how in tangible form and that the obligations of non-disclosure and
non-use shall survive termination of such agreement for a period of at least [***].
Biosite shall notify Scios prior to it or any of its sublicensees entering into
a BNP manufacturing agreement with a Third Party at least [***] prior to
executing such agreement. Such notice shall include the identity of the Third
Party manufacturer.

 

9. PATENTS

 

9.1                                 Patent
Procurement and Maintenance. Scios shall be responsible for
endeavoring to secure and maintain the Patent Rights throughout the Territory
in such countries and in such manner as Scios shall elect after considering the
views of Biosite and Scios’ other licensees of the Patent Rights. Scios shall
notify Biosite of any change in status of patents and/or patent applications
listed in Appendix A and of the filing of any new patent applications within
the Patent Rights and Appendix A shall be amended from time to time to reflect
such changes. In the event Biosite, alone or jointly with Scios, shall make any
additional invention related to a Licensed Product, then Biosite shall be responsible
and pay for the prosecution and maintenance of all applications and patents
related to such invention including the costs of reexamination, reissue,
opposition or interference proceedings. Any patents issuing from joint
inventions shall be owned jointly by Biosite and Scios. Unless otherwise
specifically agreed to herein and subject to the licenses granted under Article 2,
as a joint owner, each party shall have the right to assign, transfer, license
or exploit its interest in such joint inventions or joint patent rights without
accounting or payment to the other Party. In the event any of the Patent Rights

 

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shall
become involved in an opposition or interference proceeding, Scios shall manage
the proceeding and Biosite [***] of the [***] of such proceeding. Scios agrees
to keep Biosite reasonably informed concerning the proceeding and take its
views into account in setting Scios’ strategy in the proceeding.

 

9.2                                 Third Party
Infringement. If, during the term of this Agreement,
Biosite notifies Scios that any unlicensed Third Party is infringing any of the
Patent Rights by selling, distributing, marketing or using any Licensed Product
in a country within the Territory, and Scios does not, within [***] ([***]) [***],
either (a) establish that infringement is not occurring in such country, (b) establish
by [***] or data from another reliable source that [***] by all [***] in such
country [***] ([***]) of the [***] for Licensed Product in such country, (c) cause
such infringement to abate or (d) institute a suit to enjoin such
infringement, then Biosite shall have the right, subject to Section 9.5
and so long as such infringement continues, to pay royalties for sales of
Licensed Product in any country in which such infringement is occurring, at [***]
specified in Section 3.3; provided, however, that Scios shall not be
required to maintain suits for infringement against more than [***] [***] at a
time in any country in order to continue receiving royalties at the rate
specified in Section 3.4. Scios shall bear the expense of any infringement
suit and [***] any reward of monetary damages.

 

9.3                                 Infringement
of Third-Party Patents. It is understood by the parties that
Scios makes no representation or warranty that the [***] of Licensed Product
will not infringe the patent rights of any Third Party. In the event any claim
is made by any Third Party against Biosite or a sublicensee of Biosite alleging
that the [***] of a Licensed Product by Biosite or a sublicensee of Biosite
infringes any patent of a Third Party, Biosite shall promptly notify Scios in
writing. Biosite shall be responsible for the defense of such suit except for
any suit [***] to [***] or [***] in any country within the Territory

 

***Confidential
Treatment Requested

 

16

 

[***]
(a “[***]”). Subject to the provisions of Section 9.5, Biosite shall have
the right to deduct [***] of such suit or any [***] Biosite in such suit from
amounts due to Scios under this Agreement. Scios shall be responsible at its
own cost, for the defense of any suit claiming that the [***] of Licensed
Product by Biosite or a sublicensee of Biosite [***]. The Party conducting the
defense of any infringement suit shall have control of the suit and shall use
counsel if its choice is reasonably acceptable to the other party, provided the
party in control shall have the right to confer with the other party on matters
of strategy and shall not enter into any settlement agreement which adversely
affects the economic interest of the other party [***] to this Agreement
without that party’s consent.

 

9.4                                 License of
Third-Party Patents. If, as a result of infringement
litigation or agreement between Scios and Biosite, it is determined that it is
necessary to obtain a license from a Third Party under any patent [***] BNP,
the [***] of BNP, the [***] of Licensed Product or the [***] of Licensed
Product, Biosite shall pay [***] and, subject to section 9.5, shall have
the right to deduct [***] in any [***] from the [***] payable to Scios [***]
under this Agreement. [***] paid by Biosite to any Third Party for license
rights to patents covering [***] generally useful in [***], but not [***] to
Licensed Product, shall not be deductible from royalties payable to Scios under
this Agreement.

