Document:

Exhibit 10.9

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

COLLABORATION, LICENSE AND OPTION AGREEMENT

 

by and between

 

ACCELERON PHARMA, INC.

 

and

 

CELGENE CORPORATION

 

as amended on August 2, 2011

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Article 1
    	
DEFINITIONS
    	
2
    
	
 
    	
 
    	
 
    
	
Article 2
    	
COLLABORATION
    	
18
    
	
 
    	
 
    	
 
    
	
2.1
    	
Development
    	
18
    
	
 
    	
 
    	
 
    
	
2.2
    	
Records
    	
19
    
	
 
    	
 
    	
 
    
	
2.3
    	
Regulatory   Matters
    	
20
    
	
 
    	
 
    	
 
    
	
2.4
    	
Manufacture   and Supply
    	
21
    
	
 
    	
 
    	
 
    
	
2.5
    	
Commercialization   Plan/Budget
    	
23
    
	
 
    	
 
    	
 
    
	
2.6
    	
Commercialization   Outside North America
    	
23
    
	
 
    	
 
    	
 
    
	
2.7
    	
Co-Promotion   of Licensed Product Within North America
    	
23
    
	
 
    	
 
    	
 
    
	
2.8
    	
Third   Parties
    	
25
    
	
 
    	
 
    	
 
    
	
2.9
    	
Information   Sharing
    	
26
    
	
 
    	
 
    	
 
    
	
Article 3
    	
COLLABORATION   MANAGEMENT
    	
27
    
	
 
    	
 
    	
 
    
	
3.1
    	
Joint   Development Committee
    	
27
    
	
 
    	
 
    	
 
    
	
3.2
    	
Joint   Commercialization Committee
    	
29
    
	
 
    	
 
    	
 
    
	
3.3
    	
Joint   Responsibilities of the Joint Development Committee and Joint   Commercialization Committee
    	
31
    
	
 
    	
 
    	
 
    
	
3.4
    	
Appointment   of Subcommittees and Project Teams
    	
31
    
	
 
    	
 
    	
 
    
	
3.5
    	
Decision-Making
    	
31
    
	
 
    	
 
    	
 
    
	
3.6
    	
Dispute   Resolution
    	
32
    
	
 
    	
 
    	
 
    
	
3.7
    	
Dissolution
    	
32
    
	
 
    	
 
    	
 
    
	
3.8
    	
Appointment   of Joint Development Committee and Joint Commercialization Committee Members
    	
32
    
	
 
    	
 
    	
 
    
	
Article 4
    	
LICENSES   AND INTELLECTUAL PROPERTY OWNERSHIP
    	
32
    
	
 
    	
 
    	
 
    
	
4.1
    	
License   Grants to Celgene
    	
32
    
	
 
    	
 
    	
 
    
	
4.2
    	
License   Grant to Acceleron
    	
32
    
	
 
    	
 
    	
 
    
	
4.3
    	
Sublicenses
    	
33
    
	
 
    	
 
    	
 
    
	
4.4
    	
Ownership   of and Rights to Intellectual Property
    	
34
    
	
 
    	
 
    	
 
    
	
4.5
    	
Salk   License
    	
35
    
	
 
    	
 
    	
 
    
	
4.6
    	
No   Other Rights
    	
37
    

 

i

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

	
Article 5
    	
FINANCIAL PROVISIONS
    	
37
    
	
 
    	
 
    	
 
    
	
5.1
    	
Upfront Payments
    	
37
    
	
 
    	
 
    	
 
    
	
5.2
    	
ActRIIA   Development Milestones
    	
37
    
	
 
    	
 
    	
 
    
	
5.3
    	
Option   Compound Development Milestones
    	
39
    
	
 
    	
 
    	
 
    
	
5.4
    	
Ex-North   American Sales Milestones
    	
40
    
	
 
    	
 
    	
 
    
	
5.5
    	
Sharing   Costs
    	
41
    
	
 
    	
 
    	
 
    
	
5.6
    	
Royalties
    	
44
    
	
 
    	
 
    	
 
    
	
5.7
    	
Payment   Provisions Generally
    	
47
    
	
 
    	
 
    	
 
    
	
Article 6
    	
EXCLUSIVITY
    	
50
    
	
 
    	
 
    	
 
    
	
6.1
    	
Prohibitions
    	
50
    
	
 
    	
 
    	
 
    
	
6.2
    	
Third   Party Acquisitions
    	
52
    
	
 
    	
 
    	
 
    
	
6.3
    	
Acquisitions   of Third Parties
    	
53
    
	
 
    	
 
    	
 
    
	
Article 7
    	
OPTION   PROGRAM
    	
54
    
	
 
    	
 
    	
 
    
	
7.1
    	
Conduct   of Option Compound Programs
    	
54
    
	
 
    	
 
    	
 
    
	
7.2
    	
Option   Program Payments
    	
54
    
	
 
    	
 
    	
 
    
	
7.3
    	
Updates;   Reports
    	
55
    
	
 
    	
 
    	
 
    
	
Article 8
    	
INTELLECTUAL   PROPERTY PROTECTION AND RELATED MATTERS
    	
56
    
	
 
    	
 
    	
 
    
	
8.1
    	
Salk   Patent Rights
    	
56
    
	
 
    	
 
    	
 
    
	
8.2
    	
Prosecution   of Patent Rights
    	
56
    
	
 
    	
 
    	
 
    
	
8.3
    	
Enforcement   of Patent Rights
    	
60
    
	
 
    	
 
    	
 
    
	
8.4
    	
Claimed   Infringement of Third Party Rights
    	
62
    
	
 
    	
 
    	
 
    
	
8.5
    	
Other   Infringement Resolutions
    	
63
    
	
 
    	
 
    	
 
    
	
8.6
    	
Product   Trademarks & Product Designation
    	
63
    
	
 
    	
 
    	
 
    
	
8.7
    	
Marking
    	
63
    
	
 
    	
 
    	
 
    
	
8.8
    	
Patent   Term Extensions
    	
64
    
	
 
    	
 
    	
 
    
	
Article 9
    	
CONFIDENTIALITY
    	
64
    
	
 
    	
 
    	
 
    
	
9.1
    	
Confidential   Information
    	
64
    
	
 
    	
 
    	
 
    
	
9.2
    	
Publication   Review
    	
66
    
	
 
    	
 
    	
 
    
	
9.3
    	
Public   Announcements and Use of Names
    	
67
    
	
 
    	
 
    	
 
    
	
Article 10
    	
Effectiveness
    	
67
    

 

ii

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

	
10.1
    	
Effective   Date
    	
67
    
	
 
    	
 
    	
 
    
	
10.2
    	
Filings
    	
68
    
	
 
    	
 
    	
 
    
	
10.3
    	
Closing
    	
68
    
	
 
    	
 
    	
 
    
	
10.4
    	
Conditions   to Closing
    	
68
    
	
 
    	
 
    	
 
    
	
Article 11
    	
TERM   AND TERMINATION
    	
68
    
	
 
    	
 
    	
 
    
	
11.1
    	
Term
    	
68
    
	
 
    	
 
    	
 
    
	
11.2
    	
Termination   for Cause
    	
69
    
	
 
    	
 
    	
 
    
	
11.3
    	
Termination   for Convenience
    	
70
    
	
 
    	
 
    	
 
    
	
11.4
    	
Termination   for Failure to Meet End Points
    	
70
    
	
 
    	
 
    	
 
    
	
11.5
    	
Other   Effects of Termination
    	
70
    
	
 
    	
 
    	
 
    
	
11.6
    	
Sell-Down
    	
72
    
	
 
    	
 
    	
 
    
	
11.7
    	
Transfer   of Records
    	
72
    
	
 
    	
 
    	
 
    
	
11.8
    	
Rights   in Bankruptcy
    	
72
    
	
 
    	
 
    	
 
    
	
11.9
    	
Effect   of Expiration or Termination; Survival
    	
72
    
	
 
    	
 
    	
 
    
	
Article 12
    	
REPRESENTATIONS   AND WARRANTIES; INDEMNIFICATION
    	
73
    
	
 
    	
 
    	
 
    
	
12.1
    	
Mutual   Representations and Warranties
    	
73
    
	
 
    	
 
    	
 
    
	
12.2
    	
Acceleron   Representations and Warranties
    	
73
    
	
 
    	
 
    	
 
    
	
12.3
    	
Option   Compound Representations and Warranties
    	
75
    
	
 
    	
 
    	
 
    
	
12.4
    	
Celgene   Representations and Warranties
    	
75
    
	
 
    	
 
    	
 
    
	
12.5
    	
Warranty   Disclaimer
    	
75
    
	
 
    	
 
    	
 
    
	
12.6
    	
No   Consequential Damages
    	
75
    
	
 
    	
 
    	
 
    
	
12.7
    	
Indemnification   and Insurance
    	
76
    
	
 
    	
 
    	
 
    
	
Article 13
    	
MISCELLANEOUS   PROVISIONS
    	
78
    
	
 
    	
 
    	
 
    
	
13.1
    	
Dispute   Resolution; Governing Law
    	
78
    
	
 
    	
 
    	
 
    
	
13.2
    	
Assignment
    	
78
    
	
 
    	
 
    	
 
    
	
13.3
    	
Amendments
    	
79
    
	
 
    	
 
    	
 
    
	
13.4
    	
Notices
    	
79
    
	
 
    	
 
    	
 
    
	
13.5
    	
Force Majeure
    	
79
    
	
 
    	
 
    	
 
    
	
13.6
    	
Compliance   with Applicable Laws
    	
80
    
	
 
    	
 
    	
 
    
	
13.7
    	
Independent   Contractors
    	
80
    
	
 
    	
 
    	
 
    
	
13.8
    	
Further   Assurances
    	
80
    

 

iii

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

	
13.9
    	
No   Strict Construction
    	
80
    
	
 
    	
 
    	
 
    
	
13.10
    	
Headings
    	
80
    
	
 
    	
 
    	
 
    
	
13.11
    	
No   Implied Waivers; Rights Cumulative
    	
80
    
	
 
    	
 
    	
 
    
	
13.12
    	
Severability
    	
80
    
	
 
    	
 
    	
 
    
	
13.13
    	
No   Third Party Beneficiaries
    	
81
    
	
 
    	
 
    	
 
    
	
13.14
    	
Execution   in Counterparts
    	
81
    

 

iv

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

COLLABORATION, LICENSE AND OPTION AGREEMENT

 

This Collaboration, License and Option Agreement (this “Agreement”) dated the 20th day of February, 2008 (the “Execution Date”) is by and between Acceleron Pharma, Inc., a Delaware corporation having its principal office at 149 Sidney Street, Cambridge, MA 02139 (“Acceleron”), and Celgene Corporation, a Delaware corporation having its principal office at 86 Morris Avenue, Summit, NJ 07901 (“Celgene”).  Acceleron and Celgene may each be referred to herein individually as a “Party” and collectively as the “Parties.”

 

This First Amendment to the Collaboration, License and Option Agreement (this “Amendment”) is entered into as of August 2, 2011 (the “Effective Date”), by and between Acceleron Pharma, Inc., a Delaware corporation having its principal office at 128 Sidney Street, Cambridge, MA 02139 (“Acceleron”), and Celgene Corporation, a Delaware corporation having its principal office at 86 Morris Avenue, Summit, NJ 07901 (“Celgene”).  Acceleron and Celgene may each be referred to herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

A.            Celgene and Acceleron are parties that certain Collaboration, License and Option Agreement dated February 20, 2008 (the “Original Agreement”), pursuant to which, among other things, Celgene and Acceleron agreed to collaborate in the investigation and development of certain protein-based product candidates incorporating ActRIIA for the treatment, prevention, or modulation of diseases and conditions in humans.

 

B.            The Parties desire to amend certain terms of the Original Agreement.

 

INTRODUCTION

 

WHEREAS, Acceleron owns or otherwise controls certain intellectual property relating to ActRIIA and antibodies targeting [* * *], [* * *], and [* * *] (each as defined below), including compositions, methods of screening and methods of treatment;

 

WHEREAS, Celgene is in the business of discovering, developing and commercializing innovative therapies designed to treat cancer and immunological diseases through regulation of genomic and proteomic targets;

 

WHEREAS, Acceleron and Celgene are interested in collaborating, on the terms and conditions set forth herein, in the investigation and development of certain protein-based product candidates incorporating ActRIIA for the treatment, prevention, or modulation of diseases and conditions in humans; and

 

WHEREAS, Acceleron and Celgene are interested in entering into an option arrangement regarding rights to collaborate in the investigation and development of certain product candidates

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

incorporating antibodies targeting [* * *], [* * *], and [* * *] for the treatment, prevention, or modulation of diseases and conditions in humans;

 

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

 

Article 1
 DEFINITIONS

 

Except as otherwise explicitly specified to the contrary, (a) references to a Section, Article, Exhibit or Schedule means a Section or Article of, or Schedule or Exhibit to this Agreement, unless another agreement is specified, (b) the word “including” will be construed as “including without limitation,” (c) references to a particular statute or regulation include all rules and regulations thereunder and any predecessor or successor statute, rules or regulations, in each case, as amended or otherwise modified from time to time, (d) words in the singular or plural form include the plural and singular form, respectively, (e) words of any gender include each other gender, (f) “or” is disjunctive but not necessarily exclusive, (g) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (h) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified, and (i) references to a particular person include such person’s successors and assigns to the extent not prohibited by this Agreement.

 

When used in this Agreement, each of the following terms shall have the meanings set forth in this Article 1:

 

1.1          “Acceleron Collaboration IP” means any and all Collaboration IP created, conceived or reduced to practice, and, in the case of patentable Collaboration IP, Invented, solely by Acceleron, its Affiliates, agents or by Third Parties acting on their behalf, while performing activities under this Agreement; provided, however, that Acceleron Collaboration IP shall not include any Collaboration IP that is Celgene Collaboration IP or Joint Collaboration IP.

 

1.2          “Acceleron Development Activities” means all Development activities, including preclinical pharmacology studies, preclinical safety studies, Phase 1 Clinical Trials, initial Phase 2A Clinical Trials, and formulation development for Clinical Supply for such Clinical Trials, undertaken by Acceleron pursuant to this Agreement for the purpose of obtaining Regulatory Approval within North America and Europe.

 

1.3          “Acceleron Improvements” means any and all Improvements to the Acceleron Technology or the Joint Technology created, conceived or reduced to practice, and, in the case of patentable Improvements, Invented, solely by Acceleron, its Affiliates, agents, or by Third Parties acting on their behalf, while performing activities under this Agreement; provided, however, that Acceleron Improvements shall not include any Improvement that is a Celgene Improvement or Joint Improvement.

 

2

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1.4          “Acceleron Know-How” means any Know-How (other than Acceleron Improvements and Acceleron Collaboration IP) that is either Controlled by Acceleron on the Effective Date or comes within Acceleron’s Control during the Agreement Term and is necessary or useful to Develop, Manufacture or Commercialize a Licensed Compound or a Licensed Product in the Field.  For avoidance of doubt, to the extent that antibodies that bind to [* * *] or receptors to which [* * *] binds are necessary or useful to Develop, Manufacture or Commercialize a Licensed Compound or a Licensed Product in the Field, then, to the extent Controlled by Acceleron on the Effective Date or during the Agreement Term, the composition of such antibodies are included in the Acceleron Know-How.

 

1.5       “Acceleron Patent Rights” means (a) the United States and foreign patents and patent applications listed in Schedule 1.5 and, effective upon the dates and pursuant to the terms set forth in Section 7.2, the [* * *] Antibody Patent Rights, [* * *] Antibody Patent Rights and [* * *] Antibody Patent Rights, as applicable, (b) any Patent Rights arising from those patents and patent applications during the Agreement Term, (c) any Patent Rights resulting from Acceleron Improvements or Acceleron Collaboration IP, and (d) any other Patent Rights Controlled by Acceleron as of the Effective Date or during the Agreement Term (but, in the case of Third Party Intellectual Property Controlled by Acceleron during the Agreement Term, subject to Section 5.6.3(c)); all of the above (a) through (d) solely to the extent that such Patent Rights claim the manufacture or use of a Licensed Compound or a Licensed Product, claim a composition of matter of or including a Licensed Compound or a Licensed Product, or are necessary or useful to Develop, Manufacture or Commercialize a Licensed Compound or a Licensed Product in the Field.  For the avoidance of doubt, any Patent Rights that claim the use of a Licensed Compound or Licensed Product in combination with another product (including the use of a Licensed Compound or Licensed Product as part of a Combination Product) shall be included within “Acceleron Patent Rights” (if otherwise within this definition); provided that such inclusion shall not cause “Acceleron Patent Rights” to include any other Patent Rights that claim such other product or the use or manufacture of such other product (or the other active component of a Combination Product) that is not a Licensed Compound or Licensed Product.

 

1.6          “Acceleron Technology” means Acceleron Patent Rights, Acceleron Know-How, Acceleron Improvements, and Acceleron Collaboration IP.

 

1.7          “ActRIIA” means (a) any fusion protein containing at least [* * *] consecutive amino acids from the extracellular portion of human ActRIIA or a mammalian ortholog thereof, linked to an Fc region of an immunoglobulin, (b) any dimers or multimers of (a), and (c) any nucleic acid encoding a protein of (a) or (b).  For clarity, and without limiting the foregoing, the term “ActRIIA” specifically includes the fusion protein identified as ACE-011 and the protein having the sequence of [* * *].

 

1.8          “ActRIIB” means (a) any fusion protein containing at least [* * *] consecutive amino acids from the extracellular portion of human ActRIIB or a mammalian ortholog thereof, linked to an Fc region of an immunoglobulin, (b) any dimers or multimers of (a), and (c) any nucleic acid encoding a protein of (a) or (b).  For clarity, and without limiting the foregoing, the term

 

3

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

“ActRIIB” specifically includes the fusion protein identified as [* * *] and the protein having the sequence of [* * *].

 

1.9          “[* * *]” means (i) the protein having the sequence set forth in GenBank Entry [* * *] and dimers, multimers and fragments thereof and (ii) mammalian orthologs of (i), and dimers, multimers and fragments thereof.

 

1.10        “[* * *] Antibody” means any antibody that binds to [* * *] with a dissociation constant (KD) of 500 picomolar or less.  The terms “[* * *] Antibody” and “[* * *] Antibody” may each include antibodies that bind to both [* * *] and [* * *].

 

1.11        “[* * *] Antibody Patent Rights” means the United States and foreign patents and patent applications listed in Schedule 1.11.

 

1.12        “[* * *]” means (i) the protein having the sequence set forth in GenBank Entry [* * *] and dimers, multimers and fragments thereof and (ii) mammalian orthologs of (i), and dimers, multimers and fragments thereof.

 

1.13        “[* * *] Antibody” means any antibody that binds to [* * *] with a dissociation constant (KD) of 500 picomolar or less.  The terms “[* * *] Antibody” and “[* * *] Antibody” may each include antibodies that bind to both [* * *] and [* * *].

 

1.14        “[* * *] Antibody Patent Rights” means the United States and foreign patents and patent applications listed in Schedule 1.14.

 

1.15        “Affiliate” means, with respect to a subject entity, another entity that, directly or indirectly, controls, is controlled by, or is under common control with such subject entity, for so long as such control exists.  For purposes of this definition only, “control” means ownership, directly or indirectly through one or more Affiliates, of at least fifty percent (50%) of the equity securities of the entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, in the election of the corresponding managing authority, or in the case of a partnership, the status as a general partner) or any other arrangement whereby an entity controls or has the right to control the board of directors or equivalent governing body or management of a corporation or other entity.

 

1.16        “Agreement Term” means the period commencing on the Effective Date and ending upon the termination of this Agreement with respect to both North America and the Territory outside North America, in accordance with Section 11.1.

 

1.17        “Applicable Law” means the applicable laws, rules and regulations, including any rules, regulations, guidelines or other requirements of the Regulatory Authorities, that may be in effect from time to time in the Territory.

 

1.18        “Bankruptcy Code” means Title 11, United States Code, as amended, or analogous provisions of Applicable Law outside the United States.

 

4

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1.19        “[* * *]” means (i) the protein having the sequence set forth in GenBank Entry [* * *] and dimers, multimers and fragments thereof and (ii) mammalian orthologs of (i), and dimers, multimers and fragments thereof.

 

1.20        “[* * *] Antibody” means any antibody that binds to [* * *] with a dissociation constant (KD) of 500 picomolar or less.

 

1.21        “[* * *] Antibody Patent Rights” means the United States and foreign patents and patent applications listed in Schedule 1.21.

 

1.22        “Business Day” means a day on which banking institutions in Boston, Massachusetts and Trenton, New Jersey are open for business.

 

1.23        “Cancer-Related Bone Loss” [Definition deleted]

 

1.24        “Celgene Collaboration IP” means any and all Collaboration IP created, conceived or reduced to practice, and, in the case of patentable Collaboration IP, Invented, solely by Celgene, its Affiliates, agents or by Third Parties acting on their behalf, while performing activities under this Agreement; provided, however, that Celgene Collaboration IP shall not include any Collaboration IP that is Acceleron Collaboration IP or Joint Collaboration IP.

 

1.25        “Celgene Development Activities” means (i) all Development activities, including Phase 2B Clinical Trials, Phase 3 Clinical Trials, any formulation development for Licensed Compounds or Licensed Products taking place after the end of Phase 2A Clinical Trials, and any other Development activities taking place after the end of Phase 2A Clinical Trials, undertaken by Celgene pursuant to this Agreement for the purpose of obtaining Regulatory Approval in North America and Europe, and (ii) all Development activities, including all Clinical Trials and other Development activities undertaken by Celgene pursuant to this Agreement for the purpose of obtaining Regulatory Approvals outside North America and Europe.

 

1.26        “Celgene Improvements” means (a) any and all Improvements to the Joint Technology created, conceived or reduced to practice, and, in the case of patentable Improvements, Invented, solely by Celgene, its Affiliates, agents or by Third Parties acting on their behalf, while performing activities under this Agreement; and (b) any and all Improvements to the Celgene Technology created, conceived or reduced to practice, and, in the case of patentable Improvements, Invented, solely by either Party, its Affiliates, agents or by Third Parties acting on their behalf or jointly by the Parties, their respective Affiliates, agents or by Third Parties acting on their behalf, while performing activities under this Agreement; provided, however, that Celgene Improvements shall not include any Improvement that is an Acceleron Improvement or Joint Improvement.

 

1.27        “Celgene Know-How” means any Know-How (other than Celgene Improvements and Celgene Collaboration IP) that is either Controlled by Celgene on the Effective Date or comes within Celgene’s Control during the Agreement Term that Celgene, in its sole discretion,

 

5

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

actually uses and is necessary to Develop, Manufacture or Commercialize a Licensed Compound or a Licensed Product in the Field.

 

1.28                        “Celgene Patent Rights” means (a) any Patent Rights resulting from Celgene Improvements or Celgene Collaboration IP and (b) any other Patent Rights Controlled by Celgene as of the Effective Date or during the Agreement Term, other than the Acceleron Patent Rights, that Celgene, in its sole discretion, actually uses and are necessary to Develop, Manufacture or Commercialize a Licensed Compound or a Licensed Product in the Field; for each of (a) and (b) above, solely to the extent that such Patent Rights claim the manufacture or use of a Licensed Compound or a composition of matter of or including a Licensed Compound.  For the avoidance of doubt, any Patent Rights that claim the use of a Licensed Compound or Licensed Product in combination with another product (including the use of a Licensed Compound or Licensed Product as part of a Combination Product) shall be included within “Celgene Patent Rights” (if otherwise within this definition); provided that such inclusion shall not cause “Celgene Patent Rights” to include any other Patent Rights that claim such other product or the use or manufacture of such other product (or the other active component of a Combination Product) that is not a Licensed Compound or Licensed Product.

 

1.29                        “Celgene Technology” means Celgene Know-How, Celgene Patent Rights, Celgene Improvements, and Celgene Collaboration IP.

 

1.30                        “Change of Control” means, with respect to a Party, (i) a merger or consolidation of such Party with a Third Party which results in the voting securities of such Party outstanding immediately prior thereto ceasing to represent at least fifty percent (50%) of the combined voting power of the surviving entity immediately after such merger or consolidation, or (ii) a transaction or series of related transactions in which a Third Party, together with its Affiliates, becomes the beneficial owner of fifty percent (50%) or more of the combined voting power of the outstanding securities of such Party, or (iii) the sale or other transfer to a Third Party of all or substantially all of such Party’s business to which the subject matter of this Agreement relates.

 

1.31                        “Clinical Supplies” means supplies of Licensed Compound and Licensed Product Manufactured by or on behalf of Celgene or Acceleron in compliance with GLP and GMP and meeting the FDA Guidance for Biologics License Applications, Product License Applications/Establishment License Applications, New Drug Applications, and supplements and amendments to those applications to Center for Biologics Evaluation and Research (CBER) and EMEA guidances, in each case, if required given the intended use, and ready to be used for the conduct of pre-clinical or human clinical trials of such Licensed Product in the Field.

 

1.32                        “Clinical Trial” means a study in humans that is conducted in accordance with GCP and is designed to generate data in support of an NDA.

 

1.33                        “Closing” means, subject to the satisfaction or waiver of the conditions set forth in Section 10.4 of this Agreement, the closing of the transactions contemplated by this Agreement.

 

6

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1.34                        “Collaboration IP” means (a) any and all ideas, information, Know-How, data research results, writings, inventions, discoveries, modifications, enhancements, derivatives, new uses, developments, techniques, materials, compounds, products, designs, processes or other technology or intellectual property, whether or not patentable or copyrightable, in each case, that is not an improvement to then-existing Acceleron Technology, Celgene Technology, or Joint Technology and is developed by either Party, its Affiliates or Third Parties acting on their behalf while performing activities under this Agreement, and (b) all Patent Rights and other intellectual property rights in any of the foregoing.

 

1.35                        “Combination Product” means any product that comprises a Licensed Compound or Licensed Product sold in conjunction with another active component so as to be a combination product (whether packaged together or in the same therapeutic formulation).

 

1.36                        “Commercial Supplies” means supplies of Licensed Product in final packaged form Manufactured by or on behalf of Celgene in compliance with GMP and meeting FDA Guidance for Biologics License Applications, Product License Applications/Establishment License Applications, New Drug Applications, and supplements and amendments to those applications to Center for Biologics Evaluation and Research (CBER) and EMEA guidances, in each case, if required given the intended use, and ready to be offered for commercial sale by Acceleron or Commercialized by Celgene, or their respective Affiliates or Sublicensees, for use in the Field in the Territory.

 

1.37                        “Commercialization” means any and all activities using, constituting, importing, marketing, distributing, offering for sale and selling Licensed Products in the Field in the Territory following or in expectation of receipt of Regulatory Approval (but excluding Development) and shall include Promotion as well as activities required to fulfill ongoing regulatory obligations, including adverse event reporting but excluding any Post-Approval Clinical Trials.  When used as a verb, “Commercialize” means to engage in Commercialization.

 

1.38                        “Commercially Reasonable Efforts” means, for each Party, the carrying out of obligations in a diligent and sustained manner using such effort and employing such resources as would normally be exerted or employed by a similarly-situated biopharmaceutical company for a product of similar market potential, and at a similar stage of its Development or product life, taking into consideration safety and efficacy, Development Costs, Operating Costs, the anticipated prescription label, the nature of the Licensed Product, the clinical setting in which it is expected to be used, competitiveness of the marketplace, regulatory environment, the patent or other proprietary position of the Licensed Product, and other conditions then prevailing.  Commercially Reasonable Efforts shall be determined on a country-by-country basis; provided that, with respect to the co-Promotion obligations hereunder, such standard shall be based on an established biopharmaceutical company rather than a similarly-situated biopharmaceutical company.

 

1.39                        “Confidential Information” means, with respect to each Party, proprietary data or information that belongs in whole or in part to such Party, its Affiliates or Sublicensees, and is disclosed to the other Party.  Confidential Information of Celgene includes all Celgene

 

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Technology, the reports delivered by Celgene to Acceleron hereunder, all proprietary data and information of Celgene disclosed by Celgene at the Joint Development Committee or Joint Commercialization Committee meetings, and any information designated as Confidential Information of Celgene hereunder.  Confidential Information of Acceleron includes Acceleron Technology, the reports delivered by Acceleron to Celgene hereunder, all proprietary data and information of Acceleron disclosed by Acceleron at the Joint Development Committee or Joint Commercialization Committee meetings, and any information designated as Confidential Information of Acceleron hereunder.  For clarity, information that is not otherwise Confidential Information of a Party hereunder shall not become Confidential Information by inclusion in a report delivered by such Party to the other Party.  Confidential Information of both Parties includes Joint Technology and the terms and conditions of this Agreement.  Confidential Information shall not include (as determined by competent documentation) information that:

 

(a)                                 either before or after the date of the disclosure to the receiving Party is lawfully disclosed to the receiving Party or its Affiliates by sources (other than the disclosing Party) rightfully in possession of the Confidential Information; or

 

(b)                                 either before or after the date of the disclosure to the receiving Party or its Affiliates becomes published or generally known to the public (including information known to the public through the sale of products in the ordinary course of business) through no fault or omission on the part of the receiving Party, its Affiliates or its Sublicensees; or

 

(c)                                  is independently developed by or for the receiving Party or its Affiliates without reference to or reliance upon the Confidential Information.

 

1.40                        “Contract Year” means each calendar year during the Agreement Term; provided, however, that the first Contract Year shall begin on the Effective Date and end on December 31, 2008.  Each Contract Year shall be divided into four (4) “Contract Quarters” ending respectively on March 31, June 30, September 30 and December 31.

 

1.41                        “Control” or “Controlled” means with respect to any (a) material, item of information, method, data or other Know-How or (b) Patent Rights or other intellectual property right, the possession (whether by ownership or license, other than pursuant to this Agreement) by a Party or its Affiliates of the ability to grant to the other Party access or a license as provided herein under such item or right without, in the case of such rights that are licensed from a Third Party, violating the terms of any agreement or other arrangement with any Third Party existing before or after the Effective Date.

 

1.42                        “Designated Countries” means the United States, member countries of the European Patent Convention, member countries of the Eurasian Patent Convention, Canada, Australia, Japan, South Korea, China, India and Brazil.

 

1.43                        “Development” means all pre-clinical and clinical activities performed by or on behalf of either Party with respect to Licensed Compounds or Licensed Products in the Field in the

 

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Territory in an indication, or for the purpose of obtaining Regulatory Approval with respect to such indication, from the Effective Date until Regulatory Approval of such Licensed Compounds or Licensed Products is obtained for the indication being studied, including: (a) identification and early pre-clinical testing of Licensed Compounds; (b) toxicology, regulatory affairs, pre-clinical studies and clinical trials in accordance with the GLPs, GCPs and GMPs or other designated quality standards and Applicable Laws; and (c) all Manufacturing activities (until such time as Manufacturing of Commercial Supplies commences) relating to developing the ability to Manufacture Licensed Product, including process and formulation development, process validation, manufacturing scale-up, manufacturing and analytical development, and quality assurance and quality control.  When used as a verb, “Develop” means to engage in Development.

 

1.44                        “Development Costs” means FTE Costs and other costs specifically identifiable or allocable to Development or regulatory activities for each Licensed Compound and Licensed Product and development of the Manufacturing process, as well as Manufacturing of Clinical Supplies, in each case, actually incurred by Celgene or Acceleron, or their respective Affiliates.  Development Costs shall include:

 

(a)                                 the costs associated with the production of Clinical Supplies (including $[* * *] of Acceleron costs for the 960 vials of Clinical Supplies produced by Acceleron prior to the Effective Date, which vials will be used in connection with Development pursuant hereto) for all Clinical Trials (including the costs associated with the transfer of Clinical Supplies to the site of use and including pre-Commercialization and post-Commercialization Clinical Trials), which costs of Clinical Supplies shall include such costs that would ordinarily be included as a “Cost of Goods Sold” under U.S. GAAP for a similar product, made on the basis of theoretical full capacity operation of the relevant facility, and shall be set forth in the Development Plan/Budget;

 

(b)                                 the costs of studies on the toxicological, pharmacological, metabolic or clinical aspects of a Licensed Compound or Licensed Product necessary for the purpose of obtaining Regulatory Approval of a Licensed Compound or a Licensed Product;

 

(c)                                  the costs of process and formulation development, process improvement and scale-up costs, validation costs, including qualification lots and costs for preparing, submitting, and reviewing or developing data or information for the purpose of submission to a governmental authority to obtain manufacturing or marketing approval of a Licensed Compound or a Licensed Product, in each case, to the extent that such costs and expenses are associated with Development activities;

 

(d)                                 the costs associated with the transfer to a Third Party of, and implementation by a Third Party of, manufacturing technology necessary for the Development of a Licensed Product or Licensed Compound;

 

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(e)                                  costs of data management, statistical designs and studies, document preparation and other administration expenses associated with all Clinical Trials;

 

(f)                                   Third Party Intellectual Property Costs associated with Development activities and the Manufacture of Clinical Supplies that are deemed Development Costs pursuant to Section 5.6.3(c);

 

(g)                                  Patent Procurement Costs to the extent provided in Section 8.2.4(b); and

 

(h)                                 capital expenditures incurred by Acceleron and approved pursuant to Section 2.4.2.

 

In determining Development Costs chargeable under this Agreement, the Parties shall use their respective project accounting systems (which must be consistent with the terms of this Agreement).  The Parties shall consistently apply methodologies for calculating and allocating Development Costs based on their internal accounting systems (which must be consistent with the terms of this Agreement).  Notwithstanding anything in this definition to the contrary, only those Development Costs that are contemplated by the Development Plan/Budget shall be chargeable by either Party as Development Costs with any cost overruns treated in the manner set forth in Section 5.5.4.  Except to the extent included in cost of Clinical Supplies described in clause (a) above, expenses incurred by either Party for equipment, materials and supplies utilized in performing its activities under the Development Plan/Budget shall not be separately charged as Development Costs, except for those expenses incurred by either Party, as set forth in the Development Plan/Budget, in the purchase or making of equipment, materials or supplies (other than common laboratory supplies, e.g., pipettes, test tubes, petri dishes, reagents, and the like) that are to be used exclusively in connection with the performance of either Party’s activities under the Development Plan/Budget (e.g., laboratory animals, placebo supplies, etc.), which expenses shall be charged as Development Costs at either Party’s actual out-of-pocket expense incurred in purchasing or making such equipment, materials or supplies.

 

1.45                        “Development Plan/Budget” means (a) the comprehensive plan for the Development of any Licensed Compound or Licensed Product for the purpose of obtaining Regulatory Approval in North America and Europe, including activities designed to generate the preclinical, process development/manufacturing scale-up, clinical and regulatory information required for filing NDAs in North America and Europe, and (b) a budget setting forth the internal and external resources and expenses, including the maximum costs to be incurred in a particular Contract Year, for such Development activities.

 

1.46                        “Effective Date” means the earlier of: (i) the third Business Day after the expiration or termination of all applicable waiting periods under the HSR Act and the satisfaction of all the other conditions set forth in Section 10.4 of this Agreement or (ii) the third Business Day after the joint determination (by certification from each Party to the other) that notification under the HSR Act is not required and the satisfaction of all the other conditions set forth in Section 10.4 of this Agreement.

 

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1.47                        “EMEA” means the Regulatory Agency known as either the European Medicines Agency or the European Agency for the Evaluation of Medicinal Products, or a successor agency with responsibilities comparable to those of the European Medicines Agency or the European Agency for the Evaluation of Medicinal Products.

 

1.48                        “Europe” means Switzerland and all countries in which the Development or Commercialization of a Licensed Compound or Licensed Product is regulated by the EMEA.

 

1.49                        “Executive Officers” means the Chief Executive Officer of Celgene (or a designee of such Chief Executive Officer) and the Chief Executive Officer of Acceleron (or a designee of such Chief Executive Officer).

 

1.50                        “FDA” means the United States Food and Drug Administration, or a successor agency in the United States with responsibilities comparable to those of the United States Food and Drug Administration.

 

1.51                        “Field” means (i) the treatment, prevention, modulation, or diagnosis of any disease, disorder, or condition in humans, and (ii) any and all research uses and applications related to the Development, Manufacture and Commercialization of Licensed Compounds or Licensed Products.

 

1.52                        “First Commercial Sale” means, with respect to a given Licensed Product in a country in the Territory, the first commercial sale in an arms’ length transaction of such Licensed Product to a Third Party by or on behalf of a Party, its Affiliate or its Sublicensee in such country following receipt of applicable Regulatory Approval of such Licensed Product in such country.

 

1.53                        “FTE Costs” means, for any Contract Quarter, the FTE Rate multiplied by the number of hours of service spent in that quarter by employees of Celgene or Acceleron, or their respective Affiliates, working directly on the Development or Commercialization of a Licensed Product.

 

1.54                        “FTE Rate” means $[* * *] for employees of each of Acceleron and its Affiliates and Celgene and its Affiliates, which rate may be adjusted annually by each Party based on changes in the Consumer Price Index (as quoted by the U.S. Department of Labor, Bureau of Labor Statistics).

 

1.55                        “GCP” means the international ethical and scientific quality standards for designing, conducting, recording, and reporting trials that involve the participation of human subjects.  In the United States, GCP shall be based on Good Clinical Practices established through FDA guidances (including ICH E6).

 

1.56                        “Generic Product” means a product on the market commercialized by a Third Party (excluding Sublicensees) that (a) is approved, under any then existing laws and regulations in the applicable country pertaining to approval of “generic” biologic products, as a “generic” version of a Licensed Product labeled for substantially similar indications as such Licensed Product; or

 

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(b) otherwise is recognized as a biosimilar or interchangeable biological product to the Licensed Product by the applicable Regulatory Authority.

 

1.57                        “GLP” means the current Good Laboratory Practice (or similar standards) for the performance of laboratory activities for pharmaceutical products as are required by applicable Regulatory Authorities.  In the United States, Good Laboratory Practices are established through FDA regulations (including 21 CFR Part 58), FDA guidances, FDA current review and inspection standards and current industry standards.

 

1.58                        “GMP” means current Good Manufacturing Practices.  In the United States, GMP shall be as defined under the rules and regulations of the FDA, as the same may be amended from time to time.

 

1.59                        “HSR Act” means the Hart-Scott-Rodino Act of 1976, as amended.

 

1.60                        “Improvements” means (a) any and all ideas, information, Know-How, data research results, writings, inventions, discoveries, modifications, enhancements, derivatives, new uses, developments, techniques, materials, compounds, products, designs, processes or other technology or intellectual property, whether or not patentable or copyrightable, in each case, that is an improvement to then-existing Acceleron Technology, Celgene Technology, or Joint Technology and is developed by either Party, its Affiliates or Third Parties acting on their behalf while performing activities under this Agreement, and (b) all Patent Rights and other intellectual property rights in any of the foregoing.

 

1.61                        “IND” means an Investigational New Drug Application, as defined in the Food Drug & Cosmetics Act, or similar application or submission that is required to be filed with any Regulatory Authority before beginning clinical testing of a Licensed Product in human subjects.

 

1.62                        “Invented” means the act of invention by inventors, as determined in accordance with U.S. patent laws.

 

1.63                        “Joint Collaboration IP” means any and all Collaboration IP created, conceived or reduced to practice, and, in the case of patentable Collaboration IP, Invented, jointly by Acceleron and Celgene, their respective Affiliates, agents or by Third Parties acting on their behalf, while performing activities under this Agreement; provided, however, that Joint Collaboration IP shall not include any Collaboration IP that is Acceleron Collaboration IP or Celgene Collaboration IP.

 

1.64                        “Joint Improvements” means (a) any and all Improvements to the Acceleron Technology created, conceived or reduced to practice, and, in the case of patentable Improvements, Invented, solely by Celgene, its Affiliates, agents or by Third Parties acting on their behalf, while performing activities under this Agreement; and (b) any and all Improvements to the Acceleron Technology or Joint Technology created, conceived or reduced to practice, and, in the case of patentable Improvements, Invented, jointly by Acceleron and Celgene, their respective Affiliates, agents or Sublicensees or by Third Parties acting on their behalf, while

 

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performing activities under this Agreement; provided, however, that Joint Improvements shall not include any Improvement that is a Celgene Improvement or Acceleron Improvement.

 

1.65                        “Joint Patent Rights” means any Patent Rights resulting from any Joint Improvements or Joint Collaboration IP.

 

1.66                        “Joint Technology” means Joint Improvements, Joint Patent Rights, and Joint Collaboration IP.

 

1.67                        “Know-How” means any non-public, proprietary invention, discovery, process, method, composition, formula, procedure, protocol, technique, result of experimentation or testing, information, data, material, technology or other know-how, whether or not patentable or copyrightable.  Know-How shall not include any Patent Rights with respect thereto.

 

1.68                        “Licensed Compound” means ActRIIA, and, effective upon the dates and pursuant to the terms set forth in Section 7.2, any applicable Option Compound.

 

1.69                        “Licensed Product” means any preparation in final form that contains a Licensed Compound.

 

1.70                        “Major Market Countries” means the United States, the European Union, and Japan.

 

1.71                        “Manufacturing” means, as applicable, all activities associated with the production, manufacture, processing, filling, finishing, packaging, labeling, shipping, and storage of Licensed Compounds or Licensed Products, including process and formulation development, process validation, stability testing, manufacturing scale-up, pre-clinical, clinical and commercial manufacture and analytical development, product characterization, quality assurance and quality control, whether such activities are conducted by a Party, its Affiliates or a Third Party contractor of such Party.  When used as a verb, “Manufacture” means to engage in Manufacturing.

 

1.72                        “Net Sales” means the aggregate gross invoice prices of all Licensed Products sold by Celgene, and its respective Affiliates and Sublicensees, to Third Parties anywhere within the Territory, including wholesale distributors, less deductions from such amounts calculated in accordance with U.S. GAAP so as to arrive at “net product sales” under U.S. GAAP, and further reduced by write-offs of accounts receivables or increased for collection of accounts that were previously written off.

 

The transfer of Licensed Products between or among Celgene, Acceleron and their Affiliates and Sublicensees shall be excluded from the computation of Net Sales.

 

Notwithstanding the foregoing, in the event a Licensed Compound or Licensed Product is sold as a Combination Product, Net Sales shall be calculated by multiplying the Net Sales of the Combination Product by the fraction A/(A+B), where A is the gross invoice price of the Licensed Compound or Licensed Product if sold separately in a country and B is the gross invoice price of the other product(s) included in the Combination Product if sold separately in

 

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such country.  In the event no such separate sales are made by Celgene, its Affiliates or Sublicensees in a country, Net Sales of the Combination Product shall be calculated in a manner to be negotiated and agreed upon by the Parties, reasonably and in good faith, prior to any sale of such Combination Product, which shall be based upon the respective cost of goods sold of the active components of such Combination Product.

 

1.73                        “New Drug Application” or “NDA” means a New Drug Application filed with the FDA as described in 21 C.F.R. § 314, a Biological License Application (BLA) pursuant to 21 C.F.R. § 601.2, or any equivalent or any corresponding application for Regulatory Approval (not including pricing and reimbursement approval) in any country or regulatory jurisdiction other than the United States.

 

1.74                        [Definition deleted]

 

1.75                        “Non-Prosecuting Party” means, with respect to a particular Patent Right, the Party which is not the Prosecuting Party.

 

1.76                        “North America” means the United States, including its territories and possessions, Canada and Mexico.

 

1.77                        “North American and European Development Costs” means the subset of Development Costs for the purpose of obtaining Regulatory Approval in North America or Europe.

 

1.78                        “Operating Costs” means, costs of goods sold, all Sales Force Costs, all Third Party Intellectual Property Costs associated with the sale of Licensed Product that are deemed Operating Costs pursuant to Section 5.6.3(c), all costs associated with the distribution, marketing and sale of Licensed Product (including costs for preparing and reproducing detailing aids, promotional materials, professional education, and product related public relations).  Notwithstanding anything in this definition to the contrary, only those Operating Costs that are contemplated by the Commercialization Plan/Budget shall be chargeable by either Party as Operating Costs, with any cost overruns treated in the manner set forth in Section 5.5.4.

 

1.79                        “Option Compounds” means [* * *] Antibodies, [* * *] Antibodies, and [* * *] Antibodies.

 

1.80                        “Option Patent Rights” means the [* * *] Antibody Patent Rights, [* * *] Antibody Patent Rights, and [* * *] Antibody Patent Rights.

 

1.81                        [Definition deleted]

 

1.82                        [Definition deleted]

 

1.83                        “Patent Procurement Costs” means the fees and expenses paid by the Parties or their Affiliates to outside legal counsel and experts, and Prosecuting expenses, incurred after the Effective Date, in connection with the Prosecution of Acceleron Patent Rights, Joint Patent

 

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Rights and Celgene Patent Rights, including the costs of patent interference, reexamination, reissue, opposition and revocation proceedings.

 

1.84                        “Patent Rights” means all patents (including all reissues, extensions, substitutions, confirmations, re-registrations, re-examinations, invalidations, supplementary protection certificates, and patents of addition) and patent applications (including all provisional applications, continuations, continuations-in-part, and divisions), in each case, anywhere in the world.

 

1.85                        “Phase 1 Clinical Trial” means, as to a specific pharmaceutical product, a Clinical Trial in humans of the safety of such product in healthy volunteers or a limited patient population, or human clinical studies directed toward understanding the mechanisms or metabolism of the product.  A Phase 1 Clinical Trial shall be deemed initiated upon the dosing of the first subject or patient.

 

1.86                        “Phase 2A Clinical Trial” means, as to a specific pharmaceutical product, the first Clinical Trial in humans that is intended to study the safety, dosage and initial efficacy in a limited patient population and is prospectively designed to support the continued testing of the product in one or more further Phase 2A Clinical Trials or Phase 2B Clinical Trials.  A Phase 2A Clinical Trial shall be deemed initiated upon the dosing of the first patient.

 

1.87                        “Phase 2B Clinical Trial” means, as to a specific pharmaceutical product, a Clinical Trial of the feasibility, safety, dose ranging and efficacy of such product, that is prospectively designed to generate sufficient data (if successful) to commence a Phase 3 Clinical Trial (or foreign equivalent) of such product, as further defined in 21 C.F.R. 312.21(b) or the corresponding regulation in jurisdictions other than the United States.  A Phase 2B Clinical Trial shall be deemed initiated upon the dosing of the first patient.

 

1.88                        “Phase 3 Clinical Trial” means, as to a specific pharmaceutical product, a pivotal Clinical Trial in humans performed to gain evidence with statistical significance of the efficacy of such product in a target population, and to obtain expanded evidence of safety for such product that is needed to evaluate the overall benefit-risk relationship of such product, to form the basis for approval of an NDA by a Regulatory Authority and to provide an adequate basis for physician labeling, as described in 21 C.F.R. 312.21 (c), as amended from time to time, or the corresponding regulation in jurisdictions other than the United States.  A Phase 3 Clinical Trial shall be deemed initiated upon the dosing of the first patient.

 

1.89                        “Post-Approval Clinical Trial” means (i) any Clinical Trial conducted to satisfy a requirement of a Regulatory Authority in order to maintain a Regulatory Approval and (ii) any Clinical Trial conducted after the first Regulatory Approval in the same disease state for which the Licensed Compound or Licensed Product received Regulatory Approval in the Territory.

 

1.90                        “Product Trademarks” means the trademarks, service marks, accompanying logos, trade dress and indicia of origin used in connection with the distribution, marketing, Promotion and sale of each Licensed Product in the Territory.  For purposes of clarity, the term Product

 

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Trademarks shall not include the corporate names and logos of either Party and shall include any internet domain names incorporating such Product Trademarks.

 

1.91                        “Promotion” means those activities, including detailing normally undertaken by a Party’s sales force to implement marketing plans and strategies, aimed at encouraging the appropriate use of a particular Licensed Product in a specific indication.  When used as a verb, “Promote” means to engage in Promotion.

 

1.92                        “Prosecuting Party” means, with respect to a particular Patent Right, the Party having primary responsibility for and control over Prosecuting such Patent Right, pursuant to Section 8.2.1(a)(i).

 

1.93                        “Regulatory Approval” means the approval necessary for the commercial manufacture, distribution, marketing, Promotion, offer for sale, use, import, export, and sale of a Licensed Product in a regulatory jurisdiction, excluding, where required, separate pricing and reimbursement approvals.

 

1.94                        “Regulatory Authority” means any applicable supranational, national, regional, state or local regulatory agency, department, bureau, commission, counsel, or other government entity involved in granting of Regulatory Approval for a Licensed Product in a regulatory jurisdiction within the Territory, including the FDA and the EMEA.

 

1.95                        “Royalty Term” means (a) for all countries in the Territory outside North America, the period of time beginning on the date of First Commercial Sale in a particular country and ending, on a Licensed Product-by-Licensed Product and country-by-country basis, on the later of (i) the date on which the offering for sale, selling, making, having made, using or importing such Licensed Product is no longer covered by a Valid Claim of an Acceleron Patent Right in such country and (ii) the eleventh (11th) anniversary of the First Commercial Sale of such Licensed Product in such country; and (b) for all countries in North America, to reflect Acceleron’s contribution in connection with the Development Costs and co-Promotion of the Licensed Product, the period of time beginning on the date of First Commercial Sale in North America and ending, on a Licensed Product-by-Licensed Product and country-by-country basis, on the date on which the Commercialization of such Licensed Product in North America has ceased.

 

1.96                        “Sales Force Costs” means all costs associated with sales representatives and training of the sales representatives, sales meetings, details, sales call reporting, work on managed care accounts, costs related to customer service and other sales and customer service related expenses.  If either Party’s sales force sells products other than Licensed Products, only that portion of sales force efforts that are related to the sale of Licensed Products shall be included as Sales Force Costs hereunder.

 

1.97                        “Salk” means the Salk Institute for Biological Studies.

 

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1.98                        “Salk License” means the Exclusive License Agreement dated May 10, 2004 between Acceleron and Salk, as amended by that certain letter agreement dated February 12, 2008, a true and correct copy of which is attached hereto as Exhibit A.

 

1.99                        “Sublicensee” means a sublicensee of all or part of the rights licensed to a Party under this Agreement, in compliance with the terms of Section 4.3.

 

1.100                 “Territory” means all the countries of the world.

 

1.101                 “Third Party” means any person or entity other than a Party or any of its Affiliates.

 

1.102                 “Third Party Intellectual Property” means Patent Rights, trademarks and trademark applications and registrations, copyrights and trade secrets owned by a Third Party that would be necessary or useful to Develop, Manufacture or Commercialize a Licensed Compound or a Licensed Product in the Field, the rights to which are obtained by a Party through a license or other means after the Effective Date.

 

1.103                 “Third Party Intellectual Property Costs” means direct costs associated with the licensing or other acquisition of Third Party Intellectual Property, including upfront payments, development milestone payments, sales milestone payments, royalties, and intellectual property acquisition fees.  For the avoidance of doubt, “Third Party Intellectual Property Costs” shall not include any payments owed by Acceleron to Salk or any other third party licensor pursuant to an agreement executed by Acceleron prior to the Effective Date (or, with respect to any Option Compound, prior to the date that such Option Compound is deemed a Licensed Compound in accordance with Article 7).

 

1.104                 “U.S. GAAP” means generally accepted accounting principles in the United States.

 

1.105                 “Valid Claim” means a claim or pending claim of a Patent Right, which claim or pending claim has not been revoked or held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, which is not appealable or has not been appealed within the time allowed for appeal, and which has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination or disclaimer or other final, irrevocable action; provided, however, that if the holding of such court or agency is later reversed by a court or agency with overriding authority, the claim shall be reinstated as a Valid Claim with respect to Net Sales made after the date of such reversal; provided further, on a country-by-country basis, a patent application pending for more than five (5) years shall not be considered to have any Valid Claim for purposes of this Agreement unless and until a patent with respect to such application issues with such claim.

 

1.106                 Additional Definitions.  The following terms have the meanings set forth in the corresponding Sections of this Agreement:

 

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Term
    	
 
    	
Section
    
	
“Acceleron Indemnitees”
    	
 
    	
12.7.1
    
	
“Acceleron NA Operating Costs”
    	
 
    	
5.5.3(b)
    
	
“Acquired Party Activity”
    	
 
    	
6.3
    
	
“Audited Party”
    	
 
    	
5.7.4(b)
    
	
“Auditing Party”
    	
 
    	
5.7.4(b)
    
	
“Breaching Party”
    	
 
    	
11.2.1(a)
    
	
“Celgene Indemnitees”
    	
 
    	
12.7.2
    
	
“Commercialization Plan/Budget”
    	
 
    	
2.5
    
	
“Defending Party”
    	
 
    	
8.4.3
    
	
“Forfeited Option Compound”
    	
 
    	
6.1.1
    
	
“Indemnitee”
    	
 
    	
12.7.3
    
	
“Infringement Claim”
    	
 
    	
8.4.1
    
	
“IP”
    	
 
    	
11.8
    
	
“JCC Chairperson”
    	
 
    	
3.2.3
    
	
“JDC Chairperson”
    	
 
    	
3.1.3
    
	
“Joint Development Committee”
    	
 
    	
3.1.1
    
	
“Joint Commercialization Committee”
    	
 
    	
3.2.1
    
	
“Losses”
    	
 
    	
12.7.1
    
	
“Option Program Payment”
    	
 
    	
7.2
    
	
“Prosecuting” or “Prosecution”
    	
 
    	
8.2.1(a)(i)
    
	
“Publishing Party”
    	
 
    	
9.2
    
	
“Reconciliation Statement”
    	
 
    	
5.5.5
    
	
“Royalty Report”
    	
 
    	
5.6.4
    
	
“Salk Patent Rights”
    	
 
    	
8.1.1
    
	
“SPC”
    	
 
    	
8.8
    
	
“Third Party Activity”
    	
 
    	
6.2
    
	
“Third Party Intellectual Property Notice”
    	
 
    	
5.6.3(c)
    

 

Article 2
 COLLABORATION

 

2.1                               Development.

 

2.1.1.                  Acceleron Responsibilities.  Subject to the oversight of the Joint Development Committee, Acceleron shall be solely responsible for managing all Acceleron Development Activities relating to Licensed Compounds or Licensed Products.  Acceleron shall use Commercially Reasonable Efforts to carry out the Acceleron Development Activities as set forth in the applicable Development Plan/Budget to Develop Licensed Compounds and Licensed Products.

 

2.1.2.                  Celgene Responsibilities.  Subject to the oversight of the Joint Development Committee, Celgene shall be solely responsible for managing all Celgene Development Activities relating to Licensed Compounds or Licensed Products.  Without limiting the foregoing, upon completion or abandonment of the initial Phase 2A Clinical Trial for a Licensed Compound or related Licensed Product, any and all further Phase 2A Clinical

 

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Trials (or early-stage Development activities) for such Licensed Compound or Licensed Product shall be performed by Celgene, unless otherwise agreed by the Joint Development Committee; provided that any Phase 2A Clinical Trials that are ongoing at the time of such completion or abandonment of such initial Phase 2A Clinical Trial shall remain the responsibility of Acceleron.  Celgene shall use Commercially Reasonable Efforts to carry out the Celgene Development Activities as set forth in the applicable Development Plan/Budget to Develop Licensed Compounds and Licensed Products.  Celgene shall use Commercially Reasonable Efforts to Develop and seek Regulatory Approval for Licensed Products in the Major Market Countries.

 

2.1.3.                  Development Plan/Budget.  Acceleron shall prepare the first draft of the initial Development Plan/Budget and present it to Celgene at least 15 days prior to the first meeting of the Joint Development Committee.  With respect to the initial Development Plan/Budget, the Joint Development Committee shall, within sixty (60) days after the Effective Date, approve and submit to the Parties the initial Development Plan/Budget.  Thereafter, the Joint Development Committee shall prepare a draft of the Development Plan/Budget at least one hundred twenty (120) days prior to the commencement of any Contract Year.  During the Agreement Term, the Joint Development Committee shall, at least ninety (90) days prior to the commencement of any Contract Year during the Agreement Term, approve and submit to the Parties the Development Plan/Budget.  Each Development Plan/Budget shall contain the specific Development and Manufacturing objectives to be achieved by Celgene during the Contract Year, the specific Development and Manufacturing objectives to be achieved by Acceleron during the Contract Year, and the timeline for performing such Development objectives.

 

2.1.4.                  Payment of Development Costs.  The Parties shall share Development Costs and other costs associated with Development in accordance with Section 5.5.

 

2.1.5.                  Consultation.  Celgene agrees to consult with Acceleron with respect to the Development of Licensed Products and Licensed Compounds in accordance with the provisions of Section 2.9.4.

 

2.2                               Records.

 

2.2.1.                  Generally.  Each Party shall, and shall require the Third Parties performing services for such Party (including Third Party contract research organizations and service providers) to, maintain scientific records in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which shall fully and properly reflect all work done and results achieved in the performance of this Agreement by such Party.  Each Party shall have the right, during normal business hours and upon reasonable notice, to inspect and copy (or request the other Party to copy) all records of the other Party maintained in connection with the work done and results achieved in the performance of this Agreement, but solely to the extent access to such records is necessary for a Party to exercise its rights under this Agreement; provided that Acceleron’s access to Celgene records shall be limited to records of Celgene’s Development activities for the purpose of supporting Regulatory

 

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Approval in North America and Europe.  All such records and the information disclosed therein shall be deemed Confidential Information pursuant to Article 9.

 

2.2.2.                  Electronic Records.  Upon Celgene’s request, Acceleron will provide Celgene reasonable assistance for Celgene to convert records provided by Acceleron to Celgene into electronic form.  In addition, upon Celgene’s request, Acceleron will use templates for recordkeeping provided by Celgene reasonably necessary to assist Celgene in making electronic filings with Regulatory Authorities.

 

2.2.3.                  Security.  With regard to Confidential Information of the other Party, each Party shall institute reasonable security precautions and shall use reasonable efforts to (a) keep physical copies of such Confidential Information in locked locations; (b) maintain electronic copies of such Confidential Information in digitally secured locations with access permitted on a “need to know” basis; and (c) ensure that local computers are password protected and programmed to require password entry after reasonable periods of disuse.

 

2.3                               Regulatory Matters.

 

2.3.1.                  General.  Celgene shall develop a regulatory strategy and prepare all submissions, documents or other correspondence to be submitted to the applicable Regulatory Authorities; provided that the regulatory strategy and submissions to the Regulatory Authorities in North America shall be performed by Celgene in consultation with the Joint Development Committee.

 

2.3.2.                  North American Responsibility.  Celgene shall oversee, monitor, coordinate, file, and hold in its name all North American NDAs, all communications with and submissions to North American Regulatory Authorities and all North American Regulatory Approvals with respect to Licensed Compounds and Licensed Products.  All costs associated with such activities will be shared by the Parties in accordance with Article 5, including Section 5.5.  The Parties acknowledge that IND No. [* * *] has already been submitted to the FDA in Acceleron’s name.  Upon completion of the Phase 2A Clinical Trials or earlier if necessary for a smooth transition to Celgene of Development responsibilities or otherwise requested by Celgene, Acceleron shall assign such IND to Celgene.  If any INDs are filed in Acceleron’s name in connection with any Option Compound, such IND will be assigned to Celgene at such time, if any, as the Option Compound is deemed a “Licensed Compound” pursuant to Section 7.2.  In addition, upon Celgene’s request, prior to completion of the Phase 2A Clinical Trials, Acceleron will be primarily responsible for all communications with and submissions to North American Regulatory Authorities and all North American Regulatory Approvals with respect to Licensed Compounds and Licensed Products, subject to Celgene’s review and approval.

 

2.3.3.                  North American Regulatory Meetings and Correspondence.  Celgene shall have primary responsibility for interfacing, corresponding and meeting with the applicable North American Regulatory Authorities with respect to Licensed Compounds and Licensed

 

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Products.  To the extent practicable, Acceleron shall be entitled to participate in all meetings and telephonic discussions between representatives of Celgene and the applicable North American Regulatory Authorities with respect to each Licensed Compound and Licensed Product.  For purposes of clarification, Celgene agrees to use Commercially Reasonable Efforts to notify Acceleron of planned meetings and telephonic discussions with North American Regulatory Authorities and to use Commercially Reasonable Efforts to accommodate the schedule of Acceleron’s attendees at such meetings or discussions.  Celgene shall be entitled to limit, but not entirely exclude, the number of representatives of Acceleron that attend meetings and telephonic discussions with applicable North American Regulatory Authorities.

 

2.3.4.                  Ex-North American Responsibility.  Celgene shall have sole responsibility to oversee, monitor, coordinate, file and hold in its name all NDAs, all other communications with and submissions to Regulatory Authorities outside of North America and all such Regulatory Approvals with respect to Licensed Compounds and Licensed Products, and shall pay all costs associated with such activities.

 

2.3.5.                  Review of Correspondence.  To the extent practicable, Celgene shall provide Acceleron with drafts of any documents or other correspondence to be submitted (i) to the applicable Regulatory Authorities in North America, (ii) to Regulatory Authorities outside North America if for the purpose of obtaining Regulatory Approval in North America, or (iii) in connection with any Acceleron Development Activity, in each case, pertaining to each Licensed Compound or Licensed Product, sufficiently in advance of submission for Acceleron to review any such submission, and Acceleron may comment on such documents to the extent that they are intended to be submitted (i) to the applicable Regulatory Authorities in North America, (ii) to Regulatory Authorities outside North America if for the purpose of obtaining Regulatory Approval in North America, or (iii) in connection with any Acceleron Development Activity, in which case Celgene shall consider in good faith all such comments.  Celgene shall provide to Acceleron, as soon as reasonably practicable, copies of any documents or other correspondence received (i) from Regulatory Authorities in North America, (ii) from Regulatory Authorities outside North America if for the purpose of obtaining Regulatory Approval in North America, or (iii) in connection with any Acceleron Development Activity, in each case, pertaining to each Licensed Compound or Licensed Product (including any meeting minutes).

 

2.4                               Manufacture and Supply.

 

2.4.1.                  Phase 1 and 2 Clinical Supply.  Acceleron shall Manufacture all Clinical Supplies for Phase 1 Clinical Trials, Phase 2A Clinical Trials and Phase 2B Clinical Trials.  The terms of supply of Clinical Supplies pursuant to this Section are set forth in Exhibit B, or as otherwise may be agreed to by the Parties.  Notwithstanding any other provision of this Agreement, Celgene shall not be obligated to reimburse or share with Acceleron any capital expenditures costs required for Acceleron to Manufacture and supply such Clinical Supplies for Phase 1 Clinical Trials, Phase 2A Clinical Trials and Phase 2B Clinical Trials.  At Celgene’s request, Acceleron shall assist Celgene in obtaining a second source for

 

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supply of Clinical Supplies in order to supply Celgene with Clinical Supplies for the Phase 2B Clinical Trials in the event Acceleron is unable to so supply in accordance with the provisions of Exhibit B, or as otherwise agreed to by the Parties.

 

2.4.2.                  Phase 3 and Post-Approval Clinical Supply.  Celgene shall Manufacture and supply all Clinical Supplies for Phase 3 Clinical Trials and Post-Approval Clinical Trials; provided, however, that the Joint Development Committee may request, at least one (1) year prior to the anticipated launch of the first Phase 3 Clinical Trial or Post-Approval Clinical Trials, as applicable, that Acceleron Manufacture and supply such Clinical Supplies on terms to be agreed.  Acceleron shall not unreasonably refuse such request; provided that, notwithstanding any other provision of this Agreement, Celgene shall fully reimburse Acceleron for agreed upon capital expenditures reasonably required for Acceleron to Manufacture and supply such Clinical Supplies for Phase 3 Clinical Trials or Post-Approval Clinical Trials, and otherwise the Costs of Clinical Supplies shall be allocated in accordance with Article 5, including Section 5.5.  Notwithstanding any other provision of this Agreement, Acceleron shall not be obligated to reimburse or share with Celgene any capital expenditures costs required for Celgene to Manufacture and supply Clinical Supplies for Phase 3 Clinical Trials or Post-Approval Clinical Trials.  For purposes of clarification, upon transition of Manufacturing and supply obligations to Celgene pursuant to this Section 2.4.2 for a particular Licensed Compound or related Licensed Product, if any Clinical Supplies are needed for additional Phase 1 Clinical Trials, Phase 2A Clinical Trials, or Phase 2B Clinical Trials for the same Licensed Compound or Licensed Product, such Manufacturing and supply responsibilities will be undertaken by Celgene in the same manner as set forth in this Section 2.4.2.