 

9.5                                 Limitation
on Royalty Reduction. In no event shall the aggregate of
reductions in royalties under Sections 9.2, 9.3 and 9.4 reduce the amount of
royalties due to Scios in any royalty reporting period to less than [***]
percent ([***]%).

 

***Confidential
Treatment Requested

 

17

 

10. CONFIDENTIALITY

 

10.1                           Confidentiality. During the
term of this Agreement, and for five (5) years thereafter (but in no event
less than ten (10) years following the Effective Date), each party shall
keep confidential and shall not disclose or provide to any Third Party (except
as expressly permitted under this Agreement) or use for any purpose (except as
expressly permitted by this Agreement) any information (specifically including,
but not limited to, Know-how, biological samples and materials derived or
reproduced therefrom) furnished to it by the other party pursuant to this
Agreement other than to directors, officers, employees and consultants, except
to the extent that it can be shown by the receiving party that such
information:

 

(a)                  was already
known to the receiving party, other than under an obligation of
confidentiality, at the time of disclosure by the other party;

 

(b)                 was
generally available to the public or otherwise part of the public domain
at the time of its disclosure to the receiving party;

 

(c)                  became
generally available to the public or otherwise part of the public domain
after its disclosure, other than through an act or omission on the part of
the receiving party in breach of this Agreement; or

 

(d)                 is
subsequently lawfully disclosed to the receiving party by a Third Party. Notwithstanding
the foregoing, a party may disclose the other party’s confidential
information to the extent reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, negotiating a merger or
acquisition (under appropriate assurances of confidentiality), complying with applicable
laws, government regulations or court orders, or conducting clinical trials; provided,
however, that a party making such disclosure shall provide notice of, and
opportunity to object to, such disclosure to the other 

 

18

 

party,
which notice shall be in advance of disclosure to the extent reasonably
possible.

 

10.2                           Survival of
Obligation. The obligation of confidentiality set
forth in Section 10.1 shall survive the expiration or termination of this
Agreement.

 

11. TERM AND
TERMINATION

 

11.1                           Term. This
Agreement shall be in full force and effect from the Effective Date and, unless
otherwise terminated by operation of law or by acts of the parties in
accordance with the terms of this Agreement, shall remain in effect for the
term of any royalty obligation under Section 3.4

 

11.2                           Early
Termination. In case Biosite breaches a material
obligation under the Agreement, Scios may notify Biosite of the particular
default and its intention to terminate this Agreement. Unless such default is
cured, or Biosite has provided evidence reasonably acceptable to Scios that
such default is in the process of being cured, within [***] of the receipt of
Biosite of written notice of the particular default, Scios shall have the
option of terminating the Agreement on notice to Biosite. Failure of Scios to
provide notice to Biosite of any default shall not be deemed a waiver of such
default.

 

11.3                           Early
Termination by Biosite. Biosite may terminate this
Agreement at any time by giving [***] ([***]) [***] written notice to Scios of
its intent to do so.

 

11.4                           Accrued
Rights and Obligations. Unless otherwise specifically provided,
all rights and obligations of Scios and Biosite hereunder shall remain in
effect throughout the term of this Agreement and it is understood and agreed
that expiration or other termination of this Agreement shall not relieve either
party of any obligation arising under this Agreement which shall have accrued
prior to such expiration or termination. 

 

***Confidential
Treatment Requested

 

19

 

Termination shall have no
effect on Biosite’s obligation to report and pay all payments provided herein
for any Licensed Products sold during the period prior to termination.

 

11.5                           Effect of
Expiration or Termination.

 

(a)          Upon
expiration of this Agreement pursuant to Section 11.1, Biosite and its
sublicensees, if any, shall have a fully paid-up non-exclusive license to use
the Know-how for the purposes set forth herein.

 

(b)         In the event
of early termination pursuant to Section 2.4, Section 5.2, Section 11.2
or Section 11.3, each party to this Agreement (including, if any, each
sublicensee) shall return all information it has received in tangible form that
is subject to the confidentiality provisions of Article 10 to the party
that provided such information, or at the request of the providing party,
destroy such information, including all copies of documents and all materials,
such as [***] materials, embodying the Know-how; provided that each party may retain
one copy of such information for its legal files.