 

2.4.3.                  Commercial Supply.  Celgene shall Manufacture and supply all Commercial Supplies.

 

2.4.4.                  U.S. Manufacture.  To comply with United States government regulations for the licensing of federally funded inventions, Celgene, its Affiliates and any Sublicensees will commit that Licensed Products covered by the Salk Patent Rights sold in the United States will be manufactured substantially in the United States to the extent required by Applicable Law.  Notwithstanding the foregoing, during the Agreement Term, upon Celgene’s request, Acceleron agrees to seek a waiver from the United States government with respect to the requirement that Licensed Products for sale in the United States be manufactured substantially in the United States.  Celgene understands that Acceleron cannot guarantee that such waiver can be obtained.

 

2.4.5.                  Manufacturing Generally.  All Clinical Supplies and Commercial Supplies will be Manufactured in accordance with GLP and GMP, as applicable, and Applicable Law.  In addition, the Manufacturing process used for Clinical Supplies and Commercial Supplies shall be in accordance with the IND, NDA, or other Regulatory Approval, as applicable, for the Licensed Product or Licensed Compound.

 

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2.4.6.                  Tech Transfer.  Within 30 days of Celgene’s request, Acceleron shall commence the transfer to Celgene (or a Third Party selected by Celgene to Manufacture), at no cost to Celgene (unless the transfer is to a Third Party selected by Celgene), of relevant Acceleron Technology, including a chemistry, manufacturing, and controls (CMC) package and relevant manufacturing information, necessary for Celgene to Manufacture Clinical Supplies and Commercial Supplies and will use Commercially Reasonable Efforts to complete such transfer in a timely fashion.  In addition, at no cost to Celgene, Acceleron shall make its personnel reasonably available for meetings or teleconferences to support and assist Celgene in the Manufacture of the Licensed Product or Licensed Compound.

 

2.5                               Commercialization Plan/Budget.  The Joint Commercialization Committee, no later than [* * *] months prior to the anticipated commercial launch of the first Licensed Product and thereafter no later than [* * *] of each Contract Year, shall approve a strategic commercialization plan for the Licensed Products in the Field in North America (the “Commercialization Plan/Budget”) which sets forth the matters agreed upon by the Joint Commercialization Committee.  The Joint Commercialization Committee shall prepare the initial Commercialization Plan/Budget no later than [* * *] months prior to the anticipated commercial launch of the first Licensed Product.  Thereafter, the Joint Commercialization Committee shall prepare a draft of the Commercialization Plan/Budget no later than [* * *] of each Contract Year.  The Joint Commercialization Committee will consider including (but is not required to include) (a) a multi-year marketing strategy that includes plans for market research, health economics, pricing and reimbursement, medical affairs and value added initiatives, (b) a multi-year communications strategy that includes plans for public relations, conferences and exhibitions, and other external meetings, internal meetings and communications, publications and symposia, internet activities, and core brand package, (c) a multi-year strategy for Post-Approval Clinical Trials and lifecycle management activities, (d) a high level operating plan for the implementation of such strategies on an annual basis, including information related to product positioning, core messages to be communicated, share of voice requirements and pricing strategies, (e) a commercially reasonable level of detailing activity, (f) a commercialization budget, and (g) all other activities to be conducted in connection with the Commercialization of the Licensed Products in the Field in North America.  As between the Parties, Celgene will book all sales of Licensed Products and will have the sole responsibility for the sale, invoicing and distribution of the Licensed Products in the Territory.

 

2.6                               Commercialization Outside North America.  Celgene shall be solely responsible for all Commercialization activities relating to Licensed Products outside of North America.  Celgene shall use Commercially Reasonable Efforts to Commercialize the Licensed Products in each country outside North America in which Regulatory Approval for a Licensed Product is obtained.

 

2.7                               Co-Promotion of Licensed Product Within North America.  Celgene and Acceleron shall Commercialize the Licensed Products in North America in accordance with the Commercialization Plan/Budget as follows:

 

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2.7.1.                  Commercialization Activities.  Within North America, the Parties will use Commercially Reasonable Efforts to Commercialize Licensed Products in the Field.  In addition, within North America, the Parties will use Commercially Reasonable Efforts to conduct the Commercialization activities assigned to them pursuant to the Commercialization Plan/Budget, including the performance of detailing in accordance therewith.  In conducting the Commercialization activities, the Parties will comply with all Applicable Laws, applicable industry professional standards and compliance policies of Celgene which have been previously furnished to Acceleron, as the same may be updated from time to time and provided to Acceleron.  Celgene will reasonably assist Acceleron in training sales representatives in such standards.  Neither Party shall make any claims or statements with respect to the Licensed Products that are not strictly consistent with the product labeling and the sales and marketing materials approved for use pursuant to the Commercialization Plan/Budget.

 

2.7.2.                  Sales Representatives.  The Commercialization Plan/Budget will set forth the number of physicians to be called on, call frequency and other matters necessary to determine the detailing effort to be utilized for Promotion in North America pursuant to the Agreement.  The Commercialization Plan/Budget will allocate to each Party its portion of the total detailing effort for the aggregate of all Licensed Products across all indications in North America; provided that, unless otherwise agreed to by the Parties, (i) Acceleron will be allocated at least [* * *] sales representatives in the United States for the Promotion of Licensed Products directed to [* * *] and (ii) Acceleron will be allocated approximately [* * *] of the detailing effort in each country in North America directed to [* * *] and any other prescribing physicians that are not [* * *].  The Joint Commercialization Committee will attempt to provide that Acceleron’s assigned detailing efforts are distributed geographically within North America in a manner reasonably consistent with the distribution of the U.S. population, the Canadian population, and the Mexican population and that each Party’s detailing effort will be directed to physicians of similar prescribing potential.  The Sales Force Costs of Acceleron will be reimbursed pursuant to a rate set forth in the Commercialization Plan/Budget.

 

2.7.3.                  Sales Force.  The Joint Commercialization Committee shall determine the number of sales representatives needed to carry out the required detailing effort.  Each Party, in its sole discretion, shall create a field management structure for its sales effort.  Each sales representative shall have a sales territory that allows such sales representative to perform a reasonable number of details within a reasonable geographic area (i.e., without overly-burdensome travel requirements).  The effort of the Acceleron and Celgene sales forces in Promoting Licensed Products will be organized under the supervision of the Joint Commercialization Committee as to qualifications of sales representatives and field-based sales managerial personnel and the timing of hiring in light of the then-current Commercialization Plan/Budget; provided that the Commercialization Plan/Budget shall identify the portion of the detailing effort to be undertaken by Acceleron no later than [* * *] months before the planned date of the NDA submission.  At least [* * *] of Acceleron’s sales force planned to be available upon launch of the Licensed Product shall

 

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be hired no later than [* * *] before the PDUFA date, and Acceleron’s sales force shall be trained within [* * *] of hiring.

 

2.7.4.                  Training Materials and Sessions.  The Joint Commercialization Committee will develop Licensed Product-specific training materials and arrange for provision of such materials to each Party’s sales forces.  The Joint Commercialization Committee will develop a sales training program directed towards the Licensed Products.  Unless otherwise mutually agreed by the Parties, Celgene and Acceleron sales representatives will participate jointly in a launch meeting for each Licensed Product, which shall include training sessions of Licensed Product-specific sales skills with respect to the approved indications for the Licensed Products.  Subsequent to launch, Celgene and Acceleron shall periodically hold meetings with Acceleron and Celgene field management (down to and including district managers or their equivalents who are directly supervising territory sales representatives) to coordinate Promotion of the Licensed Products.  As requested by Acceleron, Celgene shall make its management, marketing, training and other personnel reasonably available to participate in Acceleron’s national and regional sales meetings and Licensed Product-training events.

 

2.7.5.                  Promotional Materials.  Celgene, at its sole cost and expense, shall provide Acceleron with sales and promotional materials sufficient to permit Acceleron to perform detailing calls in a manner consistent with the detailing calls performed by the Celgene sales force.  Acceleron’s sales representatives will utilize only those sales and promotional materials provided to them by Celgene and will not utilize any other materials relating to or referring to the Licensed Product.

 

2.7.6.                  Termination of Acceleron Sales Force Cost Reimbursement.  On a Licensed Product-by-Licensed Product and country-by-country basis in North America, on the date on which in such country there is at least one Generic Product, then Celgene shall no longer be responsible for Acceleron’s Sales Force Costs under Section 5.5.1 (b) (or Section 2.7.2) with respect to such Licensed Product in such country in North America, and such Sales Force Costs will no longer be deemed Operating Costs hereunder, and Acceleron shall have no further obligation to Promote such Licensed Product or maintain a sales force for the purpose of Promoting such Licensed Product.

 

2.8                               Third Parties.

 

2.8.1.                  The Parties shall be entitled to utilize the services of Third Parties, including Third Party contract research organizations and service providers to perform their respective Development, Manufacturing and Commercialization activities; provided that any such utilization in North America of a Third Party (except as provided in Section 2.8.2) shall be subject to the advance notice and approval of the Joint Development Committee or Joint Commercialization Committee; provided further that Acceleron shall not be permitted to utilize Third Parties for Acceleron’s Commercialization activities; provided further that each Party shall remain at all times fully liable for its respective responsibilities under each Development Plan/Budget, Commercialization Plan/Budget and this Agreement; provided

 

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further that any Third Party that Manufactures on behalf of either Party must comply with GMP and be approved or qualified by the applicable Regulatory Authority.

 

2.8.2.      Notwithstanding Section 2.8.1, the advance notice and approval of the Joint Development Committee shall not be required in respect of the use of the Third Parties previously engaged by Acceleron under an agreement entered into prior to the Effective Date and set forth on Schedule 2.8; provided that such exception shall only apply to any services that are currently being provided under such agreements (whether pursuant to the agreements themselves or any work orders entered into in connection therewith), and Acceleron shall not be entitled to enter into new work orders or request additional services under such agreements without complying with the advance notice and approval of the Joint Development Committee.

 

2.8.3.      Any agreement with a Third Party to perform a Party’s responsibilities under this Agreement shall include confidentiality and non-use provisions which are no less stringent than those set forth in Article 9 of this Agreement.

 

2.9          Information Sharing.

 

2.9.1.      Tech Transfer.  In addition to the provisions of Section 2.4.6, within 30 days of Celgene’s request, Acceleron, at no cost to Celgene, shall commence the transfer to Celgene of relevant Acceleron Technology necessary for Celgene to perform its obligations or exercise its rights hereunder and will use Commercially Reasonable Efforts to complete such transfer in a timely fashion.  In addition, at no cost to Celgene, Acceleron shall make its personnel reasonably available for meetings or teleconferences to support and assist Celgene in the Development, Manufacture, and Commercialization of the Licensed Product or Licensed Compound.

 

2.9.2.      Reports By Both Parties.  Each Party shall keep the Joint Development Committee or the Joint Commercialization Committee fully informed about the status of the activities performed pursuant to the Development Plan/Budget, including providing the Joint Development Committee with copies of the final form of all written reports that relate to such activities, or pursuant to the Commercialization Plan/Budget, as applicable.  Promptly following the Effective Date, to the extent not previously provided, Acceleron shall provide to Celgene a report describing in reasonable detail all data and information developed with respect to each Licensed Compound and Licensed Product prior to the Effective Date.  From time to time during the Agreement Term, Acceleron shall provide Celgene with access to any Acceleron Technology in order to permit Celgene to perform its obligations or exercise its rights hereunder.

 

2.9.3.      Reports By Celgene.  Celgene shall keep Acceleron reasonably informed about the status of the activities performed with respect to Celgene’s Development of the Licensed Product outside North America and Europe, the status of Regulatory Approvals for the Licensed Product outside North America and Europe, and the status of Celgene’s Commercialization activities outside North America.

 

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2.9.4.      Meetings.  [* * *] on dates and times mutually agreed by the Parties, Acceleron may, at its option, send at least one Acceleron representative to meet with the Celgene product team(s) responsible for the Development and regulatory activities for each Licensed Product and to discuss the conduct and progress of, and plans for, the Development and regulatory affairs with respect to such Licensed Product.

 

2.10        ACE-536 Agreement.  Subject to the next sentence, Celgene, in its sole discretion, may decide (a) to develop and commercialize a “Licensed Compound” or “Licensed Product” under the ACE-536 Agreement (as defined below) instead of Developing and Commercializing a Licensed Compound or Licensed Product under this Agreement or (b) following the Completion of the Acceleron Phase 2 Clinical Trials (as each such term is defined in the ACE-536 Agreement), to Develop a Licensed Compound or Licensed Product hereunder instead of a “Licensed Compound” or “Licensed Product” under the ACE-536 Agreement, and, thereafter, if Celgene is undertaking “Development” or “Commercialization” (each as defined in the ACE-536 Agreement) activities in accordance with the ACE-536 Agreement with respect to a “Licensed Compound” or “Licensed Product” thereunder, Celgene will be deemed to be in compliance with any Development or Commercialization obligations under this Agreement.  Celgene acknowledges that a decision to pursue the scenario described in subsection (b) will not be made based primarily on Celgene’s payment obligations to Acceleron under this Agreement or the ACE-536 Agreement, but rather will take into consideration such things as the resources as would normally be exerted or employed by a similarly-situated biopharmacecutical company, product life, stage of development, safety and efficacy, development costs, operating costs, the anticipated prescription label, the nature of the product, the clinical setting in which the product is expected to be used, competitiveness of the marketplace, regulatory environment, the patent or other proprietary position of the product, and other clinical, commercial, regulatory or manufacturing conditions then prevailing.

 

Article 3
 COLLABORATION MANAGEMENT

 

3.1          Joint Development Committee.

 

3.1.1.      Establishment.  Within 45 days after the Effective Date, the Parties shall establish, and have the first meeting of, a joint development com mittee to facilitate Development of Licensed Compounds and Licensed Products during the Agreement Term (the “Joint Development Committee”).  In advance of the formation of the Joint Development Committee, either Party may request that the Parties, and the other Party agrees that they shall, meet (in person or by teleconference) for the purposes of facilitating the performance by each Party of its activities hereunder.

 

3.1.2.      Membership.  Unless otherwise agreed by the Parties, the Joint Development Committee shall be comprised of three (3) representatives from each Party with one (1) representative with relevant decision-making authority from each Party such that the Joint Development Committee is able to effectuate all of its decisions within the scope of its responsibilities as set forth in Section 3.1.5 below.  Either Party may replace or substitute 

 

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its respective representatives to the Joint Development Committee at any time with prior notice to the other Party, provided that such replacement or substitute is of comparable authority within that Party.  Upon mutual agreement of the Parties, additional representatives or consultants may be invited to attend a Joint Development Committee meeting, subject to such representatives’ and consultants’ written agreement to comply with the requirements of Article 9.  Each Party shall bear its own expenses relating to attendance at such meetings by its representatives.

 

3.1.3.      Chairperson.  The Chairperson of the Joint Development Committee (the “JDC Chairperson”) shall be Celgene’s representative.  The JDC Chairperson’s responsibilities shall include (a) scheduling meetings; (b) setting agendas for meetings with solicited input from Acceleron’s representatives; (c) preparing and confirming minutes of the meetings, which shall provide a description in reasonable detail of the discussions held at the meeting and a list of any actions, decisions or determinations made by the Joint Development Committee and delivering minutes to each Party’s senior management for review and final approval; and (d) conducting meetings.

 

3.1.4.      Meetings.  The Joint Development Committee shall meet in accordance with a schedule established by mutual written agreement of the Parties, at least once per [* * *] (and more frequently as the Joint Development Committee determines is necessary to fulfill its responsibilities), with the location for such meetings alternating between Acceleron’s facilities and Celgene’s facilities (or such other locations as are determined by the Joint Development Committee).  Alternatively, if the Parties agree, the Joint Development Committee may meet by means of teleconference, videoconference or other similar communications equipment.  In connection with any transition of responsibilities from Acceleron to Celgene (including the transition of Manufacturing responsibility), the Joint Development Committee shall meet and discuss how best to transition such responsibilities to Celgene and, in connection with Manufacturing responsibility, shall establish a supply transition plan with respect to the applicable Licensed Product.  Acceleron shall cooperate fully to assist in transitioning to Celgene all applicable responsibilities.

 

3.1.5.      Responsibilities.  The Joint Development Committee shall have the following responsibilities:

 

(a)           reviewing and approving (i) the initial Development Plan/Budget and each annual Development Plan/Budget and (ii) any proposed modifications to such Development Plan/Budget, in each case in accordance with the time frames set forth in Section 2.1.3;

 

(b)           developing a publication strategy for Development activities and results arising out of this Agreement;

 

(c)           facilitating the transfer of Know-How and Confidential Information between the Parties for purposes of conducting the Development Plan/Budget;

 

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(d)           reviewing the progress of the Parties in their conduct of the Development Plan/Budget against the timelines and budgets contained therein, reviewing relevant data and considering issues of priority;

 

(e)           approving the licensing of Third Party technology, as described in Section 5.6.3(c);

 

(f)            performing such other activities as are contemplated under this Agreement and that the Parties mutually agree shall be the responsibility of the Joint Development Committee; and

 

(g)           defining a target Licensed Product profile after consultation with the Parties’ respective commercial managers.

 

3.2      Joint Commercialization Committee.

 

3.2.1.      Establishment.  Promptly after the Effective Date, the Parties shall establish a joint commercialization committee to facilitate Commercialization of Licensed Compounds and Licensed Products in North America during the Agreement Term (the “Joint Commercialization Committee”).

 

3.2.2.      Membership.  Unless otherwise agreed by the Parties, the Joint Commercialization Committee shall be comprised of three (3) representatives from each Party with one (1) representative with relevant decision-making authority from each Party such that the Joint Commercialization Committee is able to effectuate all of its decisions within the scope of its responsibilities as set forth in Section 3.2.5 below.  Either Party may replace or substitute its respective representatives to the Joint Commercialization Committee at any time with prior notice to the other Party, provided that such replacement or substitute is of comparable authority within that Party.  Upon mutual agreement of the Parties, additional representatives or consultants may be invited to attend a Joint Commercialization Committee meeting, subject to such representatives’ and consultants’ written agreement to comply with the requirements of Article 9.  Each Party shall bear its own expenses relating to attendance at such meetings by its representatives.  In the event that that Acceleron ceases to continue to appoint members of the Joint Commercialization Committee, Celgene shall deliver all notices of activities of the Joint Commercialization Committee and materials relating to Commercialization of Licensed Products to the Vice President of Sales & Marketing of Acceleron; and, notwithstanding Acceleron’s lack of membership on the Joint Commercialization Committee, Acceleron shall remain obligated to perform its obligations hereunder with respect to the Commercialization of Licensed Products and comply with the instructions of Celgene on behalf of the Joint Commercialization Committee, as provided herein.

 

3.2.3.      Chairperson.  The Chairperson of the Joint Commercialization Committee (the “JCC Chairperson”) shall be Celgene’s representative.  The JCC Chairperson’s responsibilities shall include (a) scheduling meetings; (b) setting agendas for meetings with 

 

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solicited input from Acceleron’s representatives; (c) preparing and confirming minutes of the meetings, which shall provide a description in reasonable detail of the discussions held at the meeting and a list of any actions, decisions or determinations made by the Joint Commercialization Committee and delivering minutes to each Party’s senior management for review and final approval; and (d) conducting meetings.

 

3.2.4.      Meetings.  The Joint Commercialization Committee shall meet in accordance with a schedule established by mutual written agreement of the Parties, at least once per [* * *] (and more frequently as the Joint Commercialization Committee determines is necessary to fulfill its responsibilities), with the location for such meetings alternating between Acceleron’s facilities and Celgene’s facilities (or such other locations as are determined by the Joint Commercialization Committee); provided that, unless otherwise agreed to by the Parties, the Joint Commercialization Committee shall not be required to meet earlier than the time necessary to complete the activities contemplated by Section 2.5.  Alternatively, if the Parties agree, the Joint Commercialization Committee may meet by means of teleconference, videoconference or other similar communications equipment.

 

3.2.5.      Responsibilities.  The Joint Commercialization Committee shall have the following responsibilities:

 

(a)           establishing the strategy for the Commercialization of Licensed Products in the Field in North America;

 

(b)           developing and approving the Commercialization Plan/Budget in accordance with Section 2.5, as well as updating the Commercialization Plan/Budget and amending the Commercialization Plan/Budget from time to time as appropriate;

 

(c)           subject to the specific terms and conditions hereof, allocating responsibilities under the Commercialization Plan/Budget to the Parties in accordance with the Parties’ abilities to perform such activities in the most efficient and cost effective manner;

 

(d)           overseeing the implementation of the strategy for Commercializing the Licensed Products in the Field in North America (including strategies related to regulatory approvals, reimbursement, advertising and promotion, brand integrity, sales, and launch sequence as set forth in the Commercialization Plan/Budget);

 

(e)           providing input to the Joint Development Committee regarding the target product profile for the Licensed Products and making recommendations regarding changes to the same;

 

(f)            approving the licensing of Third Party technology, as described in Section 5.6.3(c);

 

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(g)           reviewing the Parties’ marketing and promotional activities in North America to ensure that such activities are consistent with the Commercialization Plan/Budget; and

 

(h)           performing such other activities as are contemplated under this Agreement and that the Parties mutually agree shall be the responsibility of the Joint Commercialization Committee.

 

3.3          Joint Responsibilities of the Joint Development Committee and Joint Commercialization Committee.  In addition to the independent Joint Development Committee and Joint Commercialization Committee meetings, the Joint Development Committee and the Joint Commercialization Committee shall coordinate to hold joint meetings as appropriate to discuss issues which are relevant to both Development and Commercialization, including in order to: (i) establish the target product profile for the Licensed Products (including indications for which the Licensed Products will be Developed and Commercialized, key labeling claims required for commercial success of the Licensed Products given the competitive environment, and any other key product features and benefits which will be used to Develop or support a promotional message or reimbursement status for the Licensed Products), (ii) discuss development of the Licensed Product for additional indications and alternative delivery forms, (iii) discuss development of improvements in formulation, presentation and other features of Licensed Products considered desirable for life cycle management and maximizing sales of the Licensed Products throughout North America, and (iv) set the end point criteria to determine whether a Clinical Trial or other Development activity is deemed successful.  Such joint meetings may be held by videoconference, teleconference or in person and any decisions required to be taken shall be submitted to the Joint Development Committee or Joint Commercialization Committee for resolution in accordance with the terms hereof.

 

3.4          Appointment of Subcommittees and Project Teams.  The Joint Development Committee and Joint Commercialization Committee may each create such subcommittees or project teams as such committee deems necessary to carry out its responsibilities.  Each such subcommittee and project team shall report recommendations and proposed actions to the Joint Development Committee or Joint Commercialization Committee, as applicable, which shall approve or reject such recommendations or actions proposed in accordance with the terms of this Agreement.

 

3.5          Decision-Making.  The Joint Development Committee and Joint Commercialization Committee shall each act by unanimous agreement of its members, with each Party having one vote.  If the Joint Development Committee or Joint Commercialization Committee, after [* * *] (or such other period as the Parties may otherwise agree) of good faith efforts to reach a unanimous decision on an issue, fails to reach such a unanimous decision, then either Party may refer such issue to the Executive Officers.  Such Executive Officers shall meet promptly thereafter and shall negotiate in good faith to resolve the issues.  If Executive Officers cannot resolve such issue within [* * *] of referral of such issue to the Executive Officers, the resolution of such issue shall be determined by [* * *].  Notwithstanding the foregoing, none of [* * *], the Joint Development Committee and the Joint Commercialization Committee may make any 

 

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decision inconsistent with the express terms of this Agreement without the prior written consent of each Party.

 

3.6          Dispute Resolution.  With respect to any disputes between the Parties concerning this Agreement that are not subject to the oversight of the Joint Development Committee or the Joint Commercialization Committee, either Party may submit the dispute to senior management of Celgene and Acceleron for review.  If the dispute cannot be resolved within [* * *] despite such escalation, then either Party may refer the matter to the Executive Officers to be resolved by negotiation in good faith as soon as is practicable but in no event later than [* * *] after referral.  Such resolution, if any, by the Executive Officers shall be final and binding on the Parties.  If the Executive Officers are unable to resolve such dispute within such [* * *] period, then such matter shall be resolved [* * *].

 

3.7          Dissolution.  The Joint Development Committee and Joint Commercialization Committee shall each be dissolved upon expiration of the Agreement Term, or earlier upon mutual written agreement of the Parties.

 

3.8          Appointment of Joint Development Committee and Joint Commercialization Committee Members.  Notwithstanding the above, at all times after [* * *] years from the Effective Date, Acceleron’s membership and participation on the Joint Development Committee, the Joint Commercialization Committee, and any related subcommittees shall be at Acceleron’s sole option.  If, after [* * *] years from the Effective Date, Acceleron does not appoint members of the Joint Development Committee or the Joint Commercialization Committee, it shall not be a breach of this Agreement, and, thereafter, Celgene shall, in its own sole discretion, make all decisions for, and take all actions for, the Joint Development Committee or Joint Commercialization Committee, as applicable, pursuant to the terms and conditions of this Agreement, and Acceleron shall comply with all such decisions of Celgene.

 

Article 4
 LICENSES AND INTELLECTUAL PROPERTY OWNERSHIP

 

4.1          License Grants to Celgene.  Subject to the terms and conditions of this Agreement, Acceleron hereby grants to Celgene and its Affiliates during the Agreement Term an exclusive, royalty-bearing license (which shall, however, be co-exclusive with Acceleron solely to permit Acceleron to perform the Acceleron Development Activities, Manufacturing responsibilities, and co-Promotion activities to the extent provided herein) under the Acceleron Technology and Acceleron’s interest in the Joint Technology to offer for sale, sell, make, have made, use and import Licensed Compounds and Licensed Products in the Field in the Territory.  For avoidance of doubt, such license includes the right to Develop, Manufacture and Commercialize Licensed Compounds and Licensed Products in the Field in the Territory.

 

4.2          License Grant to Acceleron.  Subject to the terms and conditions of this Agreement, Celgene hereby grants Acceleron during the Agreement Term a non-exclusive royalty-free license under the Celgene Technology solely to perform its Development and co-Promotion obligations pursuant to the Development Plan/Budget and Commercialization Plan/Budget, as 

 

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applicable, and to Manufacture Licensed Compounds and Licensed Products in accordance with this Agreement.

 

4.3          Sublicenses.

 

4.3.1.      Celgene’s Right to Sublicense.  Celgene may sublicense the rights granted to it under Section 4.1, in whole or in part, through one or more tiers to one or more of its Affiliates or Third Parties at any time; provided, however, that the sublicense, to the extent it involves the sublicense of any Salk Patent Rights, will be subject to the terms and conditions of Section 2.2 of the Salk License.  In the event that Celgene enters into any sublicense (other than a sublicense to an Affiliate) that includes North America as a territory, in whole or in part, then, such sublicense shall not modify Acceleron’s right to participate in Collaboration matters as provided in Article 2 (Collaboration) and Article 3 (Collaboration Management) or under the cost sharing provisions of Section 5.5.  Celgene shall remain responsible for the performance of its Sublicensees under this Agreement, including for all payments due hereunder, whether or not such payments are made by Celgene, its Affiliates or its Sublicensees.  Celgene shall provide Acceleron with notice and a copy of each sublicense, and any modification or termination thereof, promptly (and in any event within [* * *] days after such agreement has been fully executed) after execution of such sublicense, modification or termination; provided that any such copy may be redacted to remove any confidential, proprietary or competitive information of Celgene or its Sublicensee, but such copy shall not be redacted to the extent that it impairs Acceleron’s or Salk’s ability to ensure compliance with this Agreement or the Salk License, as applicable.  All such notices and copies of sublicenses provided by Celgene under this Section 4.3.1 shall be deemed to be Confidential Information of Celgene subject to the provisions of Article 9 hereof whether or not so marked.

 

4.3.2.      Terms.  Each sublicense granted by Celgene pursuant to Section 4.3.1 shall be subject and subordinate to the terms and conditions of this Agreement and shall contain terms and conditions consistent with those in this Agreement.  Agreements with any Commercializing Sublicensee shall contain the following provisions:  (a) a requirement that such Sublicensee submit applicable sales or other reports consistent with those required hereunder; (b) an audit requirement similar to the requirement set forth in Section 5.7.4; and (c) a requirement that such Sublicensee comply with the confidentiality and non-use provisions of Article 9 with respect to both Parties’ Confidential Information.

 

4.3.3.      Effect of Termination.  Except as otherwise provided in the sublicense agreement, if this Agreement terminates for any reason, any Celgene Sublicensee shall, from the effective date of such termination, automatically become a direct licensee of Acceleron with respect to the rights originally sublicensed to the Sublicensee by Celgene; provided, however, that such Sublicensee is not in breach of its sublicense agreement and continues to perform thereunder.  Notwithstanding the foregoing, Acceleron shall not be liable to such Sublicensee with respect to any obligations of Celgene to the Sublicensee.

 

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4.4          Ownership of and Rights to Intellectual Property.

 

4.4.1.      Ownership of Improvements/Collaboration IP.  Each Party agrees promptly to disclose to the other Party all Improvements and all Collaboration IP made by or under authority of such Party under this Agreement.  As between the Parties, (a) title to all Celgene Improvements and Celgene Collaboration IP shall be owned by Celgene, (b) title to all Acceleron Improvements and Acceleron Collaboration IP shall be owned by Acceleron, and (c) title to all Joint Improvements and Joint Collaboration IP shall be jointly owned by Celgene and Acceleron.  Acceleron hereby assigns, and Acceleron shall cause its employees, consultants, and agents to assign, its right, title, and interest in and to all Celgene Improvements to Celgene.

 

4.4.2.      Joint Improvements/Collaboration IP.  Subject to the rights herein, each Party shall have the right to practice and exploit Joint Improvements and Joint Collaboration IP, without any obligation to account to the other for profits, or to obtain any approval of the other Party to license, assign or otherwise exploit Joint Improvements and Joint Collaboration IP, by reason of joint ownership thereof, and each Party hereby waives any right it may have under the laws of any jurisdiction to require any such approval or accounting; and to the extent there are any Applicable Laws that prohibit such a waiver, each Party will be deemed to so consent.  Each Party agrees to be named as a party, if necessary, to bring or maintain a lawsuit involving a Joint Improvement or Joint Collaboration IP.

 

4.4.3.      Data.  All data generated in the course of Clinical Trials hereunder shall be owned by Celgene and deemed “Celgene Know-How.”  Acceleron hereby assigns, and Acceleron shall cause its employees, consultants, and agents to assign, its right, title, and interest in and to such data and information to Celgene.

 

4.4.4.      Celgene IP.  Celgene is and shall remain the sole owner of the Celgene Technology.

 

4.4.5.      Acceleron IP.  Acceleron is and shall remain the sole owner of the Acceleron Technology.

 

4.4.6.      Disputes as to Inventorship and Ownership of Improvements and Collaboration IP.  Should the Parties fail to agree regarding inventorship of any invention made in the conduct of activities under this Agreement or the ownership of Improvements and Collaboration IP arising out of this Agreement, the Parties shall refer the matter to a mutually agreed-upon outside counsel for resolution.  All determinations of inventive contribution for inventions arising hereunder shall be determined under United States patent law.  The Parties agree that each of the individuals listed on Schedule 4.4.6 are acceptable outside counsel for such resolution, and neither Party will use such individuals (or the law firms for whom such individuals work) for any legal services without the prior written consent of the other Party.  The costs of such outside counsel shall be borne equally by the Parties.

 

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4.5          Salk License.