 

12. WARRANTIES AND
DISCLAIMERS

 

12.1                           Warranty of
Licensor. Scios warrants that it is the owner of the entire right,
title and interest in the Patent Rights and Know-how and that it has the right
to grant the license herein granted.

 

12.2                           Warranty of
Biosite. Biosite warrants that it has the skills necessary to
develop a Licensed Product and that it intends to do so.

 

12.3                           Exclusion by
Both Parties. Except as expressly set forth in this
Agreement, the parties expressly disclaim all warranties, express or implied,
including without limitation warranties of merchantability, fitness for a
particular purpose, or non-infringement.

 

20

 

12.4                           Product
Liability Disclaimer. Since Biosite shall have full control
over the design and development of Licensed Products and determine what testing
or evaluation each Licensed Product shall be subject to prior to use, neither
Scios nor any of its officers, employees or agents assumes any responsibility
for the manufacture or product specifications or end-use of any products which
are manufactured by or sold by Biosite under any of the Patent Rights and
Know-how. All warranties in connection with such products shall be made by
Biosite as manufacturer and/or seller and shall not directly or by implication
obligate Scios or any of its officers, employees or agents.

 

13. INDEMNITY

 

13.1                           Indemnity. Biosite
hereby agrees to indemnify, hold harmless and defend Scios, its directors,
officers, employees and agents, against any and all losses, liabilities,
damages and expenses (including reasonable attorneys’ fees and costs) incurred
by Scios as a result of any claims, demands, actions or other proceedings by any
third party arising out of:

 

(a)                  The gross
negligence of willful misconduct of Biosite and/or its sublicensees; or

 

(b)                 The
manufacture, packaging, use, sale, or other distribution of Licensed Products
by Biosite and/or its sublicensees; or

 

(c)                  Any representation
made or warranty expressly or impliedly given by Biosite or its sublicensees
with respect to any Licensed Product;

 

except in each case to
the extent that such losses, liabilities, damages and expenses arise out of the
gross negligence of willful misconduct of Scios and/or its Affiliates.

 

13.2                           Procedures. If Scios
intends to claim indemnification under Section 13.1 above, Scios shall
promptly notify Biosite of any claim, demand, action or other proceeding for
which Scios intends to claim such indemnification. Biosite shall have the right
to participate in, and, to the extent Biosite so desires, jointly with any
other indemnitor similarly noticed, to assume the defense thereof with counsel
selected by Biosite. The

 

21

 

indemnity
obligations under Section 13.1 above shall not apply to amounts paid in
settlement of any claim, demand, action or other proceeding if such settlement
is effected without the prior express written consent of Biosite, which consent
shall not be withheld unreasonably. The failure to deliver notice to Biosite
within a reasonable time after the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such Biosite of
any liability to Scios under Section 13.1 above, but the omission so to
deliver notice to Biosite will not relieve it of any liability that it may have
to any Scios otherwise than under Section 13.1. Biosite may not
settle any such claim, demand, action or other proceeding, or otherwise consent
to an adverse judgment in any such action, that diminishes the rights or
interests of Scios without the express written consent of Scios. Scios, its
employees and agents, shall cooperate fully with Biosite and its legal
representatives in the investigation of any action, claim or liability covered
by this indemnification.

 

14. TRADENAMES AND
TRADEMARKS

 

14.1                           Tradenames
and Trademarks. Nothing contained in this Agreement
shall be construed as conferring any right of one party to use in advertising,
publicity, or other promotional activities, any names, tradename, trademark, or
other designation of the other party without such other party’s prior written
consent and approval as to form. Each party hereto further agrees not to use or
refer to this Agreement or the license granted hereunder in any promotional
activity associated with the Licensed Products without the express written
approval of the other party.

 

15. MISCELLANEOUS

 

15.1                           Waiver. No waiver
by either party hereof of any breach or default of any of the covenants or
agreements herein set forth shall be deemed a waiver as to any subsequent or
similar breach or default.

 

22

 

15.2                           Assignment. Upon
written notice to Scios, Biosite may assign this Agreement [***] with the [***]
of [***] of its [***], or in the event of its [***] or [***]. Upon [***] prior
written notice to Biosite, Scios may assign or transfer this Agreement [***].
Any permitted assignee shall assume all obligations of its assignor under this
Agreement. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their permitted successors and assigns.