 

4.5.1.      Acknowledgement.  Except as provided in Section 4.5.2, Acceleron acknowledges that it is responsible for the fulfillment of its obligations under the Salk License and agrees to fulfill the same, including any provisions necessary to maintain in effect any rights sublicensed to Celgene hereunder and the exclusive nature of such rights, subject to Celgene’s compliance with its obligations hereunder.  In the event of any conflict between the terms of this Agreement and the Salk License, the Parties will discuss in good faith how to address the conflict; provided that, if the Parties are unable to agree on how to address the conflict, the terms of this Agreement shall govern.  Notwithstanding the foregoing, Celgene acknowledges that (i) the Salk License limits Acceleron from sublicensing under the Salk Patent Rights of any right with regard to Secondary Licensed Products (as defined in the Salk License), other than a sublicense of a Primary Licensed Product (including a Primary Licensed Product that subsequently becomes a Secondary Licensed Product) or in connection with a sublicense of a Secondary Licensed Product that is first discovered or identified by Acceleron, and (ii) the licenses under the Salk License are limited to therapeutic products, and diagnostic products are only permitted with respect to Secondary Licensed Products.  Celgene further acknowledges that the Salk License provides for the right of Salk to (a) Prosecute the Salk Patent Rights and (b) make and use, and to permit others at academic, government and non-profit institutions to make and use, the Salk Patent Rights.  Celgene additionally acknowledges that the Salk Patent Rights supported by federal funding are subject to certain obligations to the United States government as provided in the Salk License.

 

4.5.2.      Incorporation of Certain Provisions.  Celgene acknowledges and agrees that it shall be bound by the following provisions of the Salk License, as if Celgene was a “Licensee” thereunder: [* * *]; provided that, with respect to Section [* * *], the Parties acknowledge that, as provided in Exhibit A to the Salk License, no “Biological Materials” have been provided to Acceleron, and Acceleron will not request or accept any “Biological Materials” from Salk without Celgene’s prior written consent (which consent may be conditioned on, among other things, confirmation that the “Biological Materials” license under the Salk License is sublicensable to Celgene); provided further that, notwithstanding Celgene’s agreement to be bound by Section [* * *] of the Salk License, as between Acceleron and Celgene, the obligation to indemnify Salk pursuant to such section will be allocated between Acceleron and Celgene in accordance with Section 12.7 hereof.  The Parties acknowledge that no [* * *] has been provided to Celgene, except [* * *].

 

4.5.3.      Covenants Regarding the Salk License.  Acceleron agrees that during the Agreement Term:

 

(a)           Acceleron shall not modify or amend the Salk License in any way that could adversely affect Celgene’s rights or economic interest under this Agreement without Celgene’s prior written consent;

 

(b)           Acceleron shall not terminate the Salk License in whole or in part, without Celgene’s prior written consent, if such termination would affect Celgene’s license granted hereunder;

 

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(c)           Acceleron shall be solely responsible for, and shall make, all royalty, milestone, and other payments owed to Salk pursuant to the Salk License;

 

(d)           Acceleron shall not exercise or fail to exercise any of Acceleron’s rights or obligations under the Salk License that relate to the Licensed Compounds, Licensed Products, or Celgene’s rights hereunder (including the right to negotiate with Salk with respect to “Inventions” under Section 2.4 of the Salk License), in each case, without the prior written consent of Celgene, not to be unreasonably withheld; and, at the reasonable request of Celgene, Acceleron shall exercise such rights and make such requests as are permitted under the Salk License;

 

(e)           Acceleron shall promptly furnish Celgene with copies of all reports and other communications that Acceleron furnishes to Salk that relate to the subject of this Agreement;

 

(f)            Acceleron shall promptly furnish Celgene with copies of all reports and other communications that Acceleron receives from Salk that relate to the subject of this Agreement;

 

(g)           Acceleron shall furnish Celgene with copies of all notices received by Acceleron relating to any alleged breach or default by Acceleron under the Salk License within [* * *] after Acceleron’s receipt thereof; in addition, if Acceleron should at any time breach the Salk License or become unable to timely perform its obligations thereunder, Acceleron shall immediately notify Celgene;

 

(h)           If Acceleron cannot or chooses not to cure or otherwise resolve any alleged breach or default under the Salk License, Acceleron shall so notify Celgene within [* * *] of such decision, which shall not be less than [* * *] prior to the expiration of the cure period under the Salk License; provided that Acceleron shall use Commercially Reasonable Efforts to cure any such breach or default; and

 

(i)            Celgene, in its sole discretion, shall be permitted [* * *] in accordance with the terms and conditions of the Salk License or otherwise [* * *]; and, if Celgene [* * *].

 

4.5.4.      Survival of Celgene’s Rights.  As provided in Section 2.2 and 10.3(a)(iv) of the Salk License, in the event of termination of the Salk License, Celgene’s rights hereunder will survive in accordance with the terms of such sections.  The Parties agree that [* * *], without Celgene’s prior written consent, shall be deemed a material breach of this Agreement by Acceleron; provided that (a) if [* * *], Celgene agrees to use Commercially Reasonable Efforts to assist Acceleron in [* * *], and (b) if [* * *], such [* * *] shall not be deemed a material breach by Acceleron of this Agreement.

 

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4.6          No Other Rights.  Except as otherwise provided in this Agreement, neither Party shall obtain any ownership interest or other right in any Know-How or Patent Rights owned or Controlled by the other Party.

 

Article 5
 FINANCIAL PROVISIONS

 

5.1          Upfront Payments.  Celgene shall make the following payments to Acceleron within ten (10) days of the Effective Date: (i) thirty-five million dollars ($35,000,000) as an upfront, non-creditable, non-refundable fee, relating to the license grants set forth in Article 4, and (ii) ten million dollars ($10,000,000) as an upfront, non-creditable, non-refundable fee, relating to the option program set forth in Article 7.

 

5.2          ActRIIA Development Milestones.  For any Licensed Compound or Licensed Product containing ActRIIA, Celgene shall pay to Acceleron the amounts set forth below no later than [* * *] days after the earliest date on which the corresponding milestone event has first been achieved with respect to a Licensed Compound or Licensed Product in each indication described below:

 

	
 
    	
 
    	
Payment for Each Indication
    	
 
    
	
Milestone Event
    	
 
    	
Oncology
    	
 
    	
Non-Oncology
    	
 
    
	
Dosing the first patient in the first Phase 2B   Clinical Trial for the purposes of obtaining Regulatory Approval in the   United States
    	
 
    	
N/A
    	
 
    	
$
    	
7,000,000
    	
 
    
	
Dosing the first patient in the first Phase 3   Clinical Trial for the purposes of obtaining Regulatory Approval in the   United States
    	
 
    	
$
    	
10,000,000
    	
 
    	
$
    	
10,000,000
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    

 

A Clinical Trial or NDA will fall within the oncology indication if the Licensed Compound or Licensed Product is used (a) to treat a patient for cancer or (b) to treat a patient for a disease, disorder, or condition that results from the patient having, or being treated for, cancer.  All other Clinical Trials or NDAs will fall within the non-oncology indication.  For example, use of a Licensed Compound or Licensed Product to treat [* * *] will be deemed to fall within the oncology indication, and, for purposes of this Agreement, the treatment of anemia in a patient 

 

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with [* * *] will be considered oncology and will be deemed to fall within the oncology indication; on the other hand, [* * *] not caused by any oncologic condition or treatment thereof will fall within the non-oncology indication (whether or not the patients taking the Licensed Compound or Licensed Product has cancer or a disease, disorder, or condition that results from the patient having, or being treated for, cancer).  For the avoidance of doubt, a single Clinical Trial or NDA shall not trigger an obligation by Celgene to pay milestones with respect to both the oncology and non-oncology indications but instead shall be treated as falling only within one indication or the other and requiring not more than one milestone payment; provided that, if the Parties initially elect one indication (e.g., oncology) to apply to a Licensed Compound or Licensed Product but later determine it is not effective for that indication, the Parties may then elect to proceed with the other indication (e.g., non-oncology) for such Licensed Compound or Licensed Product; however, notwithstanding the last sentence of the next paragraph, such Licensed Compound or Licensed Product shall only trigger milestones in the new indication (in this example, non-oncology) that occur after such election and shall not trigger any earlier milestones in the new indication.

 

For clarity, the milestone payments set forth in this Section 5.2 shall be paid only once for each indication, regardless of how many Licensed Compounds and Licensed Products may achieve the milestone event and regardless of whether the same Licensed Compound or Licensed Product achieves the milestone event for the same indication more than once.  By way of a nonlimiting example, if a Licensed Compound and a Licensed Product achieve the same milestone event in the same indication, only one payment is due.  Furthermore, to the extent a Licensed Compound or Licensed Product fails and a replacement Licensed Compound or Licensed Product is selected, any milestones previously paid for such failed Licensed Compound or Licensed Product shall not be paid a second time with respect to such replacement Licensed Compound or Licensed Product.  Except as provided in the prior paragraph, to the extent that any prior milestone has not been paid at the time of achievement of a subsequent milestone, then upon the achievement of such subsequent milestone all preceding unpaid milestone payments shall be made in addition to the payment corresponding to the milestone that has been achieved; provided that the acceptance or approval of [* * *] shall not be deemed to trigger any milestone payment for [* * *] in any other country or jurisdiction.

 

For purposes of determining the occurrence of milestones under this Section 5.2 and Section 5.3, [* * *] shall be deemed to have occurred [* * *] days following [* * *]; provided that, if such [* * *], such [* * *] shall not be deemed to have occurred until such comments have been addressed to the satisfaction of [* * *].

 

The Parties agree that, effective as of the execution of the First Amendment to this Agreement, Celgene shall have no obligations to pay any amounts due pursuant to the provisions of Section 5.2 (including the table of milestones set forth therein) prior to such amendment, and the provisions of this Section 5.2 (including the table of milestones set forth herein) will replace such former provisions in their entirety.  Acceleron acknowledges and agrees that all payments that were due pursuant to the provisions of the former Section 5.2 were paid in full.

 

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5.3          Option Compound Development Milestones.  Provided that the option in Article 7 is exercised in full, for a Licensed Compound or Licensed Product containing an [* * *] Antibody, [* * *] Antibody, or [* * *] Antibody, Celgene shall also pay to Acceleron the amounts set forth below no later than [* * *] days after the earliest date on which the corresponding milestone event has first been achieved with respect to any such Licensed Compound or Licensed Product (for the avoidance of doubt, the milestones set forth below shall be payable separately with respect to a Licensed Compound or Licensed Product containing an [* * *] Antibody, an [* * *] Antibody or a [* * *] Antibody):

 

	
 
    	
 
    	
Payment for Each Indication for [* * *]
   Antibodies, [* * *] Antibodies and [* * *]
   Antibodies
    	
 
    
	
Milestone Event
    	
 
    	
Oncology
    	
 
    	
Non-Oncology
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    

 

The determination of whether a Clinical Trial or NDA falls within the oncology indication or non-oncology indication will be made in the same manner as provided in Section 5.2.

 

For clarity, the milestone payments set forth in this Section 5.3 shall be paid only once for each indication for a Licensed Compound or Licensed Product the underlying Licensed Compound of which is an [* * *] Antibody, once for each indication for a Licensed Compound or Licensed Product the underlying Licensed Compound of which is an [* * *] Antibody, and once for each indication for a Licensed Compound or Licensed Product the underlying Licensed Compound of which is a [* * *] Antibody, regardless of how many Licensed Compounds and Licensed Products with such Licensed Compound may achieve the milestone event and regardless of whether the same Licensed Compound or Licensed Product achieves the milestone event for the same indication more than once.  By way of a nonlimiting example, if an [* * *] Antibody Licensed Compound and a Licensed Product containing an [* * *] Antibody achieve the same milestone event in the same indication, only one payment is due; if an [* * *] Antibody Licensed Compound and a Licensed Product containing an [* * *] Antibody achieve the same milestone event in the same indication, only one payment is due; and if a [* * *] Antibody Licensed Compound and a Licensed Product containing a [* * *] Antibody achieve the same milestone event in the same indication, only one payment is due.  In addition for clarity, if an [* * *] Antibody Licensed Compound or Licensed Product achieves a particular milestone, and an [* * *] Antibody Licensed Compound or Licensed Product achieves the same milestone, the particular milestone payment will be made twice, once with respect to the [* * *] Antibody 

 

39

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Licensed Compound or Licensed Product and once with respect to the [* * *] Antibody Licensed Compound or Licensed Product.  Furthermore, to the extent a Licensed Compound or Licensed Product the underlying Licensed Compound of which is an [* * *] Antibody, [* * *] Antibody, or [* * *] Antibody fails and a replacement Licensed Compound or Licensed Product with the same Licensed Compound is selected, any milestones previously paid for such failed Licensed Compound or Licensed Product shall not be paid a second time with respect to such replacement Licensed Compound or Licensed Product.  To the extent that any prior milestone has not been paid at the time of achievement of a subsequent milestone, then upon the achievement of such subsequent milestone all preceding unpaid milestone payments shall be made in addition to the payment corresponding to the milestone that has been achieved; provided that the acceptance or approval of an NDA in any one country or jurisdiction shall not be deemed to trigger any milestone payment for the acceptance or approval of an NDA in any other country or jurisdiction.

 

The Parties agree that, effective as of the execution of the First Amendment to this Agreement, Celgene shall have no obligations to pay any amounts due pursuant to the provisions of Section 5.3 (including the table of milestones set forth therein) prior to such amendment, and the provisions of this Section 5.3 (including the table of milestones set forth herein) will replace such former provisions in their entirety.  Acceleron acknowledges and agrees that all payments that were due pursuant to the provisions of the former Section 5.3 were paid in full.

 

5.4          Ex-North American Sales Milestones.  Celgene shall also pay to Acceleron the amounts set forth below no later than [* * *] days after the earliest date on which the corresponding milestone event has first been achieved with respect to each Licensed Product:

 

	
Milestone Event
    	
 
    	
Payment
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    

 

Once Celgene has made any particular milestone payment under this Section 5.4, Celgene shall not be obligated to make any payment under this Section 5.4 with respect to the re-occurrence of the same milestone for the same Licensed Product (regardless of how many indications the Licensed Product may be approved for).  For making the determinations under this Section 5.4, Net Sales shall be derived from audited financial statements of Celgene (or the applicable Affiliate or Sublicensee); provided, however, that Celgene shall use U.S. GAAP to calculate in good faith the Net Sales derived from any entities that are not audited or have not completed their audit within [* * *] days after the end of the preceding Contract Year.  For clarity, two dosage forms of a product would constitute the same Licensed Product; however, any derivatives and modifications of a Licensed Product are considered distinct Licensed Products, other than 

 

40

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

modifications that are limited to changes in the formulation of a Licensed Product (which formulation modifications would constitute the same Licensed Product).

 

5.5          Sharing Costs.

 

5.5.1.      Cost Sharing.  The Parties shall be responsible for paying costs as set forth in this Section.

 

(a)           Subject to Section 5.5.1(b)(ii) and (iii), for all North American and European Development Costs incurred prior to January 1, 2013, Acceleron shall be responsible for paying [* * *] percent [* * *] and Celgene shall be responsible for paying [* * *] percent [* * *] of such North American and European Development Costs.

 

(b)           Celgene shall be responsible for paying one hundred percent (100%) of (i) all Development Costs (other than North American and European Development Costs), (ii) all North American and European Development Costs incurred on or after January 1, 2013, (iii) all [* * *] that comprise part of North American And European Development Costs and are incurred after the Effective Date of the First Amendment to this Agreement, and (iv) [* * *]; provided that the Parties acknowledge and agree that Acceleron will not be incurring any such costs described in clause (i) or (iv) (other than [* * *] or other [* * *] that are specifically set forth in the [* * *]).

 

(c)           Patent Procurement Costs shall be shared in accordance with the provisions of Section 8.2.4.

 

(d)           Except for approved costs incurred by Acceleron pursuant to Section 2.4.2, purchases of capital equipment related to Manufacturing (e.g., the purchase and qualification of a manufacturing facility or of additional manufacturing lines) shall not be included in any cost to be shared under this Agreement.

 

5.5.2.      Sharing Mechanics.  The payment of costs pursuant to this Agreement shall be subject to the following:

 

(a)           Notwithstanding anything in this Agreement to the contrary, no cost, expense, amount or sum allocable or chargeable to the Parties’ activities under this Agreement shall be allocated or charged more than once.  Unless otherwise specifically authorized by the Parties or this Agreement, all costs, expenses, amounts or sums to be charged or allocated by one Party to the other Party under this Agreement shall not be so chargeable or allocable unless they are directly related to this Agreement and the activities to be performed under this Agreement.

 

(b)           It is the intention of the Parties that the interpretation of the definitions related to this Article 5 shall be in accordance with U.S. GAAP consistently 

 

41

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

applied in accordance with the applicable Party’s then current practices.  A Party shall promptly make the appropriate adjustments to the financial information it supplies under this Agreement to reflect changes to the provisions, including reasonable detail underlying the adjustment, in reporting results of operation.

 

(c)           Furthermore, for any costs or expenses in connection with the performance of its activities hereunder, which are reimbursable by one Party or subject to cost-sharing between the Parties, if such costs or expenses consist of payments made by either Party to a Third Party, they shall be charged hereunder at the respective Party’s actual out-of-pocket cost.

 

(d)           Notwithstanding anything in this Agreement to the contrary, each Party shall be solely responsible for all travel costs for such Party’s and its Affiliates’ and agents’ employees incurred in connection with the performance of such Party’s obligations hereunder, and no travel-related expenses incurred by either Party in connection with Development activities hereunder shall be included in Development Costs or Operating Costs.

 

5.5.3.      Cost Reporting.

 

(a)           Development Costs.  No later than [* * *] Business Days after the end of each Contract Quarter, each Party shall report to the other Party an estimate of its North American and European Development Costs (including any Third Party Intellectual Property Costs that are deemed Development Costs) and Patent Procurement Costs (for which reimbursement is required pursuant to Section 8.2.4).  Furthermore, as soon as practicable after the end of each Contract Quarter, but in any event no later than [* * *] days after the end of each Contract Quarter, each Party shall report to the other Party actual North American and European Development Costs and Patent Procurement Costs (for which reimbursement is required pursuant to Section 8.2.4).  Notwithstanding the foregoing, Celgene shall have no obligation to report to Acceleron Celgene’s estimated or actual North American and European Development Costs incurred on or after January 1, 2013, though Celgene will continue to report any Patent Procurement Costs as described in this Section 5.5.3(a).

 

(b)           Results of Operations in North America.  No later than [* * *] Business Days after the end of each Contract Quarter, each Party shall report to the other Party an estimate of such Party’s results of operations in North America, as applicable, related to the following:  (i) aggregate gross invoice prices of all units of Licensed Product sold; (ii) sales returns and allowances; (iii) Net Sales; (iv) number of units sold; and (v) in the case of Acceleron, all Sales Force Costs of Acceleron and any other Operating Costs of Acceleron in North America that have been approved under the Commercialization Plan/Budget (collectively, the “Acceleron NA Operating Costs”).  Furthermore, as soon as practicable after the end of each Contract Quarter, but in any event no later than [* * *] days after the 

 

42

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

end of each Contract Quarter, each Party shall report to the other Party actual results of operations in North America, as described in the prior sentence.

 

5.5.4.      Expense Limitations.

 

(a)           Expenses charged by either Party as North American and European Development Costs for any Contract Year shall not exceed [* * *] percent [* * *] of the amount included for the total expenditure in the then-current Development Plan/Budget.

 

(b)           The Acceleron NA Operating Costs for any Contract Year shall not exceed [* * *] percent [* * *] of the amount included for the total expenditure in the then-current Commercialization Plan/Budget.

 

(c)           If the actual North American and European Development Costs enumerated in the Development Plan/Budget or if the Acceleron NA Operating Costs enumerated in the Commercialization Plan/Budget are expected to vary by more than [* * *] percent [* * *] from the amounts budgeted for expenditure during the Contract Year, the Party responsible for the forecasted variance shall promptly revise the Development Plan/Budget or Commercialization Plan/Budget, as applicable, and submit it in writing, with an explanation of the variance and the reasons therefore, to the other Party.  If the Joint Development Committee or Joint Commercialization Committee, as applicable, agrees in writing that the revised budget is acceptable then such revised budget shall be incorporated into the respective Development Plan/Budget or Commercialization Plan/Budget for the remainder of the Contract Year.

 

(d)           Notwithstanding the foregoing, this Section 5.5.4 shall not apply to North American and European Development Costs incurred by Celgene on or after January 1, 2013.

 

5.5.5.      Reconciliation Statements.  In addition to providing its report of North American and European Development Costs and Acceleron NA Operating Costs, as specified in Section 5.5.3, within [* * *] days following the end of a Contract Quarter, each Party will provide a summary report of North American and European Development Costs for the Contract Quarter, and Celgene shall prepare, in consultation with Acceleron, a statement (the “Reconciliation Statement”); provided that Celgene shall have no obligation to report to Acceleron Celgene’s North American and European Development Costs incurred on or after January 1, 2013.  Each Reconciliation Statement shall show Celgene’s calculations of costs to be shared by both Parties pursuant to this Section 5.5 and the cash settlement required.  Payments required pursuant to Reconciliation Statements shall be made by Acceleron or Celgene in the manner set forth in Section 5.7.5.

 

43

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5.6          Royalties.

 

5.6.1.      Royalty Percentages.  For sales of Licensed Products in the Territory, Celgene shall retain all amounts received for such sales; provided that Celgene shall pay to Acceleron the following royalty payments on a Licensed Product-by-Licensed Product basis during the applicable Royalty Term:

 

(a)           [* * *] percent [* * *] of annual Net Sales in each region of the Territory during a Contract Year for that portion of the annual Net Sales in such region that is less than or equal to [* * *];

 

(b)           [* * *] percent [* * *] of annual Net Sales in each region of the Territory during a Contract Year for that portion of the annual Net Sales in such region that is greater than [* * *] and less than or equal to [* * *]; and

 

(c)           [* * *] percent [* * *] of annual Net Sales in each region of the Territory during a Contract Year for that portion of the annual Net Sales in such region that is greater than [* * *];

 

provided further that the applicable thresholds above will be determined on a region-by-region basis with each of the following areas of the Territory treated as one region:  (i) North America and (ii) the rest of the Territory.

 

5.6.2.      Cumulative Royalties.  The obligation to pay royalties under this Agreement shall be imposed only once with respect to a single unit of a Licensed Product regardless of how many Valid Claims included within Acceleron Patent Rights would, but for this Agreement, be infringed by the Manufacture or Commercialization of such Licensed Product.

 

5.6.3.      Adjustment in Royalty Rates.

 

(a)           Know-How Only or Generic Competition.  On a country-by-country and Licensed Product-by-Licensed Product basis, upon the earlier to occur of (i) the date on which the offering for sale, selling, making, having made, using or importing of a Licensed Product is no longer covered by a Valid Claim of an Acceleron Patent Right in such country (but such Manufacture, use or sale of a Licensed Product continues to be covered by Acceleron Know-How) or (ii) the date on which in such country there are one or more Generic Products, then the royalty percentage applicable to Net Sales of such Licensed Product under Section 5.6.1 for such Licensed Product in such country shall be reduced by [* * *] percent [* * *] for the remainder of the Royalty Term.

 

(b)           Celgene Third Party Licenses.  In the event that one or more licenses to Third Party Intellectual Property are required by Celgene to offer for sale, sell, make, have made, use or import Licensed Compounds or Licensed Products in the Field in the Territory without infringing the Third Party Intellectual Property (including claims of a pending patent application that are reasonably expected to 

 

44

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

issue), then Celgene may offset [* * *] percent [* * *] of the amount of commercially reasonable royalties or other payments payable by Celgene to such Third Party (or paid or reimbursed by Celgene pursuant to Section 5.6.3(c)) with respect to a particular Licensed Product against amounts Celgene is obligated to pay Acceleron under Section 5.4 or Section 5.6.1 for such Licensed Product, provided that in no such event shall any such offset reduce by more than [* * *] percent [* * *] the payments otherwise due to Acceleron in particular Contract Years; provided further that on a Licensed Product-by-Licensed Product basis, any Third Party royalty payments that are not credited against royalties or sales milestones paid to Acceleron in the Contract Year in which they were accrued shall be carried forward and credited against royalties or sales milestones payable to Acceleron in the subsequent Contract Year(s) hereunder until such royalty credits are completely expended.  The calculation of the royalty reduction under this Section 5.6.3(b) shall be conducted on a country-by-country and Licensed Product-by-Licensed Product basis.  Celgene shall provide Acceleron with notice and a copy of each such license, and any modification or termination thereof, promptly (and in any event within [* * *] days after such agreement has been fully executed) after execution of such license, modification or termination; provided that any such copy may be redacted to remove any confidential, proprietary or competitive information of Celgene or its Sublicensee, but such copy shall not be redacted to the extent that it impairs Acceleron’s ability to ensure compliance with this Agreement.  With respect to any license entered into by Celgene to Third Party Intellectual Property, Celgene shall use Commercially Reasonable Efforts to ensure that such Third Party Intellectual Property is sublicensable to Acceleron to the extent required under this Agreement.

 

(c)           Third Party Intellectual Property.  Acceleron shall not enter into an agreement with a Third Party to obtain a license under Third Party Intellectual Property that solely covers the offering for sale, selling, making, having made, using or importing Licensed Compounds or Licensed Products in the Field in the Territory (including rights of a pending patent application that are reasonably expected to issue) without first offering Celgene the opportunity to contact such Third Party regarding entering into such agreement directly.  With respect to Third Party Intellectual Property that covers the offering for sale, selling, making, having made, using or importing Licensed Compounds or Licensed Products in the Field in the Territory but also covers Acceleron’s other products or compounds, Acceleron shall notify the Joint Development Committee or Joint Commercialization Committee, as applicable, of the Third Party Intellectual Property (a “Third Party Intellectual Property Notice”).  With respect to such a license for such Third Party Intellectual Property that covers the offering for sale, selling, making, having made, using or importing Licensed Compounds or Licensed Products in the Field in the Territory, Acceleron may enter into the license for such Third Party Intellectual Property; provided that, if the Joint Development Committee or Joint Commercialization Committee, as applicable,

 

45

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

determines that such Third Party Intellectual Property should be part of the Collaboration, then the following shall apply:  (i) Acceleron shall keep Celgene fully informed of the status of the negotiations with the Third Party and provide Celgene with copies of all draft agreements; (ii) Celgene may provide comments and suggestions with respect to the negotiation of the agreement with the Third Party, and Acceleron shall reasonably consider all comments and suggestions reasonably recommended by Celgene; (iii) Acceleron shall use Commercially Reasonable Efforts to ensure that such Third Party Intellectual Property is sublicensable to Celgene in accordance with the terms of this Agreement, treating (unless otherwise agreed by the Parties) the Third Party Intellectual Property as Acceleron Know-How or Acceleron Patent Rights hereunder and treating the agreement licensing such the Third Party Intellectual Property in the same way as the Salk License (including as provided in Section 4.5), except for payment obligations; provided that, if Acceleron is not able to obtain a license from such Third Party that is sublicensable in accordance with this clause (iii), then Acceleron shall promptly so notify Celgene and shall exclude from any such license that Acceleron obtains the offering for sale, selling, making, having made, using or importing Licensed Compounds or Licensed Products in the Field in the Territory, and (iv) the Parties shall allocate the Third Party Intellectual Property Costs, unless otherwise agreed, as follows: (x) the Parties shall determine in good faith an allocation of upfront payments and intellectual property acquisition fees paid to any such Third Party with respect to Licensed Compounds or Licensed Products to be treated as either Development Costs or Operating Costs, (y) development milestone payments owed to such Third Party that are required to be paid as a result of the Development of Licensed Compounds or Licensed Products shall be treated as Development Costs, and (z) sales milestone payments and royalties owed to such Third Party that are required to be paid as a result of sales of Licensed Products shall be treated as royalties paid to Third Parties pursuant to Section 5.6.3(b).  In the event that Acceleron delivers to Celgene a Third Party Intellectual Property Notice and pursues a license to the applicable Third Party Intellectual Property from such Third Party, Celgene will not directly or indirectly (other than through Acceleron pursuant to this Agreement) pursue a license to such Third Party Intellectual Property unless (1) Acceleron decides to not pursue a license to such Third Party Intellectual Property that covers a Licensed Compound or Licensed Product (in which event, Acceleron will promptly notify Celgene of such decision), (2) Acceleron notifies Celgene that Acceleron is not able to obtain a sublicensable license in accordance with clause (iii) of the third sentence of this Section, or (3) Celgene was already in discussions with such Third Party prior to Celgene’s receipt of the Third Party Intellectual Property Notice regarding licensing such Third Party Intellectual Property.

 

(d)                                 Buy-Down.  Celgene may elect to reduce the royalty percentages set forth in Section 5.6.1 and in Section 5.6.1 of that certain Collaboration, License and Option Agreement entered into by the Parties as of August 2, 2011 (as amended

 

46

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

from time to time in accordance with its terms, the “ACE-536 Agreement”) by (i) providing Acceleron with written notice of Celgene’s election on or before January 1, 2013 and (ii) paying to Acceleron a one-time payment of $25 million (the “Buy-Down Payment”) within 30 days of the date of such notice.  Immediately upon payment by Celgene of the Buy-Down Payment, the royalty payments to be paid by Celgene to Acceleron under Section 5.6.1 of this Agreement shall be replaced with the following royalty payments:

 

(i)                                     [* * *] of annual Net Sales in each region of the Territory during a Contract Year for that portion of the annual Net Sales in such region that is less than or equal to [* * *];

 

(ii)                                  [* * *] of annual Net Sales in each region of the Territory during a Contract Year for that portion of the annual Net Sales in such region that is greater than [* * *] and less than or equal to [* * *]; and

 

(iii)                               [* * *] of annual Net Sales in each region of the Territory during a Contract Year for that portion of the annual Net Sales in such region that is greater than [* * *];

 

provided that the applicable thresholds above will be determined on a region-by-region basis with each of the following areas of the Territory treated as one region:  (x) North America and (y) the rest of the Territory.  Any adjusted royalty payment made under this Section 5.6.3(d) shall be subject to reduction pursuant to Section 5.6.3(a) through Section 5.6.3(c) (and all references to Section 5.6.1 in such sections shall be deemed to be references to this Section 5.6.3(d) if applicable).  The payment of the Buy-Down Payment shall also have the effects set forth in Section 5.6.3(a) of the ACE-536 Agreement.

 

5.6.4.                  Reports and Royalty Payments.  Within [* * *] days after the beginning of each Contract Quarter during the Royalty Term, Celgene shall deliver to Acceleron a report setting forth for the previous Contract Quarter the following information on a Licensed Product-by-Licensed Product and country-by-country basis in the Territory:  (a) the gross sales and Net Sales of Licensed Product, (b) the number of units sold by Celgene, its Affiliates or Sublicensees, (c) the basis for any adjustments to the royalty payable for the sale of each Licensed Product, and (d) the royalty due hereunder for the sales of each Licensed Product (the “Royalty Report”).  The total royalty due for the sale of Licensed Products during such Contract Quarter shall be remitted at the time such report is made.  No such reports or royalty shall be due for any Licensed Product before the First Commercial Sale of such Licensed Product.

 

5.7                               Payment Provisions Generally.

 

5.7.1.                  Taxes and Withholding.  If laws, rules or regulations require withholding of income taxes or other taxes imposed upon payments set forth in Section 5.6, Celgene shall make

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

such withholding payments as required and subtract such withholding payments from the payments set forth in Section 5.6.  Celgene shall submit appropriate proof of payment of the withholding taxes to Acceleron within a reasonable period of time.  At the request of Acceleron, Celgene shall give Acceleron such reasonable assistance, which shall include the provision of appropriate certificates of such deductions made together with other supporting documentation as may be required by the relevant tax authority, to enable Acceleron to claim exemption from such withholding or other tax imposed or obtain a repayment thereof or reduction thereof and shall upon request provide such additional documentation from time to time as is reasonably required to confirm the payment of tax.

 

5.7.2.                  Payment and Currency Exchange.

 

(a)                                 All amounts (including all costs sharing) payable and calculations hereunder shall be in United States dollars and shall be paid by bank wire transfer in immediately available funds to such bank account as may be designated in writing by Acceleron or Celgene, as applicable, from time to time.  Whenever for the purposes of calculating the royalties payable under Section 5.6 or the costs payable under Section 5.5 conversion from any foreign currency shall be required, all amounts shall first be calculated in the currency of sale or currency of incurrence and then converted into United States dollars by applying the average monthly rate of exchange listed in the New York edition of The Wall Street Journal for the final month of the applicable Contract Quarter.

 

(b)                                 Where royalty amounts are due for Net Sales in a country where, for reasons of currency, tax or other regulations, transfer of foreign currency out of such country is prohibited, Celgene has the right to place Acceleron’s royalties in a bank account in such country in the name of and under the sole control of Acceleron; provided, however, that the bank selected be reasonably acceptable to Acceleron and that Celgene inform Acceleron of the location, account number, amount and currency of money deposited therein.  After Acceleron has been so notified, those monies shall be considered as royalties duly paid to Acceleron and will be completely controlled by Acceleron.

 

(c)                                  When in any country in the Territory the law or regulations prohibit both the transmittal and the deposit of royalties on sales in such country, royalty payments due on Net Sales shall be suspended for as long as such prohibition is in effect and as soon as such prohibition ceases to be in effect, all royalties that Celgene would have been under an obligation to transmit or deposit but for the prohibition shall forthwith be deposited or transmitted, to the extent allowable.

 

5.7.3.                  Records.  Each Party shall keep and maintain accurate and complete records which are relevant to costs, expenses, sales and payments throughout the Territory used to determine payments to be made under this Agreement, and such records shall be maintained for a period of three (3) years from creation of individual records for examination at the other Party’s expense by an independent certified public accountant 

 

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selected by the other Party as described in Section 5.7.4.  A Party’s right to complete a final audit upon termination or expiration of this Agreement shall expire one year after such termination or expiration.  Any records or accounting information received from the other Party shall be Confidential Information of the disclosing Party for purposes of Article 9 of this Agreement.  Results of any such audit shall be provided to both Parties, subject to Article 9 of this Agreement.

 

5.7.4.                  Audits and Interim Reviews.

 

(a)                                 Subject to the provisions of Section 5.7.3, either Party may request that a nationally recognized, independent accounting firm to be mutually agreed upon by the Parties, which is not either Party’s independent accounting firm, perform an audit or interim review of the other Party’s books as they relate to this Agreement in order to express an opinion regarding such Party’s accounting for revenues, costs and expenses, as applicable, under this Agreement.  Such audits or review shall be conducted at the expense of the requesting Party.

 

(b)                                 Upon [* * *] Business Days’ prior written notice from a Party (the “Auditing Party”), the other Party (the “Audited Party”) shall permit such accounting firm to examine the relevant books and records of the Audited Party, including any Affiliates, as may be reasonably necessary to verify the reports and information submitted by the Audited Party and the accuracy of any Royalty Report or Reconciliation Statement.  An examination by a Party under this Section 5.7.4 (whether of the Audited Party or its Affiliates) shall [* * *] and shall be limited to the pertinent books and records for any Contract Year ending not more than [* * *] months before the date of the request.  The accounting firm shall be provided access to such books and records at the Audited Party’s facility(ies) where such books and records are normally kept and such examination shall be conducted during the Audited Party’s normal business hours.  The Audited Party may require the accounting firm to sign a standard non-disclosure agreement with terms that are not inconsistent with the terms of this Agreement before providing the accounting firm access to the Audited Party’s facilities or records.  Upon completion of the audit, the accounting firm shall provide both Celgene and Acceleron a written report disclosing whether the reports submitted by the Audited Party are correct or incorrect and the specific details concerning any discrepancies.  No other information shall be provided to the Auditing Party.  If the accountant determines that, based on errors in the reports so submitted, any report prepared in accordance with this Agreement is incorrect, the Parties shall promptly revise the report and the associated Royalty Report or Reconciliation Statement and any additional amount owed by one Party to the other shall be paid within [* * *] days after receipt of the accountant’s report, along with interest as provided in Section 5.7.5; provided, however, that no such interest shall be payable if the errors leading to the Royalty Report or Reconciliation Statement being incorrect were in the reports provided by the Party to receive such additional amount.  Additionally, if the accountant determines that

 

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the reports submitted by the Audited Party misstate the Audited Party’s share of costs by more than [* * *] percent [* * *] to the Auditing Party’s detriment, the Audited Party shall reimburse the Auditing Party for the expenses incurred by the Auditing Party in conducting the audit.  In the event of any sublicense or transfer of rights with respect to Licensed Compounds or Licensed Products by a Party under this Agreement, the sublicensor or transferor shall provide for audit rights by the other Party to this Agreement in accordance with this Section 5.7.4.

 

5.7.5.                  Payments Between the Parties.  There shall be a cash settlement between the Parties no later than [* * *] days after the end of each Contract Quarter.  In the event that (a) any payment hereunder (including any royalty payment due by Celgene to Acceleron under this Agreement) is made after the date specified in the preceding sentence (other than the extent that a payment that is the subject of a good faith dispute between the Parties that has been outstanding for no more than [* * *] Business Days), and (b) such payment is overdue by more than [* * *] Business Days, the paying Party shall pay interest to the other Party at the lesser of (i) the annualized interest rate at the three (3) month LIBOR plus one percent (1%) or (ii) the highest rate permitted by applicable law from the date that such additional amount should have first been paid.

 

Article 6
 EXCLUSIVITY

 

6.1                               Prohibitions.

 

6.1.1.                  If Celgene irrevocably forfeits its rights to develop an Option Compound pursuant to Article 7 (a “Forfeited Option Compound”), then, during the Agreement Term, neither Acceleron nor any of its Affiliates, directly or indirectly with a Third Party, shall, with any such Forfeited Option Compound or product containing any such Forfeited Option Compound (i) conduct any clinical study whose primary endpoint is [* * *] unless such clinical study is required by any Regulatory Authority, in which event, the provisions of clauses (ii) and (iii) of this Section shall apply notwithstanding the conduct of such clinical trials, (ii) seek or obtain Regulatory Approval for such product indicated for [* * *], or (iii) market or promote such product for the [* * *].

 

6.1.2.                  During the Agreement Term, neither Acceleron nor any of its Affiliates, directly or indirectly with a Third Party, shall, with any product containing [* * *]: (i) conduct any clinical study whose primary endpoint is [* * *] unless such clinical study is required by any Regulatory Authority, in which event, the provisions of clauses (ii) and (iii) of this Section shall apply notwithstanding the conduct of such clinical trials, (ii) seek or obtain Regulatory Approval for such product indicated for [* * *], or (iii) market or promote such product for [* * *].  Notwithstanding the foregoing, neither Acceleron nor its Affiliates shall be restricted in any way, directly or indirectly, from developing or commercializing [* * *] for [* * *].

 

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6.1.3.                  During the Agreement Term, neither Party nor any of its Affiliates, directly or indirectly with a Third Party, shall, whether pursuant to this Agreement or otherwise, with any product containing [* * *] (i) conduct any clinical study whose primary endpoint is [* * *] unless such clinical study is required by any Regulatory Authority, in which event, the provisions of clauses (ii) and (iii) of this Section shall apply notwithstanding the conduct of such clinical trials, (ii) seek or obtain Regulatory Approval for such product indicated for [* * *], or (iii) market or promote such product for [* * *].

 

6.1.4.                  In any Third Party license, development, research, collaboration, commercialization or similar agreement with respect to an Option Compound, [* * *], [* * *], or other product, as applicable, each Party and its Affiliates shall include restrictions on such Third Party’s use of the Party’s or its Affiliates intellectual property that are the same as those on the Parties and its Affiliates set forth in this Section 6.1.  For clarity, the prohibition on conducting activities directly or indirectly with a Third Party includes a prohibition on providing any support for an external or academic investigator or site for conducting a clinical study.

 

6.1.5.                  During the Agreement Term, neither Acceleron nor any of its Affiliates, directly or indirectly with a Third Party, shall, with any product: (a) conduct any clinical study whose primary endpoint is Use in Anemia unless such clinical study is required by any Regulatory Authority, in which event, the provisions of clauses (b) and (c) of this Section shall apply notwithstanding the conduct of such clinical trials; (b) seek or obtain Regulatory Approval for such product indicated for Use in Anemia; or (c) market or promote such product for Use in Anemia.  Notwithstanding the foregoing, the provisions of this Section 6.1.5 shall not apply to Acceleron or its Affiliates to the extent of conducting the activities required to fulfill Acceleron’s obligations hereunder or under the ACE-536 Agreement.

 

6.1.6.                  Notwithstanding the foregoing, the provisions of Section 6.1.5 (or the provisions in Section 6.1.4 related thereto) shall not apply to the activities of [* * *], its sublicensees (of the rights granted by Acceleron under the [* * *] Agreement), Affiliates, successors and/or assigns, or to Acceleron and its Affiliates fulfilling their respective obligations to [* * *], its sublicensees (of the rights granted by Acceleron under the [* * *] Agreement), Affiliates, successors and/or assigns, with respect to any and all compounds covered by the rights granted by Acceleron prior to the Effective Date to [* * *] pursuant to the [* * *] by and between Acceleron and [* * *], as amended from time to time in accordance with its terms (the “[* * *] Agreement”), so long as the [* * *] Agreement continues to remain in effect; provided that (a) any future rights granted to [* * *] (including by any amendment or modification of the [* * *] Agreement) shall be subject to the provisions of Section 6.1.5 (or the provisions in Section 6.1.4 related thereto); (b) if Acceleron agrees to collaborate with [* * *] on the identification, research and development of any product or compound (other than [* * *] (as each term is defined in the [* * *] Agreement as of the date hereof)) shall be subject to the provisions of Section 6.1.5 (or the provisions in Section 6.1.4 related thereto).  Acceleron represents and warrants to Celgene that neither [* * *] nor [* * *] is a [* * *] (as defined in the [* * *] Agreement as of the date hereof).

 

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6.1.7.                  For purposes of this Article 6, each of the following terms shall have the meanings set forth below:

 

(a)                                 “Anemia” means [* * *].  For the avoidance of doubt, [* * *] includes any decrease in function and quality of [* * *], or any deficiency in the function of [* * *], or less than the normal [* * *], or any deficiency in the function of [* * *].

 

(b)                                 “Use in Anemia” means the treatment, prevention, modulation or diagnosis of Anemia, including any companion diagnostic or biomarkers associated with the treatment, prevention, modulation or diagnosis of Anemia.  For example, treatment includes [* * *].

 

6.2                               Third Party Acquisitions.

 

6.2.1.                  [* * *].  The provisions of Sections 6.1.1, 6.1.2 and 6.1.3 (and the provisions of Section 6.1.4 related thereto) are not intended to apply to any activity otherwise prohibited by such sections if a Party’s involvement in such prohibited activity results from such Party’s acquisition by a Third Party (either directly or through any Affiliate, whether by merger, purchase of assets or equity, or otherwise), but only if (i) such Third Party, prior to such acquisition or merger, was already engaged in such prohibited activity (the “Third Party Activity”), and (ii) no Celgene Technology, Acceleron Technology, or Joint Technology is used in connection with such Third Party Activities.

 

6.2.2.                  Anemia Exclusivity.  The provisions of Section 6.1.5 (and the provisions of Section 6.1.4 related thereto) do not apply to any activity otherwise prohibited by Section 6.1.5 if Acceleron’s involvement or the involvement of any of its Affiliates in such prohibited activity results from or occurs subsequently to the acquisition of Acceleron by a Third Party (either directly or through any Affiliate, whether by merger, purchase of assets or equity, or otherwise), but only if:

 

(a)                                 no Celgene Technology, Acceleron Technology or Joint Technology is used in connection with such Third Party activities;

 

(b)                                 no Patent Rights Controlled by Acceleron or its Affiliates immediately prior to the acquisition or Patent Rights developed based on the Know-How described in Section 6.2.2(c) is used in connection with such Third Party activities;

 

(c)                                  no Know-How relating to [* * *] compounds (including [* * *] of any such compounds) Controlled by Acceleron or their Affiliates prior to the acquisition or further Know-How relating to such [* * *] compound developed based on such existing Know-How is used in connection with such Third Party activities for the longer of [* * *] from the Effective Date or [* * *] from the date of the acquisition of Acceleron by a Third Party; and

 

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(d)                                 no Know-How Controlled by Celgene or its Affiliates that is provided, prior to the acquisition, to Acceleron pursuant to this Agreement or developed based on such existing Know-How is used in connection with such Third Party activities.

 

6.2.3                     Acquisitions of Acceleron by Certain Third Parties.  Subsequent to an acquisition of Acceleron by a designated Third Party set forth in Schedule 6.2.3, the following shall apply:

 

(a)                                 Notwithstanding anything to the contrary in Section 2.1.1, Celgene shall be solely responsible for conducting all Development activities of each Licensed Compound or related Licensed Product in the Field;

 

(b)                                 Notwithstanding anything to the contrary in Section 2.4.1, Celgene may, within [* * *] days, provide Acceleron with written notice, at Celgene’s sole discretion, instructing Acceleron to cease all Manufacturing activities hereunder;

 

(c)                                  Celgene’s obligation to provide reports under Article 2 and Article 3 shall cease; provided, however, that Celgene shall continue to provide reports under Section 2.9.3 (which reports will be respect to the entire Territory, not just outside North American and Europe) and semiannual reports regarding Development of Licensed Products; and

 

(d)                                 The Joint Development Committee and Joint Commercialization Committee shall each be dissolved, in which event, (i) Celgene, in its own sole discretion, shall make all decisions, and take all actions, ascribed to the Joint Development Committee or Joint Commercialization Committee pursuant to and subject to the remaining applicable terms and conditions of this Agreement (and, in furtherance thereof, all applicable references to Joint Development Committee or Joint Commercialization Committee hereunder shall be deemed to be references to Celgene); and (ii) Celgene’s obligations under Article 2 and Article 3 (x) to report or share with Acceleron the Development Plan/Budget and Commercialization Plan/Budget, and (y) to consult with Acceleron or permit Acceleron to participate with respect to Development, Commercialization, or regulatory matters shall cease; provided that, to the extent that Acceleron elects or continues to co-promote any Licensed Product pursuant to Section 2.7, Celgene shall continue to comply with the obligations of such section with respect to such co-promotion   .

 

6.3                               Acquisitions of Third Parties.  The provisions of this Article 6 do not apply to any activity otherwise prohibited by this Article 6 if a Party’s involvement or the involvement of any of its Affiliates in such prohibited activity results from such Party’s acquisition (either directly or through any Affiliate, whether by merger, purchase of assets or equity, or otherwise) of all or substantially all of the business or assets of a Third Party, but only if (i) such Third Party, prior to such acquisition or merger, was already engaged in such prohibited activity (the “Acquired

 

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Party Activity”), and (ii) such acquiring Party shall, within thirty (30) days after the date of such Party’s consummation of such acquisition, notify the other Party of such acquisition and comply with the other provisions of this Section 6.3.  Following consummation of such an acquisition, the acquiring Party shall, at its option, either (i) [* * *], or (ii) promptly discontinue such Acquired Party Activity; provided that, notwithstanding which option is chosen, such [* * *] must be accomplished no later than [* * *] after the closing of such Party’s acquisition of the Acquired Party Activity.  During the time period following the consummation of an acquisition covered by this Section 6.3 through the [* * *], the acquiring Party shall not use any [* * *] in connection with such Acquired Party Activities.  So long as the acquiring Party [* * *], the Acquired Party Activity in accordance with this Section 6.3, such acquisition shall not be deemed a violation of this Article 6.  Notwithstanding anything to the contrary in this Article 6, this Section 6.3 shall not apply to any activity of Acceleron, its Affiliates or a Third Party acquirer of Acceleron subsequent to the acquisition of Acceleron by a Third Party (either directly or through any Affiliate, whether by merger, purchase of assets or equity, or otherwise); provided that the provisions of Section 6.2 shall continue to apply to Acceleron, its Affiliates, a Third Party acquirer of Acceleron and any Third Party acquired by Acceleron (either directly or through any Affiliate, whether by merger, purchase of assets or equity, or otherwise).

 

6.4                               Termination of ACE-536 Agreement.  In the event of termination of the ACE-536 Agreement by Acceleron for cause under Section 10.2.1 of the ACE-536 Agreement, Acceleron’s use of any “Licensed Compounds” or “Licensed Products” under the ACE-536 Agreement shall no longer be subject to the exclusivity provisions of Article 6 of this Agreement that relate to a product for Use in Anemia; provided that, for the avoidance of doubt, any other exclusivity provisions of this Agreement shall continue to apply.  For the avoidance of doubt, termination of the ACE-536 Agreement under Section 10.3 or Section 10.4 of the ACE-536 Agreement or expiration of the ACE-536 Agreement shall not affect any rights or obligations of the Parties under this Agreement, and Acceleron’s use of any “Licensed Compounds” or “Licensed Products” under the ACE-536 Agreement shall continue to be subject to any exclusivity provisions of this Agreement.

 

Article 7
 OPTION PROGRAM

 

7.1                               Conduct of Option Compound Programs.  Acceleron shall be solely responsible for, and shall pay all costs associated with, managing all Development, and Manufacturing activities for each Option Compound through the completion of Phase 2A Clinical Trials for each Option Compound in its sole discretion.  Unless Celgene forfeits its right to an Option Compound pursuant to Section 7.2, for a period of [* * *] from the Effective Date, Celgene shall have the exclusive option to such Option Compound in accordance with the terms hereof, and Acceleron shall not grant any Third Party any rights to such Option Compound.

 

7.2                               Option Program Payments.  With respect to products containing [* * *] Antibodies, [* * *] Antibodies, or [* * *] Antibodies, Acceleron shall provide Celgene with written notice after the earliest date on which the corresponding milestone event has first been achieved with respect to the applicable Option Compound.  In the event that Celgene makes each payment set forth in

 

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the chart below, through and including the payment due upon completion of a Phase 2A Clinical Trial, (the “Option Program Payments”) with respect to products containing [* * *] Antibodies, [* * *] Antibodies, or [* * *] Antibodies no later than [* * *] days (or [* * *] days in the case of the third milestone event related to delivery of the results of the Phase 2A Clinical Trial) after Celgene’s receipt of notice from Acceleron that the corresponding milestone event has first been achieved with respect to the applicable Option Compound, (i) the definition of “Licensed Compound” shall automatically be deemed, effective as of the date of receipt of the last applicable Option Program Payment by Acceleron, to include [* * *] Antibodies, [* * *] Antibodies, or [* * *] Antibodies, as applicable, and (ii) the definition of “Acceleron Patent Rights” shall automatically be deemed, effective as of the date of receipt of the last applicable Option Program Payment by Acceleron, to include the [* * *] Antibody Patent Rights, [* * *] Antibody Patent Rights, or [* * *] Antibody Patent Rights, as applicable.  In the event that Celgene does not make each Option Program Payment for a particular Option Compound within the required time period, Celgene shall fully and irrevocably forfeit any right to develop such Option Compound, and all right, title and interest in such Option Compound shall remain the property of Acceleron.  For clarity, the making of any Option Program Payment is solely within the discretion of Celgene.

 

	
 
    	
 
    	
Payment for Each Option Compound
    	
 
    
	
Milestone Event
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
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$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    
	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    	
$
    	
[* * *]
    	
 
    

 

For clarity, each Option Program Payment set forth in this Section 7.2 shall be paid only once for each Option Compound, regardless of whether more than one Clinical Trial may be conducted for such Option Compound.

 

7.3                               Updates; Reports.  For so long as Celgene’s option under this Article 7 remains in place, Acceleron shall provide Celgene with regular updates no less than once a [* * *] on the results of the Option Compound Development program.  Such updates shall be conducted by telephone or video-conference, and prior to each such update, Acceleron shall provide Celgene with a written summary of the activities conducted under the Option Compound program for the preceding [* * *] and supporting data related thereto.  Celgene shall have the right to reasonably request and to receive in a timely manner clarifications and answers to questions with respect to such reports.

 

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Article 8
 INTELLECTUAL PROPERTY PROTECTION AND RELATED MATTERS

 

8.1          Salk Patent Rights.

 

8.1.1.      Celgene acknowledges that the Acceleron Patent Rights listed on Schedule 8.1 (the “Salk Patent Rights”) have been licensed by Acceleron from Salk pursuant to the Salk License.

 

8.1.2.      Acceleron acknowledges that, pursuant to the Salk License, it has the below rights with respect to the Salk Patent Rights and agrees to keep Celgene fully informed of these rights, as well as provide to Celgene all information and copies of documents received from Salk or its patent counsel relating to the Salk Patent Rights:

 

(a)           The right to proceed with the Prosecution of the Salk Patent Rights in the event that Salk does not exercise its rights to do so;

 

(b)           The right, in certain circumstances, to review any patent documents prior to filing and to provide comments and suggestions for revision thereof; and

 

(c)           The right, in certain circumstances, to initiate legal proceedings against third parties for infringement of the Salk Patent Rights.

 

8.1.3.      In the event that Acceleron is permitted to proceed with Prosecution, provide comments or suggestions to patent documents, or initiate legal proceedings with respect to the Salk Patent Rights, then such Salk Patent Rights shall be treated in the same manner as other Acceleron Patent Rights under this Article 8, and Acceleron shall exercise all such rights with respect to the Salk Patent Rights pursuant to the instructions of Celgene, if Celgene is given the first right to act under this Article 8.

 

8.2          Prosecution of Patent Rights.

 

8.2.1.      Other Acceleron Patent Rights and Joint Patent Rights.  The following terms shall apply to all Acceleron Patent Rights owned by Acceleron and all Joint Patent Rights.

 

(a)           Primary Responsibility.

 

(i)            Acceleron, through counsel of its choosing, shall have primary responsibility for and control over obtaining, filing, prosecuting (including any interferences, reissue proceedings, re-examinations, oppositions, and revocations), and maintaining (collectively, “Prosecuting” or, when used as a noun, “Prosecution”) throughout the Territory the Acceleron Patent Rights (and, for clarity, will be the “Prosecuting Party” with respect to the Acceleron Patent Rights), and Celgene shall cooperate with Acceleron in regard thereto.  Celgene, through counsel of its choosing, shall have primary responsibility for and control over Prosecuting throughout the

 

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Territory the Joint Patent Rights (and, for clarity, will be the “Prosecuting Party” with respect to the Joint Patent Rights), and Acceleron shall cooperate with Celgene in regard thereto.  If the Prosecuting Party elects to abandon (except in the course of Prosecution to pursue such subject matter or claim in a continuing application) any subject matter or claim that (x) relates to any of the rights licensed to the Non-Prosecuting Party hereunder or (y) is filed or requested to be filed by a Prosecuting Party at the request of the Non-Prosecuting pursuant to Section 8.2.1(a)(ii), the Prosecuting Party shall so notify the Non-Prosecuting Party promptly (but no less than [* * *] prior to any deadlines for Prosecution) in writing of its intention in good time to enable the Non-Prosecuting Party to meet any deadlines by which an action must be taken to preserve any such rights in such subject matter or claim, and the Non-Prosecuting Party shall be entitled to acquire control of Prosecuting such subject matter or claim and be deemed the Prosecuting Party with respect thereto.

 

(ii)           Notwithstanding the foregoing, the Prosecuting Party’s choice of outside patent counsel shall be reasonably acceptable to the Non-Prosecuting Party, and the Prosecuting Party shall keep the Non-Prosecuting Party fully informed of Prosecution and provide the Non-Prosecuting Party with copies of material correspondence (including applications, office actions, responses, etc.) relating to Prosecution of any Patent Rights being Prosecuted by such Prosecuting Party.  The Non-Prosecuting Party may provide comments and suggestions with respect to any material actions to be taken by the Prosecuting Party, and the Prosecuting Party shall reasonably consider all comments and suggestions and shall take all Prosecution actions reasonably recommended by the Non-Prosecuting Party.  The Prosecuting Party shall consult with the Non-Prosecuting Party before taking any action that would have a material adverse impact on the scope of claims within the Acceleron Patent Rights or Joint Patent Rights, as applicable.  The Prosecuting Party shall use Commercially Reasonable Efforts to Prosecute additional claims substantially similar to those suggested by the Non-Prosecuting Party, if any, in such jurisdictions of the Territory requested by the Non-Prosecuting Party.

 

(iii)          In order to facilitate the Non-Prosecuting Party’s right to comment, the Prosecuting Party shall provide copies of all such official correspondence and any proposed responses by the Prosecuting Party at least [* * *] days prior to any filing or response deadlines, or within [* * *] Business Days of the Prosecuting Party’s receipt of any official correspondence if such correspondence only allows for [* * *] or less to respond, and the Non-Prosecuting Party shall provide any comments promptly and in sufficient time to allow the Prosecuting Party to meet

 

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applicable filing requirements.  In no event shall the Prosecuting Party be required to delay any submission, filing or response past any deadline that is not extendable.  The Prosecuting Party agrees to use Commercially Reasonable Efforts to avoid extension fees, unless agreed to in advance by the Parties, and to take such action as deemed reasonably necessary to preserve pendency of the Patent Rights being Prosecuted by such Prosecuting Party, including the filing of any new or continuing patent application or payment of any fee necessary to preserve pendency of a pending application.

 

(iv)          Acceleron covenants and agrees that it shall not grant any Third Party any right to control the Prosecution of the Acceleron Patent Rights or to approve or consult with respect to any Patent Rights licensed to Celgene hereunder, in any case, that is more favorable to the rights granted to Celgene hereunder or otherwise conflicts with Celgene’s rights hereunder.

 

(b)           Common Interest.  All information exchanged between the Parties or between the Parties’ outside patent counsel regarding Prosecution of the Acceleron Patent Rights or Joint Patent Rights shall be deemed Confidential Information.  In addition, the Parties acknowledge and agree that, with regard to such Prosecution of the Acceleron Patent Rights or Joint Patent Rights, the interests of the Parties as licensor and licensee are to obtain the strongest patent protection possible, and as such, are aligned and are legal in nature.  The Parties agree and acknowledge that they have not waived, and nothing in this Agreement constitutes a waiver of, any legal privilege concerning the Acceleron Patent Rights or Joint Patent Rights, including privilege under the common interest doctrine and similar or related doctrines.

 

(c)           Election Not to Continue Prosecution; Abandonment.  If a Prosecuting Party elects (i) not to Prosecute patent applications for the Acceleron Patent Rights or Joint Patent Rights under its Prosecution control in any country, (ii) not to continue the Prosecution of any Acceleron Patent Right or Joint Patent Right under its Prosecution control in a particular country in the Territory, (iii) not to Prosecute patent applications for the Acceleron Patent Rights or Joint Patent Rights under its Prosecution control in a particular country following a written request from the Non-Prosecuting Party to Prosecute in such country, or (iv) not to Prosecute patent applications for the Acceleron Patent Rights or Joint Patent Rights under its Prosecution control reasonably sufficient to protect the Licensed Compounds and Licensed Product following a written notice from the Non-Prosecuting Party setting forth the Non-Prosecuting Party’s good faith analysis of the insufficiency of the Prosecuting Party’s patent applications, then the Prosecuting Party shall so notify the Non-Prosecuting Party promptly (but no less than 30 days prior to the date that a response is due) in writing of its intention in good time to enable the Non-Prosecuting Party to meet any deadlines by which an

 

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action must be taken to establish or preserve any such rights in such patent in such country, and the Prosecuting Party shall permit the Non-Prosecuting Party, should the Non-Prosecuting Party choose to do so, to Prosecute or otherwise pursue such Acceleron Patent Rights or Joint Patent Rights in such country in the Non-Prosecuting Party’s own name, and the Prosecuting Party shall cooperate with the Non-Prosecuting Party in regard thereto.

 

8.2.2.      Celgene Patent Rights.  Celgene, through counsel of its choosing, shall have the sole responsibility for and control over Prosecuting throughout the Territory the Celgene Patent Rights, but shall have no obligation to Prosecute such Patent Rights.

 

8.2.3.      Cooperation.  Each Party hereby agrees: (a) to make its employees, agents and consultants reasonably available to the other Party (or to the other Party’s authorized attorneys, agents or representatives), to the extent reasonably necessary to enable such Party to undertake patent Prosecution as contemplated by this Agreement; (b) to cooperate, if necessary and appropriate, with the other Party in gaining patent term extensions wherever applicable to Patent Rights that are subject to this Agreement; and (c) to endeavor in good faith to coordinate its efforts with the other Party to minimize or avoid interference with the Prosecution of the other Party’s patent applications that are subject to this Agreement.

 

8.2.4.      Patent Procurement Costs.

 

(a)           All Patent Procurement Costs related to Prosecuting Patent Rights hereunder in Designated Countries shall be shared by the Parties as follows:  (a) Patent Procurement Costs relating to the Prosecution of Celgene Patent Rights in Designated Countries or any other countries in the Territory shall be paid for by Celgene, (b) Patent Procurement Costs relating to the Prosecution of Joint Patent Rights in Designated Countries shall be borne equally by the Parties, and (c) Patent Procurement Costs relating to the Prosecution of Acceleron Patent Rights in Designated Countries shall be borne [* * *] percent [* * *] by Acceleron and * * * percent [* * *] by Celgene.

 

(b)           In the event that Celgene requests that an Acceleron Patent Right or a Joint Patent Right be Prosecuted in any country other than the Designated Countries, then any Patent Procurement Costs relating to such Prosecution of such Acceleron Patent Right or Joint Patent Right, as applicable, in such country shall be deemed a Development Cost.  In the event that Acceleron requests that a Joint Patent Right be Prosecuted in any country other than the Designated Countries, then any Patent Procurement Costs relating to such Prosecution of such Joint Patent Right in such country shall be borne [* * *] percent [* * *] by Acceleron and [* * *] percent [* * *] by Celgene.

 

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(c)           Notwithstanding anything else in this Section 8.2.4, any Patent Procurement Costs owed by Acceleron to Salk or any other third party licensor pursuant to an agreement executed by Acceleron prior to the Effective Date (or, with respect to any Option Compound, prior to the date that such Option Compound is deemed a Licensed Compound in accordance with Article 7) shall be borne solely by Acceleron.

 

8.3          Enforcement of Patent Rights.

 

8.3.1.      Notification.  Each Party shall promptly report in writing to the other Party during the Agreement Term any (a) known or suspected infringement of any Acceleron Patent Rights, Joint Patent Rights or Celgene Patent Rights claiming or relating to Licensed Compounds or Licensed Products, by a Third Party or (b) unauthorized use or misappropriation of any Confidential Information, including Acceleron Technology, Joint Technology and Celgene Technology claiming or relating to Licensed Compounds or Licensed Products, by a Third Party of which it becomes aware and shall provide the other Party with all available evidence supporting such infringement, or unauthorized use or misappropriation.

 

8.3.2.      Rights to Enforce.

 

(a)           Acceleron Technology.  The following terms shall apply to all Acceleron Patent Rights (including Acceleron Patent Rights resulting from Acceleron Collaboration IP), Acceleron Improvements and Acceleron Know-How owned by Acceleron and, with respect to other Acceleron Technology (excluding Acceleron Collaboration IP), including Salk Patent Rights, to the extent permitted by the Salk Licenses or other applicable third party licenses.  In respect of Licensed Compounds and Licensed Products in the Territory, Acceleron shall have the first right, but not the obligation, to take any reasonable measures it deems appropriate to stop infringing activities in the Field in the Territory with respect to (including initiating or prosecuting an infringement or other appropriate suit or action against any Third Party who at any time has infringed, or is suspected of infringing, or defending any declaratory judgment action with respect to) any Acceleron Patent Rights claiming or relating to Licensed Compounds or Licensed Products (including Acceleron Patent Rights resulting from Acceleron Collaboration IP) or of using without proper authorization any Acceleron Know-How and Acceleron Improvements.  In the event that Acceleron elects not to take action pursuant to this Section 8.3.2(a), Acceleron shall so notify Celgene promptly in writing of its intention in good time to enable Celgene to meet any deadlines by which an action must be taken to establish or preserve any enforcement rights, and Celgene shall have the right (to the extent Acceleron has the ability to grant Celgene such right with respect to the Salk Patent Rights or other applicable third party Patent Rights), but not the obligation, to take any such reasonable measures to stop such infringing activities by such alleged infringer.

 

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(b)           Acceleron Collaboration IP; Joint Technology.  The following terms shall apply to all Joint Technology and all Acceleron Collaboration IP (excluding Acceleron Patent Rights resulting from Acceleron Collaboration IP).  In respect of Licensed Compounds and Licensed Products in the Territory, Celgene shall have the first right, but not the obligation, to take any reasonable measures it deems appropriate to stop infringing activities in the Field in the Territory with respect to (including initiating or prosecuting an infringement or other appropriate suit or action against any Third Party who at any time has infringed, or is suspected of infringing, or defending any declaratory judgment action with respect to) any Joint Patent Rights claiming or relating to Licensed Compounds or Licensed Products or of using without proper authorization any Joint Improvements, Joint Collaboration IP or Acceleron Collaboration IP (excluding Acceleron Patent Rights resulting from Acceleron Collaboration IP).  In the event that Celgene elects not to take action pursuant to this Section 8.3.2(b), Celgene shall so notify Acceleron promptly in writing of its intention in good time to enable Acceleron to meet any deadlines by which an action must be taken to establish or preserve any enforcement rights, and Acceleron shall have the right, but not the obligation, to take any such reasonable measures to stop such infringing activities by such alleged infringer.  In any enforcement action involving Joint Technology, the Parties agree to be joined as parties to such enforcement action if necessary to enable the enforcement action.