 

15.3                           Notices. Any notice
or other communication required or permitted to be given to either party hereto
shall be in writing and shall be effective on the date of receipt if delivered
in person or by telex or ten (10) days after mailing by registered or
certified mail, postage paid, or any other lawful means, to the other party at
the following address:

 

In the case of
Scios:                                                             Scios
Inc.

2450 Bayshore Parkway

Mountain View, Ca 94043, USA

Attention: General Counsel

Facsimile: 415-962-5816

 

	
  with a copy to the attention of:

  	
  Vice President of Business Development

  

 

In the case of
Biosite:                                                     Biosite
Diagnostics Incorporated

11030 Roselle Street, Suite D

San Diego, California 92121

Attention: President

Facsimile: (619) 455-4815

 

with a copy
to:                                                                                         Pillsbury
Madison & Sutro

235 Montgomery Street, 15th Floor

San Francisco, California 94104

Attention: Thomas E. Sparks, Jr.

 

Either party may change
its address or facsimile number for communications by a notice to the other
party in accordance with this Section 15.3.

 

15.4                           Governing
Law and Jurisdiction. This Agreement shall be interpreted and
construed in accordance with the laws of the state of California. Each party
submits to

 

***Confidential
Treatment Requested

 

23

 

the
jurisdiction and venue of the California state courts and the federal courts
for the Northern District of California for any action hereunder. Each party
agrees that service of process may be effected against it by certified or
registered mail with respect to legal actions commenced by the other party in
any such jurisdiction.

 

15.5                           Headings. The
heading of the several sections are inserted for convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement.

 

15.6                           Amendment. No
amendment or modification hereof shall be valid or binding upon the parties
unless made in writing and signed by both parties.

 

15.7                           Force
Majeure. Any delay in performance by any party under this Agreement
shall not be considered a breach of this Agreement if and to the extent caused
by occurrences beyond the reasonable control of the party affected, including
but not limited to acts of God, embargoes, governmental restrictions, strikes
or other concerted acts of workers, fire, flood, explosion, riots, wars, civil
disorder, rebellion or sabotage. The party suffering such occurrence shall
promptly notify the other party and the time for performance of any obligation
hereunder shall be extended by the actual time of delay caused by the
occurrence.

 

15.8                           Independent
Contractors. In making and performing this
Agreement, Biosite and Scios act and shall act at all times as independent
contractors and nothing contained in this Agreement shall be construed or
implied to create an agency, partnership or employer and employee relationship
between Scios and Biosite. At no time shall one party make commitments or incur
any charges or expenses for or in the name of the other party except as
specifically provided herein.

 

15.9                           Severability. If any
term, condition or provision of this Agreement is held to be unenforceable for
any reasons, it shall if possible, be interpreted rather than voided, in

 

24

 

order
to achieve the intent of the parties to this Agreement to the extent possible. In
any event, all other terms, conditions and provisions of this Agreement shall
remain valid and enforceable to the full extent.

 

15.10                     Additional
Documents. Each party to execute such further papers or agreements as
may be necessary to effect the purpose of this Agreement.

 

15.11                     Entire
Agreement. This Agreement embodies the entire understanding of the
parties and shall supersede all previous communications, representations or
understandings, either oral or written, between the parties relating to the
subject matter hereof.

 

IN WITNESS HEREOF, both
Scios and Biosite have executed this Agreement, in duplicate originals, by
their respective officers hereunto duly authorized, as of the day and year
hereabove written.

 

	
  SCIOS:

  	
  SCIOS INC.

  
	
   

  	
  By:

  	
   /s/ Richard L. Casey

  	
   

  
	
   

  	
  Name:

  	
   Richard L. Casey

  	
   

  
	
   

  	
  Title:

  	
   Chairman and CEO

  	
   

  
	
   

  	
   

  
	
  BIOSITE:

  	
  BIOSITE DIAGNOSTICS, INCORPORATED

  
	
   

  	
  By:

  	
   /s/ Kim D. Blickenstaff

  	
   

  
	
   

  	
  Name:

  	
   Kim D. Blickenstaff

  	
   

  
	
   

  	
  Title:

  	
   President & CEO

  	
   

  
						

 

25

 

Appendices:

 

	
  Appendix A

  	
  -

  	
  List of Patent Rights

  
	
  Appendix B

  	
  -

  	
  List of [***] to be delivered by Scios

  
	
  Appendix C

  	
  -

  	
  Specifications for BNP

  