 

(c)           Celgene Technology.  The following terms shall apply to all Celgene Patent Rights, Celgene Improvements, Celgene Collaboration IP and Celgene Know How owned by Celgene and, with respect to other Celgene Technology, to the extent permitted by the applicable licenses.  Celgene shall have the sole right, but not the obligation, to take any reasonable measures it deems appropriate to stop infringing activities in the Field in the Territory, including initiating or prosecuting an infringement or other appropriate suit or action against any Third Party who at any time has infringed, or is suspected of infringing, or defending any declaratory judgment action with respect to, any Celgene Patent Rights claiming or relating to Licensed Compounds or Licensed Products or of using without proper authorization any Celgene Know-How, Celgene Improvements or Celgene Collaboration IP.

 

8.3.3.      Procedures; Expenses and Recoveries.  The Party having the right to initiate any infringement suit under Section 8.3.2(a) or 8.3.2(b) above shall have the sole and exclusive right to select counsel for any such suit (which counsel shall be reasonably acceptable to the other Party) and shall pay all expenses of the suit, including attorneys’ fees and court costs and reimbursement of the other Party’s reasonable out-of-pocket expense in rendering assistance requested by the initiating Party.  If required under Applicable Law in order for the initiating Party to initiate or maintain such suit, or if either Party is unable to initiate or prosecute such suit solely in its own name or it is otherwise advisable to obtain an effective legal remedy, in each case, the other Party shall join as a party to the suit and shall execute

 

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and cause its Affiliates to execute all documents necessary for the initiating Party to initiate litigation to prosecute and maintain such action.  The initiating Party will keep the other Party reasonably informed of the status of the infringement suit.  At the initiating Party’s request, the other Party shall provide reasonable assistance to the initiating Party in connection with an infringement suit at no charge to the initiating Party except for reimbursement by the initiating Party of reasonable out-of-pocket expenses incurred in rendering such assistance.  The non-initiating Party may participate and be represented in any such suit by its own counsel at its own expense.  If the Parties obtain from a Third Party, in connection with such suit under Section 8.3.2(a) or 8.3.2(b), any damages, license fees, royalties or other compensation (including any amount received in settlement of such litigation), such amounts shall be allocated as follows:

 

(a)           to reimburse each Party for all expenses of the suit, including attorneys’ fees and disbursements, court costs and other litigation expenses; and

 

(b)           any remaining amount shall be [* * *].

 

8.4          Claimed Infringement of Third Party Rights.

 

8.4.1.      Notice.  In the event that a Third Party at any time provides written notice of a claim to, or brings an action, suit or proceeding against, any Party, or any of their respective Affiliates or Sublicensees, claiming infringement of such Third Party’s patent rights or unauthorized use or misappropriation of its know-how based upon an assertion or claim arising out of the Development, Manufacture or Commercialization of a Licensed Compound or Licensed Product in the Territory (“Infringement Claim”), such Party shall promptly notify the other Party of the Infringement Claim or the commencement of such action, suit or proceeding, enclosing a copy of the Infringement Claim and all papers served.  Each Party agrees to make available to the other Party its advice and counsel regarding the technical merits of any such claim at no cost to the other Party and to offer reasonable assistance to the other Party at no cost to the other Party.

 

8.4.2.      Right to Defend.  Celgene shall have the right, but not the obligation, to defend any Infringement Claim brought against Celgene or its Affiliates or Sublicensees arising out of the Development, Manufacture or Commercialization of a Licensed Compound or Licensed Product in the Territory.  With respect to any such Infringement Claim brought against Acceleron or its Affiliates, Acceleron shall notify Celgene, and the Parties, in good faith, shall determine who should defend such suit.  All litigation costs and expenses incurred by the Defending Party (as defined below) in connection with such Infringement Claim, and all damages, payments and other amounts awarded against, or payable by, either Party under any settlement with such Third Party shall be borne by the Defending Party.

 

8.4.3.      Procedure.  The Party having the obligation or first right to defend an Infringement Claim shall be referred to as the “Defending Party.”  The Defending Party shall have the sole and exclusive right to select counsel for any Infringement Claim; provided that such counsel shall be reasonably acceptable to the other Party.  The Defending Party shall keep

 

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the other Party fully informed of any such claims, shall consult with the other Party with respect to the strategy and conduct of any defense of such claims, and shall provide the other Party with copies of all documents filed in, and all written communications relating to, any suit brought in connection with such claims, which copies of documents filed or communications sent by the Defending Party will be provided in advance of filing or sending.  The other Party may provide comments and suggestions with respect to any material actions to be taken by the Defending Party, and the Defending Party shall reasonably consider all comments and suggestions and shall take all prosecution actions reasonably recommended by the other Party.  The other Party may also participate and be represented in any such claim or related suit, at its own expense.  The other Party shall have the sole and exclusive right to control the defense of an Infringement Claim in the event the Defending Party fails to exercise its right to assume such defense within thirty (30) days following written notice from the other Party of such Infringement Claim.  No Party shall settle any claims or suits involving rights of another Party (or rights of such Party to the extent they are licensed to such other Party) without obtaining the prior written consent of such other Party, which consent shall not be unreasonably withheld.

 

8.4.4.      Limitations.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN SECTION 12.7, THE FOREGOING STATES THE ENTIRE RESPONSIBILITY OF ACCELERON AND CELGENE, AND THE SOLE AND EXCLUSIVE REMEDY OF ACCELERON OR CELGENE, AS THE CASE MAY BE, IN THE CASE OF ANY CLAIMED INFRINGEMENT OF ANY THIRD PARTY PATENT RIGHTS OR UNAUTHORIZED USE OR MISAPPROPRIATION OF ANY THIRD PARTY’S KNOW-HOW.

 

8.5          Other Infringement Resolutions.  In the event of a dispute or potential dispute that has not ripened into a demand, claim or suit of the types described in Sections 8.3 and 8.4 of this Agreement (e.g., actions seeking declaratory judgments and revocation proceedings), the same principles governing control of the resolution of the dispute, consent to settlements of the dispute, and implementation of the settlement of the dispute shall apply.

 

8.6          Product Trademarks & Product Designation.  Celgene shall select and own the Product Trademarks for each Licensed Product and shall be solely responsible for filing and maintaining the Product Trademarks in the Territory.  Celgene shall assume full responsibility, at its sole cost and expense, for any infringement of a Product Trademark for a Licensed Product by a Third Party (and shall retain in full any recoveries for such infringement) and shall defend and indemnify Acceleron for and against any claims of infringement of the rights of a Third Party by Acceleron’s use of a Product Trademark in connection with a Licensed Product in accordance with the terms of this Agreement.  In addition, Celgene shall have the right to select the product designation or generic name for the Licensed Compounds and Licensed Product, including changing the designation of ActRIIA and the fusion protein ACE-011.

 

8.7          Marking.  Each Party agrees to mark, and to require any Affiliate or Sublicensee, to mark any Licensed Product (or their containers or labels) made, sold, or otherwise distributed by it or them with any notice of patent rights necessary or desirable under Applicable Law to enable the Acceleron Patent Rights to be enforced to their full extent in any country where Licensed

 

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Products are made, used, sold, or offered for sale.  In all countries within North America, to the extent legally permissible, both Parties’ names and logos will appear with equal prominence on Licensed Product labels and promotional materials.  In any such country within North America where this is not legally permitted, the Parties agree to work together in good faith to identify a mechanism to allow the association of both Parties’ names with the Product.

 

8.8          Patent Term Extensions.  The Parties shall use reasonable efforts to obtain all available supplementary protection certificates (“SPC”) and other extensions of the Acceleron Patent Rights and Joint Patent Rights (including those available under the Hatch-Waxman Act).  Each Party shall execute such authorizations and other documents and take such other actions as may be reasonably requested by the other Party to obtain such extensions.  The Parties shall cooperate with each other in gaining patent term restorations, extensions or SPCs wherever applicable to Acceleron Patent Rights or Joint Patent Rights.  The Party first eligible to seek patent term restoration or extension of any such Patent Rights or any SPC related thereto may do so; provided that, if in any country the first Party has an option to extend the patent term for only one of several patents, the first Party shall consult with the other Party before making the election.  If more than one patent is eligible for extension or patent term restoration, the Parties shall select in good faith a strategy that shall maximize patent protection and commercial value for each Licensed Product.  All filings for such extensions and certificates shall be made by the Party to whom responsibility for Prosecution of the Acceleron Patent Rights or Joint Patent Rights are assigned; provided that, in the event that the Party to whom such responsibility is assigned elects not to file for an extension or SPC, such Party shall (a) inform the other Party of its intention not to file, (b) grant the other Party the right to file for such extension or SPC in the Patent Rights’ owner’s name, and (c) provide all necessary assistance in connection therewith.

 

Article 9
 CONFIDENTIALITY

 

9.1          Confidential Information.

 

9.1.1.      Confidentiality.  All Confidential Information disclosed by a Party to the other Party during the Agreement Term shall be used by the receiving Party solely in connection with the activities contemplated by this Agreement, shall be maintained in confidence by the receiving Party and shall not otherwise be disclosed by the receiving Party to any other person, firm, or agency, governmental or private (other than a Party’s Affiliates), without the prior written consent of the disclosing Party.  Acceleron and Celgene each agrees that it shall provide Confidential Information received from the other Party only to its employees, consultants and advisors, and to the employees, consultants and advisors of such Party’s Affiliates or Sublicensees, and Third Parties acting on behalf of such Party, who have a need to know and have an obligation to treat such information and materials as confidential, which obligations are no less stringent than those contained in this Article 9.  Each Party shall be responsible for a breach of this Article 9 by its Affiliates, Sublicensee, Third Parties acting on behalf of such Party, and their respective employees, consultants and advisors.  All obligations of confidentiality imposed under this Article 9 shall expire [* * *].

 

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9.1.2.      Authorized Disclosure.  Notwithstanding the provisions of Sections 9.1.1, 9.2, or 9.3, each Party may disclose Confidential Information belonging to the other Party to the extent such disclosure is reasonably necessary to:

 

(a)           comply with Applicable Laws (including the rules and regulations of the Securities and Exchange Commission or any national securities exchange) and with judicial process;

 

(b)           Prosecute Patent Rights as contemplated by this Agreement;

 

(c)           defend or prosecute litigation in accordance with Article 8; provided that the receiving Party provides prior written notice of such disclosure to the disclosing Party and takes reasonable and lawful actions to avoid or minimize the degree of such disclosure;

 

(d)           make filings and submissions to, or correspond or communicate with, any Regulatory Authority or clinical registry, including for purposes of obtaining authorizations to conduct Clinical Trials of, and to Commercialize, Licensed Products pursuant to this Agreement; and

 

(e)           exercise its rights hereunder (including, with respect to Celgene, disclosures to potential Sublicensees); provided such disclosure is covered by terms of confidentiality similar to those set forth herein.

 

In the event a Party shall deem it reasonably necessary to disclose Confidential Information belonging to the other Party pursuant to this Section 9.1.2, such Party shall (i) to the extent possible give reasonable advance notice of such disclosure to the other Party sufficiently prior to making such disclosure so as to allow the other Party adequate time to take whatever action it may deem appropriate to protect the confidentiality of the information, (ii) provide reasonable assistance to the other Party with respect thereto, and (iii) take reasonable measures to ensure confidential treatment of such information.

 

9.1.3.      Acceleron’s Use of Confidential Information.  Celgene acknowledges the fact that as a private company, Acceleron shall, from time to time, engage in fundraising activities with private investors.  Acceleron may disclose this Agreement, including its terms and subject matter, under terms of confidentiality no less strict than those contained in this Agreement, to such investors or potential investors (including potential acquirers) in or potential licensees of Acceleron conducting due diligence in each instance.  Acceleron shall provide Celgene with a list of all such persons executing such confidentiality agreements and shall be responsible for a breach of this Article 9 by such persons.  Celgene shall permit a copy of this Agreement to be provided to Salk as a requirement of the Salk License, such copy to be considered confidential information under the Salk License and to be redacted to the extent permitted under the Salk License, which redaction shall be subject to the prior written approval of Celgene.

 

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9.1.4.                  ACE-536 Agreement.  The Parties acknowledge and agree that Confidential Information disclosed pursuant to this Agreement may have application to the Parties’ rights and obligations under the ACE-536 Agreement and vice versa.  Therefore, the Parties agree that information can be deemed Confidential Information under this Agreement and “Confidential Information” under the ACE-536 Agreement and that such information will be subject to the confidentiality and non-use obligations of both agreements.

 

9.1.5.                  Joint Technology.  The Parties agree that, in order to effectuate the provisions of Section 4.4.2, subject to any exclusive licenses granted hereunder, (a) the non-use provisions of this Article 9 shall not apply to each Party’s use of Joint Technology, and (b) each Party may disclose the Joint Technology to Third Parties who are under terms of confidentiality no less strict than those contained in this Agreement.

 

9.2                               Publication Review.  Except as required by Applicable Law or, subject to the last sentence of this Section, as may be permitted under any agreement identified on Schedule 2.8, from and after the Effective Date, Celgene shall have the sole right to publish or present the results of any work relating to the Licensed Products or Licensed Compounds in the Field; provided that Acceleron shall have the right to publish or present works relating solely to Acceleron Development Activities (the Party entitled to publish pursuant to this Section being hereafter referred to as the “Publishing Party”).  The Publishing Party shall publish or present such results (i) in a manner consistent with the publication strategy developed by either the Joint Development Committee or the Joint Commercialization Committee and (ii) after providing the other Party with the right to review such publications or presentations to ensure the other Party’s Confidential Information is not included without the other Party’s consent.  In that respect, the Publishing Party shall provide to the other Party for review any (a) abstracts, posters and slide presentations prior to any scientific meetings, and such other Party shall have at least [* * *] Business Days to provide feedback to such other Party, and (b) primary and final manuscripts and review articles prior to journal submission, and such other Party shall have at least [* * *] Business Days to provide feedback.  The Party that is not the Publishing Party may require that its Confidential Information that may be disclosed in any such proposed publication or presentation be deleted prior to such publication or presentation.  Acceleron’s right to publish hereunder will be subject to the prior consent of Celgene, such consent not to be unreasonably withheld or delayed and which consent shall be deemed given if Celgene has not objected to any such publication within the applicable [* * *] periods described above.  If (x) a Third Party that is a party to an agreement identified on Schedule 2.8 is permitted to publish or present the results of any work conducted by such Third Party pursuant to such agreement and relating to the Licensed Products or Licensed Compounds in the Field, and (y) such Third Party is required to present such publication or presentation to Acceleron for prior review or approval, then (1) to the extent that Acceleron is permitted to disclose to Celgene such publications or presentations, Acceleron shall disclose such publications or presentations to Celgene, (2) to the extent that Acceleron is not permitted to disclose to Celgene such publications or presentations, Acceleron shall notify Celgene in the event such a publication or presentation has been submitted to Acceleron by such a Third Party, and (3) with respect to such publications or presentations

 

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(regardless of whether they were disclosed to Celgene or Celgene was merely notified of them), Acceleron shall take any action requested by Celgene, including withholding consent to such publication or presentation, to the extent Acceleron has the right to take such action under the applicable agreement with such Third Party.

 

9.3                               Public Announcements and Use of Names.  No disclosure of the existence of, or the terms of, this Agreement may be made by either Party, and no Party shall use the name, trademark, trade name or logo of the other Party or its employees in any publicity, news release or disclosure relating to this Agreement or its subject matter, in each case, without the prior written permission of the other Party, except as may be required by law or expressly permitted by the terms hereof, including Section 9.1.2.  A press release announcing this Agreement is attached to this Agreement as Schedule 9.3, which may be released by either Party on the date agreed to by the Parties.  Except for issuing such press release and subsequent announcements of the information contained in such press release, neither Party shall originate any publicity, news release or public announcements, written or oral, whether to the public or press, stockholders or otherwise, relating to the execution of this Agreement, the subject matter of this Agreement or any activities contemplated hereby, any of the terms of this Agreement, or any amendment hereto without the prior written consent of the other Party, except as may be required by law or expressly permitted by the terms hereof, including Section 9.1.2.  Notwithstanding the foregoing, Celgene, in its sole discretion, may determine the timing and content of any press release with respect to activities conducted hereunder beginning with the Phase 2B Clinical Trials with respect to each Licensed Compound or Licensed Product and all activities thereafter; provided that Celgene may not use Acceleron’s name in any such press release without the prior written consent of Acceleron, except for the limited purpose of identifying Acceleron as the licensor of the Acceleron Technology and the party conducting the Phase 1 Clinical Trials and Phase 2A Clinical Trials or for purpose of republishing materials that have previously been published in accordance with this Section 9.3; provided further that Acceleron, to the extent required by applicable securities laws, may issue any press release with respect to activities conducted hereunder beginning with the Phase 2B Clinical Trials with respect to each Licensed Compound or Licensed Product so long as Acceleron provides Celgene with prior written notice, allows Celgene a reasonable opportunity to comment on the content of such disclosure, and consults with Celgene with respect to such comments.  Notwithstanding the foregoing, once a public announcement is approved in accordance with this Section 9.3, a Party may reuse and subsequently disclose the information in such public announcement and may continue to disclose the contents of such public announcement without resubmitting such materials for further approval; provided that such Party does not materially change content and/or the manner in which the name, trademark, trade name or logo of the other Party is used.

 

Article 10
 EFFECTIVENESS

 

10.1                        Effective Date.  Except for the Parties’ obligations under this Article 10 and the Parties representations and warranties (and disclaimers thereof) in Article 12, this Agreement shall not become effective until the Effective Date.

 

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10.2                        Filings.  The Parties shall cooperate with one another in the preparation, execution and filing of all documents that are required (as reasonably determined by Celgene) to be filed pursuant to the HSR Act and will promptly file the same after the Execution Date.  The related filing fees associated with the submission under the HSR Act shall be paid by Celgene.

 

10.3                        Closing.  As promptly as practicable after the Execution Date and after the satisfaction by each Party or, if permissible, waiver of the conditions set forth in Section 10.4, the Parties hereto shall cause the Closing to occur on the Effective Date.  The Closing shall be held at the offices of Jones Day, 222 East 41st Street, New York, New York 10017, or such other place as the Parties shall agree, for the purpose of confirming the satisfaction or waiver, as the case may be, of the conditions set forth in Section 10.4.  If the Effective Date has not occurred prior to May 31, 2008, either Party may terminate this Agreement upon written notice to the other Party; provided, however, that, as of such date, the Party terminating this Agreement is not in default under this Agreement.

 

10.4                        Conditions to Closing.  The obligation of each Party to close shall be subject to the satisfaction on or before the Effective Date of the following conditions any or all of which may be waived in whole or in part by such Party:

 

10.4.1.           the expiration or termination of all applicable waiting periods under the HSR Act, unless a joint determination is made by Celgene and Acceleron (by certification from Celgene and Acceleron to each other) that notification under the HSR Act is not required;

 

10.4.2.           the representations and warranties made by the other Party in Article 12 shall be true and correct in all material respects as of the Effective Date with the same force and effect as if they had been made as of the Execution Date, and the other Party shall have performed all obligations and conditions herein required to be performed or observed by it on or prior to Closing; and

 

10.4.3.           the provision by each Party to the other Party of an officer’s certificate certifying that Section 10.4.1 and 10.4.2 above are true and correct with respect to such first Party as of the Effective Date.

 

Article 11
 TERM AND TERMINATION

 

11.1                        Term.  The term of this Agreement shall commence on the Effective Date and expire, unless this Agreement is terminated earlier in accordance with this Article 11, on a country-by-country basis, upon the occurrence of both of the following:  (a) the expiration of the Royalty Term with respect to all Licensed Products in such country in the Territory, and (b) Celgene has exercised or forfeited its option with regard to each Option Compound.  For the avoidance of doubt, Section 11.1(a) shall be deemed to have occurred on the date on which no Development or Commercialization activities for any Licensed Compound or Licensed Product are ongoing and, according to the Joint Development Committee and Joint Commercialization Committee, no additional Development or Commercialization activities, respectively, are expected to

 

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commence.  Upon the occurrence of the events described in clause (a) above, all licenses granted by Acceleron under this Agreement for such Licensed Product or Licensed Compound in such country shall become fully paid-up, perpetual, non-exclusive, sublicensable, irrevocable, royalty-free licenses.

 

11.2                        Termination for Cause.

 

11.2.1.           Cause for Termination.  This Agreement may be terminated at any time during the Agreement Term:

 

(a)                                 upon written notice by either Party if the other Party (the “Breaching Party”) is in breach of its material obligations hereunder and has not cured such breach within [* * *] (or [* * *] for breaches of payment obligations) after notice requesting cure of the breach; provided that, notwithstanding the foregoing, in the event of a breach of a material obligation that is capable of being cured, but is not reasonably capable of being cured within the [* * *] cure period, if the Breaching Party (i) proposes within such [* * *] period a written plan to cure such breach within a defined time frame, and (ii) makes good faith efforts to cure such default and to implement such written cure plan, then the non-breaching Party may not terminate this Agreement for so long as the Breaching Party is diligently pursuing such cure in accordance with such plan; or

 

(b)                                 by either Party upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings, or upon an assignment of a substantial portion of the assets for the benefit of creditors by the other Party; provided, however, that in the event of any involuntary bankruptcy or receivership proceeding such right to terminate shall only become effective if the Party consents to the involuntary bankruptcy or receivership or such proceeding is not dismissed within [* * *] after the filing thereof.  Celgene acknowledges that pursuant to the Salk License, Salk may terminate the Salk License immediately with no further notice obligation or opportunity to cure if Acceleron becomes insolvent, makes an assignment for the benefit of creditors, has a petition in bankruptcy filed for or against it or has a receiver or trustee in bankruptcy or similar officer appointed to take charge of all or part of Acceleron’s property; provided that the provisions of Section 4.5.4 hereof would apply.

 

11.2.2.           Effect of Termination for Cause.

 

(a)                                 Termination by Acceleron.  Without limiting any other legal or equitable remedies that Acceleron may have, if Acceleron terminates this Agreement in accordance with Section 11.2.1, then, except for the licenses granted in Section 11.5, all licenses granted under this Agreement shall terminate.

 

(b)                                 Termination by Celgene.  Without limiting any other legal or equitable remedies that Celgene may have, if Celgene terminates this Agreement in

 

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accordance with Section 11.2.1, then the license granted to Acceleron pursuant to Section 4.2 shall terminate, the licenses granted to Celgene under Section 4.1 shall continue in perpetuity and (i) all future royalties payable by Celgene under this Agreement shall be reduced by [* * *] percent [* * *]; (ii) Celgene shall have no obligation to pay any milestones arising under this Agreement after the date of such termination; (iii) Acceleron’s obligations under Article 6 (Exclusivity) shall survive such termination for as long as Celgene is paying royalties pursuant hereto; and (iv) Acceleron shall continue to be solely responsible for all royalty, milestone, and other payments owed to Salk or any other third party licensor pursuant to an agreement executed by Acceleron prior to the Effective Date (or, with respect to any Option Compound, prior to the date that such Option Compound is deemed a Licensed Compound in accordance with Article 7); provided that, if Acceleron is the Breaching Party and Celgene terminates this Agreement in accordance with Section 11.2.1(a) for a breach by Acceleron of its material obligations under Article 6 (Exclusivity) or if Acceleron breaches such Article 6 (Exclusivity) following termination during the period such obligations survive as provided in this Section 11.2.1(b), then Celgene shall have no further obligation to pay any royalties hereunder based on Net Sales arising after the date of such termination, but Celgene shall be responsible for paying any royalties due to Salk and other Third Parties pursuant to Section 5.6.3(c) with respect to activities of Celgene in exercising such licenses.

 

11.3                        Termination for Convenience.  At any time, Celgene may terminate this Agreement, on a country-by-country or Licensed Product-by-Licensed Product basis or in its entirety, for any reason, upon [* * *] advance written notice to Acceleron.

 

11.4                        Termination for Failure to Meet End Points.  If a Licensed Compound or Licensed Product fails to meet the end point criteria set by the Joint Development Committee pursuant to Section 3.3 for a particular Clinical Trial or Development activity, Celgene may terminate this Agreement, on a Licensed Product-by-Licensed Product basis or in its entirety, upon [* * *] advance written notice to Acceleron.

 

11.5                        Other Effects of Termination.  In the event that Acceleron terminates this Agreement for cause under Section 11.2.1 or Celgene terminates this Agreement for convenience under Section 11.3 or for failure to meet end points under Section 11.4:

 

11.5.1.           License and Assignment.  All licenses granted to Celgene under this Agreement with respect to the applicable country or Licensed Product shall terminate.  Celgene (a) hereby grants (effective only upon any such termination of this Agreement) to Acceleron a worldwide, non-exclusive, non-transferable license, with the right to sublicense (under the same terms that Celgene may sublicense its rights pursuant to Section 4.3), under the Celgene Technology to offer for sale, sell, make, have made, use and import Licensed Compounds (and Option Compounds to the extent that they have become Licensed Compounds at the time of termination pursuant to Section 7.2) and Licensed Products in the Field in the Territory, which license shall be (i) royalty-free in the event that Celgene

 

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terminates this Agreement for convenience under Section 11.3 or for failure to meet clinical endpoints under Section 11.4 or Acceleron terminates this Agreement for cause under Section 11.2.1 for a breach by Celgene of its material obligations under Article 6 (Exclusivity), and (ii) royalty-bearing in the event that Acceleron terminates this Agreement for any other cause under Section 11.2.1, with the royalties to be paid by Acceleron to Celgene equal to [* * *] percent [* * *] of the royalties payable by Celgene to Acceleron under this Agreement; (b) shall assign or sublicense to Acceleron, to the extent possible and as requested by Acceleron, Celgene’s rights and obligations under any Third Party licenses entered into pursuant to Sections 5.6.3(b) or 5.6.3(c), (c) shall assign to Acceleron all of its rights, title and interest in Product Trademarks, and (d) shall transfer to Acceleron ownership of any NDAs or Regulatory Approvals then in Celgene’s name related to Licensed Compounds or Licensed Products and notify the appropriate Regulatory Authorities and take any other action reasonably necessary to effect such transfer of ownership.  If ownership of an NDA or Regulatory Approval cannot be transferred to Acceleron in any country, Celgene hereby grants (effective only upon any such termination of this Agreement) to Acceleron a permanent, exclusive (even as to Celgene) and irrevocable right of access and reference to such NDAs and Regulatory Approvals for Licensed Compounds and Licensed Products in such country in the Field.  The royalties to be paid by Acceleron to Celgene shall be paid under the terms specified in Sections 5.6 and 5.7, in each case substituting “Acceleron” for “Celgene” and vice versa with respect to all obligations and definitions, and otherwise mutatis mutandis.

 

11.5.2.           Transfer of Materials.  In the event Acceleron exercises its rights pursuant to Section 11.5.1, Celgene shall negotiate in good faith with Acceleron regarding Celgene transferring to Acceleron, at Acceleron’s cost, materials developed under this Agreement in the course of Developing and Commercializing Licensed Compounds or Licensed Products that are directly related to Licensed Compounds or Licensed Products to the extent provided in and in accordance with such agreement.

 

11.5.3.           Confidential Information.  Notwithstanding Section 9.1.1, which provides that obligations of confidentiality shall expire [* * *] years following termination or expiration of this Agreement, for so long as the Celgene Know-How, Celgene Improvements or Celgene Collaboration IP to be licensed to Acceleron pursuant to Section 11.5.1 remain Confidential Information, Acceleron’s obligations of confidentiality pursuant to Article 9 shall survive and continue in full force and effect.

 

11.5.4.           Continuity of Supply.  Except in the event of a termination of this Agreement pursuant to Section 11.4, in the event that Celgene has begun Manufacture of Clinical Supplies or Commercial Supplies pursuant to Section 2.4, then at Acceleron’s request, Celgene shall continue to Manufacture and supply Acceleron with such Clinical Supplies or such Commercial Supplies, as applicable, at [* * *], for an additional [* * *] after termination for Clinical Supplies and for an additional [* * *] after termination for Commercial Supplies; provided, however, that Celgene shall not be obligated to Manufacture or supply such Clinical Supplies or Commercial Supplies in excess of the greater of (i) the anticipated amounts of such supply as set forth in the applicable

 

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Development Plan/Budget or Commercialization Plan/Budget for such [* * *] or (ii) the amount of such Clinical Supplies or Commercial Supplies Manufactured by Celgene in the [* * *] prior to termination.  In the event that the Clinical Supplies or Commercial Supplies are being Manufactured by a Third Party under contract, to the extent permitted by the terms of such contract, Celgene shall assign such contracts to Acceleron.  For all future Third Party Manufacturing contracts related to the Licensed Compounds or Licensed Products, Celgene shall use Commercially Reasonable Efforts to ensure that such contracts are assignable to Acceleron in the event of termination of this Agreement as provided in Section 11.5.1.

 

11.6                        Sell-Down.  If Celgene, its Affiliates or Sublicensees at termination of this Agreement possess Licensed Product, have started the Manufacture thereof or have accepted orders therefor, Celgene, its Affiliates or Sublicensees shall have the right, for up to [* * *] following the date of termination, to sell their inventories thereof, complete the Manufacture thereof and Commercialize such fully-Manufactured Licensed Product, in order to fulfill such accepted orders or distribute such fully-Manufactured Licensed Product, subject to the obligation of Celgene to pay Acceleron the royalty payments as provided in Article 5 of this Agreement.

 

11.7                        Transfer of Records.  Upon expiration of this Agreement or in the event that Celgene terminates this Agreement for cause under Section 11.2.1, Acceleron will continue to maintain all records described in Section 2.2 or transfer them to Celgene, as requested by Celgene.

 

11.8                        Rights in Bankruptcy.  All rights and licenses granted under or pursuant to this Agreement by Acceleron or Celgene, including Article 4, are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or analogous provisions of Applicable Law outside the United States, licenses of right to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code or analogous provisions of Applicable Law outside the United States (hereinafter “IP”).  The Parties agree that Celgene or Acceleron, as applicable, as licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code or any other provisions of Applicable Law outside the United States that provide similar protection for IP.  Upon the bankruptcy of Acceleron or Celgene, the non-bankrupt Party shall further be entitled to a complete duplicate of (or complete access to, as appropriate) any such IP, and such IP, if not already in such Party’s possession, shall be promptly delivered to such Party.

 

11.9                        Effect of Expiration or Termination; Survival.  Expiration or termination of this Agreement shall not relieve the Parties of any obligation accruing prior to such expiration or termination.  The provisions of Article 9, Article 11, Article 12, Article 13 and Sections 4.3.3, 4.4, 4.5.4, 12.5, 12.6, 12.7, as well as Sections 8.2, 8.3, 8.4.4 and 8.6 (but only to the extent that Celgene’s exclusive license survives pursuant to Section 11.2.2(b)) shall survive any expiration or termination of this Agreement.  Except as set forth in this Article 11, upon termination or expiration of this Agreement all other rights and obligations cease.  Any expiration or early termination of this Agreement shall be without prejudice to the rights of either Party against the other accrued or accruing under this Agreement before termination.

 

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Article 12
 REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

 

12.1                        Mutual Representations and Warranties.  Each Party represents and warrants to the other Party that as of the Execution Date and as of the Effective Date of this Agreement:

 

12.1.1.           It is duly organized and validly existing under the laws of its jurisdiction of incorporation or formation and has full corporate or other power and authority to enter into this Agreement and to carry out the provisions hereof.  Further, except for any Regulatory Approvals, pricing or reimbursement approvals, manufacturing approvals or similar approvals necessary for the Development, Manufacture or Commercialization of the Licensed Compounds and Licensed Products, and except for any approvals under the HSR Act, all necessary consents, approvals and authorizations of all government authorities required to be obtained by such Party as of the Effective Date in connection with the execution, delivery and performance of this Agreement have been obtained by the Effective Date.