 

***Confidential
Treatment Requested

 

26

 

APPENDIX A

 

PATENT RIGHTS

 

I.                                         [***]

 

ISSUED PATENTS:

 

	
  Jurisdiction

  	
   

  	
  Date Filed

  	
   

  	
  Date Issued

  	
   

  	
  Patent Number

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

PATENT APPLICATIONS:

 

	
  Jurisdiction

  	
   

  	
  Date Filed

  	
   

  	
  Date Issued

  	
   

  	
  Patent Number

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

II.                                     [***]

 

PATENT APPLICATIONS:

 

	
  Jurisdiction

  	
   

  	
  Date Filed

  	
   

  	
  Date Issued

  	
   

  	
  Patent Number

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

***Confidential Treatment
Requested

 

27

 

APPENDIX B

 

LIST OF [***] TO BE DELIVERED BY
SCIOS

 

[***]

 

	
  •

  	
  -

  	
  [***]

  
	
   

  	
   

  	
   

  
	
  •

  	
  -

  	
  [***]

  
	
   

  	
   

  	
   

  
	
  •

  	
  -

  	
  [***]

  

 

***Confidential Treatment
Requested

 

28

 

APPENDIX C

 

SPECIFICATIONS
FOR BNP

 

[***]

 

 

	
  SOP

  	
   

  	
  Test Procedure / Specification

  	
   

  	
  Result

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

***Confidential Treatment
Requested

 

29Exhibit 10.19

 

***Text omitted and filed separately

Confidential Treatment Requested

Under 17 C.F.R.§§ 200.80 (b) (4)

And 240.24b-2

 

FIRST AMENDMENT TO
SEMI-EXCLUSIVE BNP DIAGNOSTIC AGREEMENT

between

BIOSITE
DIAGNOSTICS INCORPORATED and SCIOS INC.

 

THIS FIRST
AMENDMENT TO SEMI-EXCLUSIVE BNP DIAGNOSTIC AGREEMENT is entered into as of August 1,
1997 between BIOSITE DIAGNOSTICS INCORPORATED, a corporation organized under
the laws of Delaware with its principal place of business at 11030 Roselle
Street, San Diego, California 92121 (“Biosite”), and SCIOS INC., a corporation
organized under the laws of Delaware with a principal place of business at 2450
Bayshore Parkway, Mountain View, California 94043 (“Scios”);

 

WHEREAS, Biosite
and Scios entered into a Semi-Exclusive BNP Diagnostic Agreement having an
effective date of December 30, 1996 (the “Agreement”); and

 

WHEREAS, Scios and
Biosite wish to amend the Agreement;

 

NOW, THEREFORE,
the Agreement is amended, effective August 1, 1997 (the “Effective Date of
First Amendment”), as follows.

 

Section 2.4
of the Agreement shall be amended to read, in its entirety, as follows:

 

“2.4                           Additional
Licenses. Scios reserves the right to grant the following additional
licenses in the Territory under the Patent Rights and Know-how:

 

(a)                                  Licenses
allowing the manufacture, use, importation, offer for sale, or sale of the [***]
in any country of the Territory other than the United States; and

 

(b)                                 Up
to two (2) licenses in addition to any licenses described in (a) above
and the license granted to Biosite under this Agreement, to make, have made,
use, sell, offer for sale and import Licensed Products in the Territory.

 

Any additional
license granted under Section 2.4(b) may allow the licensee to [***]
a [***] to [***] in each country of the Territory, provided that, in each

 

***Confidential
Treatment Requested

 

1

 

country, the
licensee [***] [***] Licensed Product in the [***],”

 

All other terms
and conditions of the Agreement shall remain in full force and effect.

 

IN WITNESS
WHEREOF, both Scios and Biosite have executed this First Agreement to
Semi-Exclusive BNP Diagnostic Agreement, in duplicate originals, by their
respective officers hereunto duly authorized, as of the Effective Date of First
Amendment.

 

	
  SCIOS INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/
  Robert Rosenkranz, Ph.D.

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Robert
  Rosenkranz, Ph.D.

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  President and
  COO

  	
   

  	
   

  
	
   

  	
   

  
	
  BIOSITE
  DIAGNOSTICS INCORPORATED

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/
  Kim D. Blickenstaff

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
    Kim
  D. Blickenstaff

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
    President

  	
   

  	
   

  
								

 

***Confidential Treatment
Requested

 

2

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