 

12.1.2.           It is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person or persons executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action.

 

12.1.3.           This Agreement is legally binding upon it and enforceable in accordance with its terms.  The execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party and by which it may be bound.

 

12.2                        Acceleron Representations and Warranties.  Acceleron represents and warrants to Celgene that as of the Execution Date and as of the Effective Date of this Agreement:

 

12.2.1.           Acceleron Controls the Acceleron Patent Rights existing as of the Effective Date and is entitled to grant the licenses specified herein.  The Acceleron Patent Rights existing as of the Effective Date constitute all of the Patent Rights Controlled by Acceleron as of the Effective Date that relate to or are necessary or useful to Develop, Manufacture or Commercialize a Licensed Compound or a Licensed Product in the Field.  Acceleron has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the Acceleron Technology in a manner that conflicts with any rights granted to Celgene hereunder.  During the Agreement Term, Acceleron shall not encumber the rights granted to Celgene hereunder with respect to the Acceleron Patent Rights.

 

12.2.2.           Acceleron Controls the Option Patent Rights existing as of the Effective Date and is entitled to grant the options for licenses specified herein.  During the Agreement Term, Acceleron shall not encumber the Option Patent Rights in a manner that conflicts with any rights granted to Celgene hereunder.

 

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12.2.3.           To the best knowledge of Acceleron and its Affiliates, there is no actual or threatened infringement of the Acceleron Patent Rights or the Option Patent Rights in the Field by any Third Party or any other infringement or threatened infringement that would adversely affect Celgene’s rights under this Agreement.

 

12.2.4.           There are no claims, judgments or settlements against or owed by Acceleron or its Affiliates or pending or, to the best knowledge of Acceleron and its Affiliates, threatened claims or litigation relating to the Acceleron Technology that would impact activities under this Agreement.

 

12.2.5.           The Salk License, as set forth in Exhibit A, is in full force and effect and has not been modified or amended.

 

12.2.6.           Neither Acceleron nor, to the best knowledge of Acceleron, Salk is in default with respect to a material obligation under, and neither such party has claimed or has grounds upon which to claim that the other party is in default with respect to a material obligation under, the Salk License.

 

12.2.7.           To the best knowledge of Acceleron, the Salk Patent Rights were not and are not subject to any restrictions or limitations except as set forth in the Salk License, a true and correct copy of which is attached as Exhibit A.

 

12.2.8.           Acceleron has not waived or allowed to lapse any of its rights under the Salk License with respect to Licensed Compounds or Licensed Products, and no such rights have lapsed or otherwise expired or been terminated.

 

12.2.9.           As of the Effective Date, neither Acceleron nor any of its respective employees or, to the best knowledge of Acceleron or its Affiliates, its agents, in their capacity as such, have been disqualified or debarred by the FDA, pursuant to 21 U.S.C. §§ 335(a) or (b), or been charged with or convicted under United States law for conduct relating to the development or approval, or otherwise relating to the regulation of any Licensed Product under the Generic Drug Enforcement Act of 1992, or any other relevant law, rule, or regulation or been disbarred, disqualified, or convicted under or for any equivalent or similar applicable foreign law, rule, or regulation.

 

12.2.10.    [* * *] is a [* * *] under [* * *], and, if [* * *] becomes a [* * *] under [* * *], Acceleron will continue to have the right to [* * *] to the extent set forth in this Agreement without any alteration from the granted rights associated with [* * *] except that [* * *].

 

12.2.11.    The Acceleron Patent Rights, and to the best knowledge of Acceleron or its Affiliates, the Salk Patent Rights, have been filed and diligently prosecuted in accordance with all Applicable Laws in the Territory and have been maintained, with all applicable fees with respect thereto having been paid.

 

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12.2.12.    To the best knowledge of Acceleron or its Affiliates, each of the issued Acceleron Patents Rights is valid and enforceable.

 

12.2.13.    To the best knowledge of Acceleron (after due investigation), there have been no patent applications arising from research funded by [* * *] since the effective date of [* * *], as described in [* * *] except for U.S. patent application Nos. [* * *] and [* * *] and all foreign counterparts thereto and all provisional applications, continuations, continuations-in-part, and divisions thereof.

 

12.2.14.    For purposes of exercising its rights or performing its obligations hereunder in Developing, Manufacturing and Commercializing Licensed Compounds or Licensed Product [* * *], Celgene does not need access or a license to (a) the patent rights specified in Section 12.2.13 or (b) to the best knowledge of Acceleron or its Affiliates, any and all Know-How, Patent Rights, or other intellectual property rights that are licensed to Acceleron or its Affiliates or that they otherwise have access to but are not Controlled by Acceleron or its Affiliates pursuant hereto.

 

12.3                        Option Compound Representations and Warranties.  Immediately prior to an Option Compound becoming a “Licensed Compound” pursuant to Article 7, Acceleron shall represent and warrant to Celgene the matters set forth in Section 12.2 with respect to such Option Compound or shall notify Celgene of which representations and warranties, if any, are untrue.

 

12.4                        Celgene Representations and Warranties.  Celgene represents and warrants to Acceleron that as of the Execution Date and as of the Effective Date of this Agreement, and to the best knowledge of Celgene or its Affiliates, there are no claims, judgments or settlements against or owed by Celgene or its Affiliates or pending or threatened claims or litigation relating to the Celgene Technology that would impact activities under this Agreement.

 

12.5                        Warranty Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY WITH RESPECT TO ANY TECHNOLOGY OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.  EACH PARTY HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY THAT THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF ANY LICENSED COMPOUND, OPTION COMPOUND OR LICENSED PRODUCT UNDER THIS AGREEMENT SHALL BE SUCCESSFUL.

 

12.6                        No Consequential Damages.  NEITHER PARTY HERETO SHALL BE LIABLE FOR SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES.  NOTHING IN

 

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THIS SECTION 12.6 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY OR TO LIMIT A PARTY’S LIABILITY FOR BREACHES OF ITS OBLIGATION REGARDING [* * *].

 

12.7                        Indemnification and Insurance.

 

12.7.1.           Indemnification by Celgene.  Celgene shall indemnify, hold harmless, and defend Acceleron, its Affiliates, and their respective directors, officers, employees and agents and their respective successors, heirs and assigns (“Acceleron Indemnitees”) from and against any and all Third Party claims, suits, losses, liabilities, damages, costs, fees and expenses (including reasonable attorneys’ fees and expenses of litigation) (collectively, “Losses”) to the extent arising out of or resulting from (a) any breach of, or inaccuracy in, any representation or warranty made by Celgene in this Agreement, or any breach or violation of any covenant or agreement of Celgene in or pursuant to this Agreement; (b) the negligence or willful misconduct by or of Celgene, its Affiliates or Sublicensees, and their respective directors, officers, employees and agents; and (c) any product liability claims (under any theory, including actions in the form of tort, warranty or strict liability) relating to Celgene’s Development, Manufacturing, and Commercialization activities under this Agreement.  Celgene shall have no obligation to indemnify the Acceleron Indemnitees to the extent that the Losses arise out of or result from, directly or indirectly, any breach of, or inaccuracy in, any representation or warranty made by Acceleron in this Agreement, or any breach or violation of any covenant or agreement of Acceleron in or pursuant to this Agreement, or the negligence or willful misconduct by or of any of the Acceleron Indemnitees.

 

12.7.2.           Indemnification by Acceleron.  Acceleron shall indemnify, hold harmless, and defend Celgene, its Affiliates, and their respective directors, officers, employees and agents and their respective successors, heirs and assigns (“Celgene Indemnitees”) from and against any and all Losses to the extent arising out of or resulting from (a) any breach of, or inaccuracy in, any representation or warranty made by Acceleron in this Agreement, or any breach or violation of any covenant or agreement of Acceleron in or pursuant to this Agreement; (b) the negligence or willful misconduct by or of Acceleron, its Affiliates and their respective Sublicensees, and their respective directors, officers, employees and agents; or (c) any product liability claims (under any theory, including actions in the form of tort, warranty or strict liability) relating to Acceleron’s Development, Manufacturing, and Commercialization activities under this Agreement.  Acceleron shall have no obligation to indemnify the Celgene Indemnitees to the extent that the Losses arise out of or result from, directly or indirectly, any breach of, or inaccuracy in, any representation or warranty made by Celgene in this Agreement, or any breach or violation of any covenant or agreement of Celgene in or pursuant to this Agreement, or the negligence or willful misconduct by or of any of the Celgene Indemnitees.

 

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12.7.3.           Indemnification Procedure.  In the event of any such claim against any Celgene Indemnitee or Acceleron Indemnitee (individually, an “Indemnitee”), the indemnified Party shall promptly notify the other Party in writing of the claim and the indemnifying Party shall manage and control, at its sole expense, the defense of the claim and its settlement.  The Indemnitee shall cooperate with the indemnifying Party and may, at its option and expense, be represented in any such action or proceeding.  The indemnifying Party shall not be liable for any settlements, litigation costs or expenses incurred by any Indemnitee without the indemnifying Party’s prior written authorization.  Notwithstanding the foregoing, if the indemnifying Party believes that any of the exceptions to its obligation of indemnification of the Indemnitees set forth in Section 12.7.1 or 12.7.2 may apply, the indemnifying Party shall promptly notify the Indemnitees, which may be represented in any such action or proceeding by separate counsel at their expense; provided that the indemnifying Party shall be responsible for payment of such expenses if the Indemnitees are ultimately determined to be entitled to indemnification from the indemnifying Party.  Any other provision of this Article 12 to the contrary, no Indemnitee under this Agreement shall be required to waive a conflict of interest under any applicable rules of professional ethics or responsibility if such waiver would be required for a single law firm to defend both the indemnifying Party and one or more Indemnitees.  In such case, the indemnifying Party shall provide a defense of the affected Indemnitees through a separate law firm reasonably acceptable to the affected Indemnitees at the indemnifying Party’s expense.

 

12.7.4.           Joint Defendants.  If a product liability suit is brought against either Party relating in any way to a Licensed Product or Licensed Compound, and it is not clear from the allegations in the complaint or the known facts surrounding the allegations in the complaint as to whether a claim exists for which there is a right of indemnification pursuant to Section 12.7.1 or 12.7.2 above, then Celgene shall be responsible for controlling the defense of such suit in the first instance.  During such period that Celgene is controlling such defense, with regard to the costs of such defense, including attorneys’ fees, Celgene and Acceleron each shall be responsible for [* * *] of all such costs.  No settlement, consent judgment or other voluntary final disposition of any such suit may be entered into without the prior written consent of Acceleron, which consent shall not be unreasonably withheld or delayed.  If, at any time in the course of such suit, it becomes apparent from discovery or otherwise that a claim exists for which indemnification may be obtained in accordance with Section 12.7.1 or 12.7.2 above, then the indemnification provisions of either Section 12.7.1 or 12.7.2 above, whichever is applicable, and the indemnification procedures of Section 12.7.3 shall become applicable and govern further proceedings in the suit.

 

12.7.5.           Insurance.  As of the Effective Date and throughout the term of this Agreement, each Party shall procure and maintain, at its sole cost and expense, commercial general liability insurance and products liability coverage (each including broad form contractual liability coverage for such Party’s indemnification obligation under Section 12.7.1 or 12.7.2 above, as applicable) in amounts not less than [* * *] per incident and [* * *] annual aggregate; provided that after approval of the first NDA by a Regulatory Authority for use

 

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of a Licensed Product, such products liability coverage shall be increased to not less than [* * *] per incident and [* * *] annual aggregate.  Each Party shall name the other Party as additional insureds on each such insurance policy relating to this Agreement.  Celgene may elect to self-insure all or parts of the limits described above.  The minimum amounts of insurance coverage required under this Section 12.7.5 shall not be construed to create a limit of either Party’s liability with respect to its indemnification obligation under Section 12.7.1 or 12.7.2 above, as applicable.

 

Article 13
 MISCELLANEOUS PROVISIONS

 

13.1                        Dispute Resolution; Governing Law.

 

13.1.1.           Disputes.  Unless otherwise set forth in this Agreement, in the event of any dispute arising under this Agreement between the Parties, the Parties may refer such dispute to the respective Executive Officers, and such Executive Officers shall attempt in good faith to resolve such dispute.  If the Parties are unable resolve a given dispute pursuant to this Section 13.1.1 within [* * *] days of referring such dispute to the Executive Officers, either Party shall be free to pursue any remedy that may be available to it at law or in equity.

 

13.1.2.           Jurisdiction.  Each Party hereby (a) irrevocably submits to the exclusive jurisdiction of the United States District Court located in the State of New York and (b) agrees not to assert as a defense or otherwise that its property is exempt or immune from attachment or execution, that any such action brought in the above-named court should be dismissed on grounds of forum non conveniens, should be transferred or removed to any court other than the above-named court, or should be stayed by reason of the pendency of some other proceeding in any other court other than the above-named court, or that this Agreement or the subject matter hereof may not be enforced in or by such court.

 

13.1.3.           Governing Law.  This Agreement shall be construed and the respective rights of the Parties determined according to the substantive laws of the State of New York notwithstanding the provisions governing conflict of laws under such New York law to the contrary.

 

13.2                        Assignment.  Except as provided in this Section 13.2, this Agreement may not be assigned or otherwise transferred, nor may any right or obligation hereunder be assigned or transferred, by either Party without the consent of the other Party.  Either Party may, however, without the other Party’s consent, assign this Agreement and its rights and obligations hereunder in whole or in part to an Affiliate or pursuant to a Change of Control.  To the extent that the assigning Party survives as a legal entity, the assigning Party shall remain responsible for the performance by its assignee of this Agreement or any obligations hereunder so assigned to such assignee.

 

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13.3                        Amendments.  This Agreement and the Schedules referred to in this Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all previous arrangements with respect to the subject matter hereof, whether written or oral.  Any amendment or modification to this Agreement shall be made in writing signed by both Parties.

 

13.4                        Notices.  Any consent, notice or report required or permitted to be given or made under this Agreement by one of the Parties hereto to the other shall be in writing and (a) delivered by hand, (b) sent by nationally recognized overnight delivery service, (c) sent by registered or certified mail, return receipt requested, postage prepaid, or (d) sent by facsimile transmission confirmed by prepaid, registered or certified mail letter, and shall be deemed to have been properly served to the addressee upon receipt of such written communication, in any event to the following addresses:

 

	
If to Acceleron:
    	
 
    	
Acceleron Pharma, Inc. 
   149 Sidney Street
   Cambridge, MA 02139
   Attn: President
   Telephone: (617) 649-9200 
   Fax: (617) 576-2224
    
	
 
    	
 
    	
 
    
	
with a copy to:
    	
 
    	
Ropes & Gray LLP
   One International Place
   Boston, MA 02110
   Attn: Marc A. Rubenstein
   Telephone: (617) 951-7000 
   Fax: (617) 235-0706
    
	
 
    	
 
    	
 
    
	
If to Celgene:
    	
 
    	
[* * *]
    
	
 
    	
 
    	
 
    
	
with a copy to:
    	
 
    	
 
    

 

Either Party may change its address to which notices shall be sent by giving notice to the other Party in the manner herein provided.

 

13.5                        Force Majeure.  No failure or omission by either Party in the performance of any obligation of this Agreement shall be deemed a breach of this Agreement or create any liability if the same shall arise from any cause or causes beyond the reasonable control of such Party, including the following:  acts of god; 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; terrorist act; rebellion; insurrection; riot; and invasion; provided that such Party provides notice to the other Party of such an event, and the non-performing Party uses Commercially Reasonable Efforts to cure such failure or omission resulting from one of the above causes as soon as is practicable; provided further that, in the event the suspension of performance continues for [* * *] days, and such

 

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failure to perform would constitute a material breach of this Agreement in the absence of such force majeure event, the Parties will discuss how to proceed under this Agreement, which may include termination of this Agreement by the non-affected Party.

 

13.6                        Compliance with Applicable Laws.  Neither Party shall export any technology licensed to it by the other Party under this Agreement except in compliance with United States export laws and regulations.  The Parties shall at all times comply with all material laws and regulations applicable to its activities under this Agreement.

 

13.7                        Independent Contractors.  It is understood and agreed that the relationship between the Parties is that of independent contractors and that nothing in this Agreement shall be construed as authorization for either Acceleron or Celgene to act as agent for the other.  Nothing herein contained shall be deemed to create an employment, agency, joint venture or partnership relationship between the Parties or any of their agents or employees for any purpose, including tax purposes, or to create any other legal arrangement that would impose liability upon one Party for the act or failure to act of the other Party.  Neither Party shall have any express or implied power to enter into any contracts or commitments or to incur any liabilities in the name of, or on behalf of, the other Party, or to bind the other Party in any respect whatsoever.

 

13.8                        Further Assurances.  Each Party hereto agrees to execute, acknowledge and deliver such further instruments, and to do all other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

 

13.9                        No Strict Construction.  This Agreement has been prepared jointly and shall not be strictly construed against either Party.

 

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

 

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

 

13.12                 Severability.  If any provision hereof should be held invalid, illegal or unenforceable in any respect in any jurisdiction, the Parties hereto shall substitute, by mutual consent, valid provisions for such invalid, illegal or unenforceable provisions, which valid provisions in their economic effect are sufficiently similar to the invalid, illegal or unenforceable provisions that it can be reasonably assumed that the Parties would have entered into this Agreement with such valid provisions.  In case such valid provisions cannot be agreed upon, the invalid, illegal or unenforceable of one or several provisions of this Agreement shall not affect the validity of this

 

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Agreement as a whole, unless the invalid, illegal or unenforceable provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid, illegal or unenforceable provisions.

 

13.13                 No Third Party Beneficiaries.  No person or entity other than Celgene, Acceleron and their respective Affiliates and permitted assignees hereunder shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.

 

13.14                 Execution in Counterparts.  This Agreement may be executed in counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.

 

Incorporation.  Article 13 of the Original Agreement is hereby incorporated mutatis mutandis into this Amendment.

 

Effect on Original Agreement.  Except as specifically amended by this Amendment, the Original Agreement will remain in full force and effect and is hereby ratified and confirmed.  To the extent a conflict arises between the terms of the Original Agreement and this Amendment, the terms of this Amendment shall prevail but only to the extent necessary to accomplish their intended purpose.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Collaboration, License and Option Agreement as of the date first set forth above.

 

	
 
    	
ACCELERON PHARMA, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ John Knopf
    
	
 
    	
Name:
    	
John Knopf
    
	
 
    	
Title:
    	
CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CELGENE CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Sol Barer
    
	
 
    	
Name:
    	
Sol Barer
    
	
 
    	
Title:
    	
Chairman and CEO
    

 

[Signature Page to Collaboration License and Option Agreement]

 

 

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EXHIBIT

 

[* * *]

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

EXHIBIT B

 

[* * *]

 

 

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SCHEDULE 1.4
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SCHEDULE 1.11
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SCHEDULE 1.14
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SCHEDULE 1.21
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SCHEDULE 2.8
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SCHEDULE 4.4.6
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SCHEDULE 6.2.3

[* * *]

 

 

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SCHEDULE 8.1
 [* * *]

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

SCHEDULE 9.3
 PRESS RELEASE

 

	

    	

    

 

Acceleron Pharma Announces Global Collaboration with Celgene Corporation on ACE-011 Program for Cancer-Related Bone Loss

 

CAMBRIDGE, Mass. & SUMMIT, N.J.— Feb. 20, 2008 -  Acceleron Pharma, Inc. and Celgene Corporation today announced a worldwide strategic collaboration for the joint development and commercialization of ACE-011, a first-in-class, novel bone-forming compound.  The collaboration combines both companies’ resources and commitment to developing products for the treatment of cancer and cancer-related bone loss. In pre-clinical and early clinical studies, this innovative compound has reported success in key biomarkers of bone formation.  The companies also signed an option agreement for certain discovery stage programs.

 

Under the terms of the agreement, Celgene and Acceleron will jointly develop, manufacture and commercialize Acceleron’s products for bone loss.  Celgene will make an upfront payment to Acceleron of $50 million, which includes a $5 million equity investment in Acceleron.  In addition, in the event of an initial public offering of Acceleron, Celgene will purchase a minimum of $7 million of Acceleron common stock.

 

“This collaboration is an excellent strategic fit for Acceleron and the ACE-011 program. Celgene is one of the most successful biotech companies in the world and is the leader in the field of blood cancers, including multiple myeloma, an indication where ACE-011 has great potential,” said John Knopf, Ph.D., Chief Executive Officer of Acceleron.  “We believe Celgene’s established commercial, clinical, regulatory and international capabilities complemented by Acceleron’s expertise in novel biologics drug discovery, manufacturing and development may result in a successful partnership that reflects a shared vision to improve the lives of patients worldwide.”

 

Acceleron will retain responsibility for initial activities, including research and development, through the end of Phase 2a clinical trials, as well as manufacturing the clinical supplies for these studies.  In turn, Celgene will conduct the Phase 2b and Phase 3 clinical studies and will oversee the manufacture of Phase 3 and commercial supplies.  Acceleron will pay a share of the development expenses and is eligible to receive development, regulatory and commercial milestones of up to $510 million for the ACE-011 program and up to an additional $437 million for each of the three discovery stage programs.  The companies will co-promote the products in North America.  Acceleron will receive tiered royalties on worldwide net sales.

 

“Celgene supports the development of promising new approaches for the treatment of cancer and bone loss like ACE-011,” said Sol Barer, Ph.D., Chairman and Chief Executive Officer of Celgene. “We look forward to the initiation of the ACE-011 Phase 2a study in multiple myeloma later this year.”

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

The completion of the agreement is subject to Hart-Scott-Rodino approval under United States antitrust laws.

 

About ACE-011

 

ACE-011, a protein therapeutic based on the activin receptor type IIA, is a novel bone-forming agent. In numerous pre-clinical models of bone loss, ACE-011 increased bone mineral density, improved bone architecture, increased the mineral apposition and bone formation rates and improved bone mechanical strength. These effects have been demonstrated in therapeutic models of bone loss in which ACE-011 stimulated bone formation — a significant unmet medical need that is underserved by current treatments for bone loss.  In its Phase 1 study, ACE-011 demonstrated an encouraging safety profile and increased biomarkers of bone formation.  ACE-011 is currently in a Phase 1b study and Acceleron expects to begin a Phase 2a study in multiple myeloma in the middle of 2008.

 

About Acceleron

 

Acceleron is a privately held biopharmaceutical company committed to discover, develop, manufacture and commercialize novel biotherapeutics that modulate the growth of bone, muscle, fat and the vasculature to treat musculoskeletal, metabolic and cancer-related diseases.  Acceleron’s scientific approach takes advantage of its unique insight into the regenerative powers of two protein families: the Growth and Differentiation Factors (GDFs) and Bone Morphogenetic Proteins (BMPs).  ACE-011, a novel bone forming agent, is the Company’s lead program, and is being developed to reverse bone loss in diseases such as cancer-related bone loss.  In addition, the company is advancing through pre-clinical development product candidates that increase muscle mass, control angiogenesis and inhibit fat accumulation.  Acceleron utilizes proven biotherapeutic technologies and capitalizes on the company’s internal GMP manufacturing capability to rapidly and efficiently advance its therapeutic programs.  The investors in Acceleron are Advanced Technology Ventures, Bessemer Ventures, Flagship Ventures, MPM BioEquities, OrbiMed Advisors, Polaris Ventures, QVT Financial, Sutter Hill Ventures and Venrock.  For more information, visit www.acceleronpharma.com.

 

About Celgene

 

Celgene Corporation, headquartered in Summit, New Jersey is an integrated global pharmaceutical company engaged primarily in the discovery, development and commercialization of innovative therapies for the treatment of cancer and inflammatory diseases through gene and protein regulation. For more information, please visit the Company’s website at www.celgene.com.

 

This release contains forward-looking statements which are subject to known and unknown risks, delays, uncertainties and other factors not under Celgene’s control, which may cause actual results, performance or achievements of Celgene to be materially different from the results, performance or other expectations expressed or implied by these forward-looking statements. These factors include results of current or pending research and development activities, actions by the FDA and other regulatory authorities, and other factors described in Celgene’s filings with the Securities and Exchange Commission such as its 10K, 10Q and 8K reports.

 

	
CONTACT:
    	
 
    
	
Celgene   Corporation:
    	
Acceleron   Pharma:
    
	
David   Gryska, 908-673-9059
    	
Steven   Ertel, 617-649-9234
    
	
Senior   Vice President and Chief Financial Officer
    	
Vice   President, Corporate Development
    
	
or
    	
or
    
	
Brian   P. Gill, 908-673-9530
    	
Paul   Kidwell (Media)
    
	
Vice President, Global Corporate Communications
    	
Suda Communications LLC, tel: 617-296-3854
    

 

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# # #

 

iiiExhibit 10.10

 

EXCLUSIVE LICENSE AGREEMENT 

 

BETWEEN 

 

SALK INSTITUTE FOR BIOLOGICAL STUDIES 

AND 

 

ACCELERON PHARMA INC.

 

ACTIVIN RECEPTORS (TYPE IIA) AND RELATED SUBJECT MATTER 

 

FOR THERAPEUTIC AND DIAGNOSTIC PURPOSES

 

	
1
    	
DEFINITIONS
    	
2
    
	
 
    	
 
    	
 
    
	
2
    	
GRANT   OF RIGHTS
    	
7
    
	
 
    	
 
    	
 
    
	
3
    	
PAYMENTS
    	
10
    
	
 
    	
 
    	
 
    
	
4
    	
OWNERSHIP   OF INTELLECTUAL PROPERTY
    	
14
    
	
 
    	
 
    	
 
    
	
5
    	
BIOLOGICAL   MATERIALS
    	
15
    
	
 
    	
 
    	
 
    
	
6
    	
DISCLAIMERS
    	
16
    
	
 
    	
 
    	
 
    
	
7
    	
INDEMNIFICATION   AND INSURANCE
    	
18
    
	
 
    	
 
    	
 
    
	
8
    	
PROSECUTION   AND MAINTENANCE OF PATENT RIGHTS
    	
20
    
	
 
    	
 
    	
 
    
	
9
    	
REPORTING,   VERIFICATION AND PAYMENT
    	
24
    
	
 
    	
 
    	
 
    
	
10
    	
TERM   AND TERMINATION
    	
25
    
	
 
    	
 
    	
 
    
	
11
    	
CONFIDENTIAL   INFORMATION
    	
28
    
	
 
    	
 
    	
 
    
	
12
    	
CHOICE   OF LAW; DISPUTE RESOLUTION
    	
29
    
	
 
    	
 
    	
 
    
	
13
    	
COMMERCIALIZATION
    	
30
    
	
 
    	
 
    	
 
    
	
14
    	
ADDRESSES
    	
32
    
	
 
    	
 
    	
 
    
	
15
    	
MISCELLANEOUS
    	
32
    

 

 

LICENSE AGREEMENT

 

This Amended and Restated License Agreement (the “Agreement”) is made and entered into as of August 10, 2010, (the “Effective Date”) by and between the Salk Institute for Biological Studies, a nonprofit public benefit corporation organized under the laws of the State of California (“Salk”), and Acceleron Pharma, Inc., a corporation organized under the laws of the State of Delaware (“Licensee”).

 

WHEREAS, Salk is the owner of certain Patent Rights (as hereinafter defined) and of Biological Materials (as hereinafter defined) relating to same;

 

WHEREAS, the development of the inventions listed in Schedule A was sponsored in part by the National Institutes of Health and, as a consequence, Salk is subject to obligations to the Federal Government as set forth in 35 U.S.C. §200 et seq.;

 

WHEREAS, Salk desires that the Patent Rights and Biological Materials be developed and utilized to the fullest extent possible so that products resulting therefrom may be available for public use and benefit;

 

WHEREAS, Salk has determined that the best method for disseminating the Patent Rights and Biological Materials is through the grant of a license to an entity willing to establish a program to develop therapeutic and/or diagnostic products covered by such Patent Rights and Biological Materials;

 

WHEREAS, Licensee represents that it has the intent and has reasonable expectations of having the resources to develop and market products based upon the Patent Rights and Biological Materials;

 

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WHEREAS, Licensee wishes to obtain, and Salk is willing to grant, a license to the Patent Rights and Biological Materials, subject to the terms set forth below; and

 

WHEREAS, Licensee and Salk are parties to that certain Exclusive License Agreement, effective as of May 10, 2004 (the “Original Agreement”) and as amended February 12, 2008 (collectively with the Original Agreement, the “Prior Agreements”), and desire to amend and restate the Prior Agreements in their entirety and to accept the rights created pursuant to this Agreement and the companion agreement effective as of August 11, 2010 relating to Activin Receptors (Type IIB) in lieu of the rights granted to them under the Prior Agreements.

 

NOW, THEREFORE, in consideration of the above premises and the mutual covenants contained herein, the parties hereby agree as follows:

 

1                                         DEFINITIONS.

 

1.1                               The term “ActRIIa Product” means:

 

(a)(i) any protein containing at least twenty-five (25) consecutive amino acids from the extracellular portion of human ActRIIa, murine ActRIIa or a vertebrate ortholog thereof, (ii) any dimers or multimers of (a)(i), and (iii) any nucleic acid encoding a protein of (a)(i) or (a)(ii); or

 

(b)(i) any antibody or portion thereof that binds specifically to a protein described in (a)(i) or (a)(ii) and (ii) any nucleic acid encoding an antibody of (b)(i).

 

1.2                               The term “Affiliate” shall mean any entity that controls, is controlled by or is under common control with Licensee, where “control’ means beneficial ownership of more than fifty percent (50%) of the outstanding shares or securities or the ability otherwise to elect a majority of the board of directors or other managing authority.

 

13                                  The term “Biological Materials” shall mean the materials supplied by Salk (initially identified in Exhibit B and any additional materials transferred during the Term)

 

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together with any progeny, mutants, or derivatives thereof supplied by Salk or created by Licensee from such materials.

 

1.4                               The term “Commercial Sale” shall mean any transaction, following receipt of all necessary governmental approvals to market a Licensed Product, that transfers to a purchaser, for value, physical possession of and title to a Licensed Product, after which transfer the seller has no right or power to determine the purchaser’s resale price. Transfer of possession and title to an Affiliate or Sublicensee shall not constitute a Commercial Sale unless the Affiliate or Sublicensee is an end user of the Licensed Product.

 

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

 

1.6                               The term “Licensed Product” shall mean any Primary Licensed Product and/or Secondary Licensed Product.

 

1.7                               The term “Licensed Technology” shall mean the Patent Rights and the Biological Materials.

 

1.8                               The term “Loss” shall have the meaning set forth in Section 7.1 hereof.

 

1.9                               The term “Net Sales” shall mean the gross sales by Licensee, its Affiliates or Sublicensees in the Commercial Sale of Licensed Product less the following items if separately stated on purchase orders, invoices, or other documents of sale:

 

(a)                                 outbound shipping, storage, packing and insurance expenses, each as actually paid or allowed;

 

(b)                                 amounts repaid or credited by reason of rejections, defects or returns or because of retroactive price reductions;

 

(c)                                  sales and other excise taxes, use taxes, tariffs, export license fees and duties actually paid or allowed; and

 

(d)                                 trade, quantity and cash discounts to the extent allowed and taken.

 

No deductions shall be made for commissions paid to individuals whether they are with independent sales agencies or regularly employed by Licensee, its Affiliates or Sublicensees and

 

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on its payroll, or for cost of collections.  Net Sales shall occur on the date of receipt of payment for a Licensed Product.

 

Notwithstanding the foregoing, in the event a Licensed Product is sold in conjunction with another active component so as to be a combination product (whether packaged together or in the same therapeutic formulation), Net Sales shall be calculated by multiplying the Net Sales of such combination product by a faction, the numerator of which shall be the average wholesale price of the Licensed Product as if sold separately (determined in accordance with generally accepted accounting principles), and the denominator of which shall be the aggregate average wholesale price of all the active components of such combination product, including the Licensed Product, as if sold separately. In the event no such separate sales are made by Licensed or its Affiliates, Net Sales of the combination product shall be calculated in a manner to be negotiated and agreed upon by the Parties, reasonably and in good faith prior to any sale of such combination product, which shall be based upon the respective estimated commercial values of the active components of such combination product.

 

Net Sales shall include the fair market value of any non-cash consideration received by Licensee, its Affiliates or Sublicensees for the sale, lease or transfer of Licensed Products.

 

1.10                        The term “Patent Costs” shall mean out-of-pocket expenses incurred by Salk in connection with the preparation, filing, prosecution, maintenance, and interference proceedings of patent applications and patents in the United States, including the fees and expenses of attorneys and patent agents, filing fees and maintenance fees, but excluding costs associated with any patent infringement actions.

 

1.11                        The term “Patent Rights” shall mean inventions claimed in below-described (a), (b), (c), (d), (e), (f) and (g), and inventions not claimed but for which support is found in (a), (b), (e), (d),(e), (f) and (g).

 

(a)                                 Patent applications listed in Exhibit A and patents issuing therefrom.

 

(b)                                 Patents listed in Exhibit A.

 

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(c)                                  Divisional applications and continuation applications that claim the benefit of priority to any of the patents described in (a) or (b) or patent applications described in (a) or (b) and patents issuing therefrom.

 

(d)                                 Continuation-in-part applications only to the extent the invention(s) are supported by the patents described in (a) or (b) and patent applications described in (a) or (b) and patents issuing therefrom.

 

(e)                                  Reissue patents and reexamination patents related to patents described in (a), (b), (c) and (d).

 

(f)                                   Any and all foreign counterparts of the patent applications and patents described in (a), (b), (c), (d) and (e).

 

(g)                                 Any extensions, supplementary protection certificates, and patents of addition of any of the patent applications and patents described in (a), (b), (c), (d), (e) and (f).

 

1.12                        The term “Primary Licensed Product” shall mean any therapeutic product that is an ActRIIa Product the use, sale or practice of which is covered by a Valid Claim included in the Patent Rights.

 

1.13                        The term “Secondary Licensed Product” shall mean any therapeutic and diagnostic product that is an ActRIIa Product, other than a Primary Licensed Product, discovered, developed and/or identified using the Patent Rights, to the extent covered by a Valid Claim, or the Biological Materials, including small molecules identified by screening. Without limiting the foregoing, Secondary Licensed Product includes any ActRIIa Product that is a derivative compound developed from a compound discovered or identified using the Licensed Technology and any Primary Licensed Product no longer covered by a Valid Claim in the Patent Rights.

 

1.14                        The term “Sublicensee” shall mean any non-Affiliate grantee of a Sublicense or a Sub-sublicense (as defined in Section 2.2). The term “Direct Sublicensee” shall mean any non-Affiliate grantee of a Sublicense granted by Licensee of any of the rights granted to Licensee under Section 2.

 

1.15                        The term “Sublicensing Revenue” shall mean all upfront, license, and technology access fees, product milestone payments (whether research, preclinical or

 

5

 

developmental), and other remuneration, however characterized (except for direct reimbursement of fully burdened research or sales personnel expenditures at rates consistent with current industry standards and payments based on the level of sales, profits or other levels of commercialization derived from Net Sales of Licensed Products by Sublicensees (including, without limitation, Licensee’s royalties on net sales and/or sharing of Sublicensee’s profits with Licensee)), owed to or received by Licensee under any Sublicense or Sub-sublicense of the rights granted hereunder with a third party for the use of the Licensed Technology by the third party and/or the sale by a third party of any Licensed Product. Any non-cash consideration received by Licensee from Sublicensees shall be valued at its fair market value as of the date of receipt. For equity investments received by Licensee under any Sublicense or Sub-sublicense of the rights granted hereunder, Sublicensing Revenue shall only include the amount over 130% of the then fair market value of Licensee’s equity. Fair market value of equity will be determined as follows:

 

if, at the time of such investment, the shares of Licensee are quoted on a securities exchange or listed on an automatic quotation system (“listed shares”), then the fair market value shall be the closing price of the Licensee’s stock on the date of such investment;

 

if, at the time of such investment, the shares of Licensee are not listed shares and an arms length equity placement has been made within the six months preceding a sublicense agreement, the share price actually used for that transaction will be deemed to be the applicable fair market value unless Licensee can show some material advancement or achievement of a milestone that has occurred in the intervening period; or

 

if, at the time of such investment, the shares of Licensee are not listed shares and there has not been an arms length equity financing within the six months preceding a sublicense agreement, then the Board of Directors of Licensee will, in good faith, determine the fair market value.

 

1.16                        The term “Term” shall have the meaning set forth in Section 10.1 hereof,

 

1.17                        The term “Valid Claim” shall mean any issued claim in a patent within the Patent Rights, which issued claim has not been disclaimed or held unenforceable or invalid by a governmental agency or court of competent jurisdiction by a decision beyond right of review; and, any pending claim in a patent application within the Patent Rights to the extent that any such patent application has not been pending for more than five (5) years. If an irrevocable

 

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judgment holds any claim invalid, Licensee and its Affiliates shall thereafter be relieved of any future obligations under this Agreement in respect to such claim.

 

2                                         GRANT OF RIGHTS.

 

2.1                               Patent Rights and Biological Materials.  Salk hereby grants to Licensee subject to the terms and conditions hereof:

 

(a)                                 an exclusive, worldwide license, including the right to grant sublicenses, under the Patent Rights to develop, have developed, make, have made, use, have used, import, have imported, offer for sale, sell and have sold Primary Licensed Products, and

 

(b)                                 a nonexclusive license, including the right to grant sublicenses subject to the limitations set forth in Section 2.2(a), under the Patent Rights to develop, have developed, make, have made, use, have used, import, have imported, offer for sale, sell and have sold Secondary Licensed Products, and

 

(c)                                  a commercial license to use the Biological Materials to develop, have developed, make, have made, use, and have used any Licensed Product for the Term defined in Section 10.1.

 

2.2                               Sublicenses and Sub-sublicenses.

 

(a) Sublicenses. Licensee shall have the right to grant sublicenses consistent with this Agreement (“Sublicenses”). The rights granted under Section 2.1(b) are sublicensable by Licensee, except that Licensee shall not have the right to grant sublicenses under the Patent Rights for the purpose of the discovery or identification of Secondary Licensed Products. Notwithstanding the foregoing, Licensee shall have the right to grant sublicenses to all of the rights granted under Section 2.1(b) if such sublicense is in connection with a sublicense of a Primary Licensed Product (including a Primary Licensed Product that subsequently becomes a Secondary Licensed Product) or in connection with a sublicense of a Secondary Licensed

 

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Product that is first discovered or identified by Licensee. Licensee agrees that any Sublicenses granted by it shall include Sections 4, 5.2(a), 7, 8.4, 9.2, 11, 13.5 and 15.7 of this Agreement. Licensee is responsible for timely enforcement of Sublicense agreements. Failure to enforce any of the provisions set forth in the fourth sentence of this Section will be considered a breach of this Agreement and cause for termination under Section 10.2(b).

 

(b) Sub-sublicenses. Direct Sublicensees shall have the right to grant further sublicenses consistent with this Agreement (“Sub-sublicenses”). Rights granted under Subsublicenses shall not be further sublicensed without Salk’s prior written approval, which approval shall not be unreasonably withheld, and any unapproved sublicense of rights granted under a Sub-sublicense shall be null and void. Each Sub-sublicense and further sublicenses granted by Sub-sublicensees shall include Sections 4, 5.2(a), 7, 8.4, 9.2, 11, 13.5 and 15.7 of this Agreement. Licensee is responsible to Salk for timely enforcement of Sub-sublicense agreements. Failure to enforce any of the provisions set forth in the third sentence of this Section will be considered a breach of this Agreement and cause for termination under Section 10.2(b).

 

(c) Sublicenses and Sub-sublicenses Generally. Licensee agrees that no Sublicense or Sub-sublicense shall contain any provision that would cause any Sublicense or Sub-sublicense granted hereunder to extend beyond the term of the Agreement. Licensee further agrees to deliver in confidence to Salk for informational purposes a true and correct copy of each Sublicense and Sub-sublicense, and any modification, or termination thereof, within forty-five (45) days after execution of each such Sublicense, Sub-sublicense, or modification, or termination thereof; provided that any such copy may be redacted to remove any confidential, proprietary or competitive information of Licensee or its Sublicensee, but such copy shall not be redacted to the extent that it impairs Salk’s ability to ensure compliance with this Agreement. Failure to provide such copy will be considered a breach of this Agreement and cause for termination under Section 10.2(b). Upon termination of this Agreement for any reason, Salk will stand in the place of Licensee with respect to any Direct Sublicensee and such Sublicense will survive in accordance with its terms as long as the Direct Sublicensee is current on its payment obligations under the sublicense agreement and agrees to pay Salk the future annual maintenance fees due under Section 3.2 and Patent Costs due under Section 8.2(b).

 

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Salk agrees to negotiate in good faith with any third party requested by Licensee for the grant of a non-exclusive license to the Patent Rights consistent with the grant of rights set forth in Section 2.1(b) hereof.

 

2.3                               Government Rights. Licensee acknowledges that the U.S. federal government retains a royalty-free, non-exclusive, non-transferable license to practice any government-funded invention in the Patent Rights, to the extent set forth in 35 U.S.C. §§ 201-211 and the regulations promulgated thereunder, as amended, or any successor statutes or regulations.

 

2.4                               Retained Rights. Under the license granted herein, Salk reserves the right to use for research purposes including sponsored research and collaborations, as long as the other party to the sponsored research or collaboration does not obtain rights to Licensed Technology which have already been granted exclusively under this Agreement, and the right to allow other nonprofit or academic institutions to use for internal, non-commercial research purposes, any Patent Rights and Biological Materials licensed hereunder, without Salk or such other institutions being obligated to pay Licensee royalties or other compensation. Salk shall have no obligation to notify or inform Licensee of such use; provided, however, in the event Salk alone or jointly with any nonprofit or academic institution conceives, reduces to practice or otherwise develops any inventions, discoveries, or designs using the Licensed Technology (an “Invention”), Salk shall notify Licensee of any Invention which Salk has control over the patenting and licensing of Salk’s rights, which notification shall include a reasonably detailed description of such Invention. If Licensee desires a license to Salk’s rights in any Invention disclosed to it pursuant to this Section, Licensee shall so notify Salk within thirty (30) days of disclosure thereof. If a license is requested by Licensee, the parties shall negotiate in good faith, for a period of not less than ninety (90) days from the date of Licensee’s request, the terms of a license of such Invention to Licensee. If the parties are unable, despite such good faith efforts, to reach agreement on the terms of any such license, then Salk shall be free to negotiate a license to such Invention with any third party; provided that Salk shall not enter into any such license with a third party on terms more favorable to such third party in the aggregate, than the terms last offered by Salk to Licensee.

 

2.5                               No Additional Rights. Nothing in this Agreement shall be construed to confer any rights upon Licensee by implication, estoppel, or otherwise as to any technology or patent

 

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rights of Salk or any other entity other than the Patent Rights, regardless of whether such technology or patent rights shall be dominant or subordinate to any Patent Rights.

 

3                                         PAYMENTS.

 

3.1                               License Fee. As partial consideration for the rights granted to Licensee pursuant to the Original Agreement, and as a nonrefundable license fee, within fifteen (15) business days following May 10, 2004, Licensee issued to Salk 250,000 shares (valued at $1.00 per share) of common stock of Licensee (the “Shares”). Salk recognizes that Licensee has issued and may issue additional ownership securities of the same or different class for such consideration as Licensee directors shall deem appropriate. As of May 10, 2004, Licensee represented and warranted that (i) the execution and delivery of the Original Agreement and the payment of the cash portion of the license fee and issuance of Shares were duly and validly authorized by all necessary corporate action by Licensee, (ii) the issuance of Shares were not subject to any preemptive or similar rights, except for any such rights which were waived or otherwise complied with, and (iii) the authorized capital stock of Licensee did consist of 38,000,000 shares of Common Stock, of which 5,006,000 shares were issued and outstanding, 25,550,000 shares of Preferred Stock, of which 9,203,710 shares were issued and outstanding, and outstanding options, warrants or other rights to acquire capital stock of Licensee covered an aggregate of 148,315 shares of its capital stock.

 

3.2                               Annual Maintenance Fees. Licensee agrees to pay to Salk the greater of (i) Twenty Five Thousand Dollars ($ 25,000.00) or (ii) the amount payable to Salk under Section 3.5 hereof in respect of annual license or maintenance fees paid by Sublicensee(s) of Licensee in cash per year (the “Maintenance Fee”), beginning and due on the two-year anniversary date of the Effective Date and due on the anniversary date each year thereafter. The Maintenance Fee is non-refundable and not subject to proration. This Maintenance Fee will be credited against the royalties due under Section 3.4 for the calendar year in which the annual payment was made and will be credited on a dollar-for-dollar basis up to the full amount of the Maintenance Fee paid for such year. An annual Maintenance Fee payment made in one calendar year is not creditable against royalties accruing in a different calendar year.

 

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3.3          Milestone Payments. Licensee shall provide Salk with written notice within thirty (30) days of each achievement by Licensee or its Affiliates of each of the milestone events set forth below. Salk acknowledges that as of the Effective Date certain milestones, indicated below, have been achieved and payment has been received by Salk. Except for those payments already made, within fifteen (15) days after delivering each such notice, Licensee shall pay to Salk the amounts set forth below in cash:

 

Milestones for the first Primary Licensed Product:

First demonstration of in vivo efficacy: $25,000 (paid, ACE-011)

Initiation of IND-enabling toxicity studies: $70,000 (paid, ACE-011)

First administration to humans in a clinical trial: $100,000 (paid, ACE-011)

Completion of Phase II Clinical: $250,000

Submission of NDA to FDA: $300,000

Approval of NDA by FDA: $1,250,000

 

Milestones for subsequent Primary Licensed Products:

First demonstration of in vivo efficacy: $25,000

Initiation of IND-enabling toxicity studies: $37,500

First administration to humans in a clinical trial: $50,000

Completion of Phase II Clinical: $125,000

Submission of NDA to FDA: $150,000

Approval of NDA by FDA: $500,000

 

Milestones for the first Secondary Licensed Product:

First administration to humans in a clinical trial: $50,000

Completion of Phase II Clinical: $100,000 

Submission of NDA to FDA: $200,000 

Approval of NDA by FDA: $300,000

 

Milestones for the second and third Secondary Licensed Products:

First demonstration of in vivo efficacy: $10,000

Initiation of IND-enabling toxicity studies: $12,500

First administration to humans in a clinical trial: $25,000

Completion of Phase II Clinical: $50,000

Submission of NDA to FDA: $100,000

Approval of NDA by FDA: $150,000

 

The term “First demonstration of in vivo efficacy” shall mean first results indicating that a Licensed Product has the statistically significant (p < 0.01) desired effect in an animal model of human disease.

 

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The term “IND-enabling toxicity studies” shall mean the specific preclinical studies that yield data in animals which when completed will satisfy regulatory requirements for a successful IND filing with the FDA, but for clarification, the milestone payment is due at initiation of the study.

 

The term “Completion of Phase II Clinical Study” shall mean completion of the Phase II clinical study in which the primary end point of the study has been met according to the predetermined statistical analysis plan and that enables the initiation of one or several Phase III registration studies intended to be used for filing an NDA or BLA with the FDA.

 

The term “New Drug Application (“NDA”)” shall mean a New Drug Application pursuant to 21 U.S.C. Section 505 (b)(1), or a Biological License Application (BLA) pursuant to 21 CFR 601.2 or PLA or similar application for marketing approval of Licensed Products in the United States.

 

The term “NDA Approval” shall mean receipt of marketing authorization by the FDA for a Licensed Product.

 

For the avoidance of doubt, for a particular Licensed Product, written notice and a payment is required the first time each milestone is achieved, but no additional written notice or payment is due to the extent that for the same Licensed Product a milestone is achieved again (e.g. a second in vivo experiment is successfully completed) for the same indication. Any derivatives and modifications of a Licensed Product are considered distinct Licensed Products, other than modifications which are limited to changes in the formulation of a Licensed Product. Also for the avoidance of doubt, a different indication must be a distinct and different disease state, and not a subset of the same disease or a label extension (e.g., secondary progressive multiple sclerosis is

 

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the same disease state, and therefore the same indication, as relapsing remitting multiple sclerosis). For the same Licensed Product being developed in a distinct indication, only the milestones from phase II forward are relevant, and payable.

 

If Licensee makes one or more of the milestone payments with respect to a Licensed Product but development of such Licensed Product is dropped or suspended before it achieves all of the final milestone(s), Licensee shall only be required to make the milestone payments on a follow-on Licensed Product that were not made previously; provided, that such follow-on Licensed Product is being developed for the same indication as the previous Licensed Product.

 

For the avoidance of doubt, no payment shall be due to Salk pursuant to this Section 3.3 hereof if milestone events for said Licensed Product are achieved by a Sublicensee.

 

Failure to make any milestone payment when due is considered a breach of this Agreement and cause for termination under Section 10.2(b).

 

3.4          Royalty Payments.

 

(a)           Primary Products. Licensee shall pay to Salk a royalty of three and one half percent (3.5%) on Net Sales of Primary Licensed Products, on a country by country and Primary Licensed Product by Primary Licensed Product basis through the period ending on the expiration of the last to expire of the Valid Claims included in the Patent Rights covering such Primary Licensed Product (the “Patent License Period”); provided that, if the Patent License Period for any Primary Licensed Product ends prior to the eleventh (11th) anniversary of the Effective Date, the Licensee shall pay Salk a royalty of one percent (1%) on Net Sales of Primary Licensed Products until the 11th anniversary of the Effective Date (as such Patent License Period may be extended, the “Primary Licensed Term”).

 

(b)           Secondary Products. Licensee shall pay Salk a royalty of one percent (1%) on Net Sales of Secondary Licensed Product until the fifteenth (15th) anniversary of the Effective Date (the “Secondary License Term”).

 

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(c)           Royalty Payment Terms. Royalty payments shall be made in accordance with Section 9.

 

(d)           Third Party Payments. In the event that Licensee is required to make payments to a third party to make, use, or sell Licensed Products, Royalties on Net Sales due to Salk hereunder will be subject to reduction by an amount equal to 50% of the amounts paid to any such third party; provided that, in no event will such Royalties be reduced to an amount less than 50% of the Royalty stated above.

 

3.5          Other Payments. Licensee shall pay to Salk a share of Sublicensing Revenue as defined in Section 1.15 as follows:

 

25% of amount of Sublicensing Revenue received if sublicense granted prior to filing of IND for a Licensed Product 

 

15% of amount of Sublicensing Revenue received if sublicense granted prior to initiation of the first Phase II clinical trial for a Licensed Product 

 

10% of amount of Sublicensing Revenue received if sublicense granted anytime after the initiation of the first Phase II clinical trial for a Licensed Product.

 

With respect to Sublicensing Revenue received by Licensee pursuant to the Collaboration, License and Option Agreement by and between Acceleron Pharma Inc. and Celgene Corporation, executed February 20, 2008, Licensee shall make payments under this Section 3.5 as described in the “Letter Agreement Concerning Payment of Sublicense Revenues” dated March 30, 2009 and attached hereto as Exhibit D.

 

Notwithstanding the foregoing, no payment shall be due to Salk under this Section on or after the second anniversary of the Effective Date in respect of annual license or maintenance fees paid by Sublicensee(s) if such payments are less than $25,000 per year. If such payments are greater than $25,000 per year, then the payment of such amount shall also constitute the payment due to Salk pursuant-to Section 3.2 hereof.

 

4              OWNERSHIP OF INTELLECTUAL PROPERTY.

 

Licensee (for itself, its Affiliates and Sublicensees) acknowledges and agrees that Salk is and shall remain (as to Licensee) the owner of the Patent Rights, subject to the rights of

 

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the Federal Government as set forth in 35 U.S.C. §200 et seq., and that Licensee (including its Affiliates and Sublicensees) has no rights in or to the Patent Rights other than the rights specifically granted herein.

 

5              BIOLOGICAL MATERIALS

 

5.1          Availability. Upon execution of this Agreement, Salk or its designee shall make available to Licensee the Biological Materials described in Exhibit B. Thereafter, Licensee may request and obtain from Salk additional quantities of said Biological Materials that Salk has in its possession and does not need for its own research or to meet other contractual obligations, at reasonable charge by Salk for handling and shipping. If Salk fails to fulfill the request of Licensee for Biological Materials, Licensee shall be free to produce such Biological Materials itself, or to purchase such Biological Materials from a third party.

 

5.2          Title and Improvements.

 

(a)           Title to Biological Materials shall remain with Salk. Licensee shall have only the right to use Biological Materials in accordance with the grant of rights under Section 2 hereof, and shall not use Biological Materials for any other purpose. Licensee shall not permit Biological Materials or any sample thereof to be distributed or delivered to any person whatsoever, other than to its own employees and those of its Affiliates and Sublicensees to be used as permitted herein.

 

(b)           To the extent permitted by any agreement between Licensee and any third party, Licensee shall notify Salk of any improvements (including, but not limited to, derivatives and variants) to the Biological Materials made by Licensee, irrespective of whether any such improvements were made in collaboration with Salk or any of its employees. At Salk’s request and expense, Licensee shall provide Salk with reasonable quantities of such improvements, and scientists at Salk shall have the right to use them for internal, non-commercial research at Salk. Inventorship of such improvements will be determined in accordance with U.S. patent laws. Salk

 

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agrees that it will not publish the results of any research conducted using improvements made solely by Licensee except in accordance with the provisions of this Section. Prior to publishing any such results, Salk shall provide a draft of any manuscript to Licensee. Licensee shall have fifteen (15) days to review such manuscript to determine if any confidential information of Licensee or patentable subject matter is included in such manuscript. If Licensee reasonably determines that any confidential information of Licensee is contained in such manuscript, in which event Salk shall remove such confidential information. If Licensee reasonably determines that any patentable subject matter is disclosed in such manuscript, then, at Licensee’s request, Salk shall delay submission of such manuscript for publication for a period of up to sixty (60) days to enable Licensee or, pursuant to the terms of this agreement, Salk to file a patent application covering such patentable subject matter.

 

5.3          Acknowledgment. Licensee acknowledges that Biological Materials are experimental in nature and may have unknown characteristics. Licensee agrees that Biological Materials provided by Salk shall not be used in humans, including for purposes of therapy or diagnostic testing. Licensee further agrees to use prudence and reasonable care in the use, handling, storage, transportation, disposition and containment of Biological Materials and all products derived therefrom.

 

5.4          Representation. Licensee shall comply with all applicable Governmental laws and regulations, and with all published Governmental guidelines, pertaining to the use, handling, storage, transportation, disposition and containment of Biological Materials and all products derived therefrom.

 

5.5          No Warranty. BIOLOGICAL MATERIALS ARE PROVIDED WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED.

 

6              WARRANTIES AND DISCLAIMERS.

 

6.1          Representations by Salk. Salk hereby represents and warrants to Licensee that (1) it has not granted any rights to any third party inconsistent with the rights granted to Licensee hereunder, (ii) it has not received any notice of infringement or invalidity from any third party

 

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relating to the Patent Rights, and (iii) all improvements to the technology covered by the Patent Rights arising from research funded by the Research Development Foundation in Wylie Vale’s laboratory are controlled by the Research Development Foundation, and Salk will promptly notify Licensee in the event that such control changes.

 

6.2          Warranty Disclaimer. Nothing in this Agreement is or shall be construed as:

 

(a)           a warranty or representation by Salk as to the validity or scope of any Patent Rights;

 

(b)           a warranty or representation that anything made, used, sold or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of patents, copyrights and other rights of third parties;

 

(c)           an obligation to bring or prosecute actions or suits against third parties for infringement, except to the extent and in the circumstances described in Section 8.3; or

 

(d)           a grant by implication, estoppel, or otherwise of any licenses under patent applications or patents of Salk or other persons other than as provided in Section 2 hereof.

 

6.2          No Warranty.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SALK MAKES NO REPRESENTATION AND EXTENDS NO WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES AS TO TITLE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

6.3          Disclaimer of Liability.  In no event shall Salk be liable for any incidental, special or consequential damages resulting from the exercise of Licensee’s rights under the license granted pursuant to this Agreement or the use of the Licensed Technology.

 

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7              INDEMNIFICATION AND INSURANCE.

 

7.1          Indemnification. Licensee agrees to indemnify, hold harmless and defend Salk, its trustees, officers, employees and agents, the sponsors of the research that led to the Licensed Technology and the inventors of the patents and patent applications included in the Patent Rights against any and all liability and/or damages with respect to any claims, suits, demands, judgments or causes of action brought by third parties and arising out of (a) the development, manufacture, storage, sale or other distribution, or any other use of Licensed Products or Licensed Technology, or exercise of rights granted hereunder, by Licensee, its Affiliates or Sublicensees, distributors, agents or representatives; (b) the use by end-users and other third parties of Licensed Products or Licensed Technology; and/or (c) any representation, warranty or statement by Licensee or its Affiliates, Sublicensees, distributors, agents or representatives, concerning Salk, the Licensed Technology or the Patent Rights (collectively, a “Loss”), except to the extent that any such Loss arises out of any breach of a representation made by Salk hereunder or the gross negligence or willful misconduct of Salk. In the event any such claims, demands or actions are made, Licensee shall defend Salk at Licensee’s sole expense by counsel selected by Licensee. No settlement, consent judgment or other voluntary final disposition may be entered into without the prior written consent of Salk, which consent shall not be unreasonably withheld. Salk shall give Licensee prompt written notice of any action for which indemnification is sought hereunder. Licensee shall be relieved of its obligations under this Section to the extent that any delay in such notification prejudices or impairs Licensee’s ability to defend such action. Salk shall, at Licensee’s expense, cooperate fully in the defense of any such action.

 

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7.2          Insurance.

 

(a) In addition to the foregoing, Licensee shall maintain, during the Term (as defined below), comprehensive general liability insurance, including products liability insurance, with reputable and financially secure insurance carriers to cover the activities of Licensee, it Affiliates and Sublicensees, if any, contemplated by this Agreement in an amount not less than one million dollars ($1,000,000) per specific occurrence and one million dollars ($1,000,000) for aggregate liability insurance. Not less than thirty (30) days before the earlier date upon which Licensee or its Affiliates or Sublicensees (i) tests Licensed Products in a clinical trial involving more than 100 human subjects for purposes of diagnosis or treatment, or (ii) makes a First Commercial Sale of any Licensed Product, License shall obtain products liability coverage in an amount of not less than three million dollars ($3,000,000) per specific occurrence and a minimum limit of three million dollars ($3,000,000) for aggregate liability insurance. Such product liability insurance shall include Salk as a named insured, shall require prior notice to Salk before cancellation, shall be written to cover claims incurred, discovered, manifested, or made during or after the expiration of this Agreement and should be placed with carriers with ratings of at least A- as rated by A.M. Best. The minimum amounts of insurance coverage required shall not be construed to create a limit of Licensee’s liability with respect to its indemnification under this Agreement.

 

(b)  Within thirty (30) days of the Effective Date of this Agreement, Licensee shall furnish a Certificate of Insurance evidencing primary coverage and additional insured requirements and provide Salk with copies of subsequent annual Certificates of Insurance. Licensee shall provide Salk with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance. It is the intention of the parties hereto that Licensee shall, throughout the term of this Agreement, continuously and without interruption, maintain in force the required insurance coverages set forth in this Section, Failure of Licensee to comply with this requirement shall be considered a breach of the Agreement and cause for termination under Section 10.2(b).

 

(c)  If Licensee elects to self-insure all or part of the limits described above (including deductibles or retentions that are in excess of $250,000 annual aggregate) such self-insurance program must be acceptable to Salk at its sole discretion.

 

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(d)  Licensee shall maintain commercial general liability insurance beyond the expiration or termination of this Agreement during: (i) any period that any product, process, or service, relating to, or developed pursuant to, this Agreement is being commercially distributed or sold by Licensee, a Sublicensee, Affiliate or agent of Licensee; and (ii) thereafter for a period of five (5) years.

 

8              PROSECUTION AND MAINTENANCE OF PATENT RIGHTS.

 

8.1          Prosecution and Maintenance.

 

(a)           Salk shall have first right over prosecution and maintenance of the patent applications and patents contained in the Patent Rights. In the event that Salk does not exercise its rights, Licensee will have the right to proceed with prosecution and/or maintenance as it sees fit. Salk will keep Licensee advised of the status of patent prosecution and shall provide Licensee with copies of official communications about the patent applications and patents contained in the Patent Rights, and shall use its best efforts to provide Salk with drafts of any proposed responses to said communications, in each case sufficiently in advance of any filing date to allow Licensee reasonable opportunity to review such communication or proposed drafts and to provide considered comments and suggestions. Licensee may provide input to Salk on responses Salk makes to the Patent Office, and Salk will give good faith consideration to Licensee’s comments prior to submitting such responses to the Patent Office. Salk’s current outside counsel for prosecution of the Patent Rights is Foley and Lardner. Should selection of a new outside counsel become necessary, Salk shall select new outside counsel for prosecution of the Patent Rights, subject to the approval of Licensee. Notwithstanding Licensee’s obligations of payment of the Patent Costs, such counsel shall represent Salk in such prosecution.

 

(b)           Licensee shall immediately notify Salk of a change in its entity status under 37 C.F.R. section 1.27. Licensee’s entity status may change due to a change in the number of its employees or if any rights under Patent Rights have been transferred to or released from an affiliate, collaborator or sublicensee.

 

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8.2          Patent Costs.

 

(a)           Upon execution of this Agreement, Licensee shall pay to Salk Eleven Thousand Four Hundred Forty Three dollars and Fifteen cents ($11,443.15) as reimbursement for all unreimbursed Patent Costs incurred through December 31, 2003. Licensee shall reimburse Salk for all Patent Costs thereafter incurred with respect to the Patent Rights.

 

(b)           Salk will provide an invoice to Licensee for Patent Costs at least semiannually, which invoice shall be accompanied by reasonable documentation regarding such legal expenses, and Licensee shall reimburse Salk for such Patent Costs within thirty (30) days after delivery of any such invoice. Pursuant to Section 9.5, late payments shall be subject to a charge of one and one-half percent (1.5%) per month compounded. The payment of such late charges shall not prevent Salk from exercising any other rights it may have as a consequence of the lateness of any payment.

 

(c)           Licensee may elect to surrender its license to any particular Patent Rights in any country by providing to Salk written notice of such intent at least sixty (60) days prior to such surrender. Such notice may be provided by mail, electronic mail or facsimile directly to Salk in house patent counsel. Such notice shall not relieve Licensee from responsibility to reimburse Salk for patent-related expenses incurred prior to the expiration of the sixty (60) day notice period (or such longer period specified in Licensee’s notice). In the event Licensee elects to surrender any license to any particular Patent Rights, such patent application or patent shall be excluded from the definition of the Patent Rights and from the scope of the license granted under this Agreement, and all rights relating thereto shall revert to Salk and may be freely licensed by Salk, If Licensee surrenders its Patent Rights in a given country a patent application or patent included in the Patent Rights and Salk, ceases to prosecute such patent application or maintain such patent, Licensee shall not sell a product covered by the claims of any such patent as issued or, in the case of an application, covered in the claims as written at the time Licensee notified Salk of its decision not to support the application, unless Licensee is obligated to pay royalties and/or other payments under this Agreement on sales in said country because such product is covered by another patent or patent application licensed hereunder.

 

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8.3                               Infringement of Patent Rights.

 

(a)                                 In the event Licensee or Salk becomes aware of any actual or potential infringement of any Patent Rights, that party shall promptly notify the other and the parties shall discuss the most appropriate action to take. Salk and Licensee will cooperate with each other to attempt to terminate such infringement without litigation, provided all decisions with respect to such infringement shall ultimately by made by Licensee.

 

(b)                                 If attempts to abate such infringement are unsuccessful, Licensee shall consult with Salk and shall consider the views of Salk regarding the advisability of the proposed action and its effect on the public interest. Licensee may bring an action at its own expense, in which event Salk shall cooperate with Licensee as reasonably requested, at Licensee’s expense. No settlement, consent judgment or other voluntary final disposition of the action which prejudices the rights of Salk in the Patent Rights may be entered into without the prior written consent of Salk, which consent shall not be unreasonably withheld. To the extent Licensee’s recoveries from such infringement action exceed Licensee’s expenses, Licensee agrees to pay Salk three and a half percent (3.5%) of such excess recoveries.

 

(c)                                  (i) If required by law, Salk shall permit any action under this Section to be brought in its name, including being joined as a party-plaintiff, provided that Licensee shall hold Salk harmless from, and indemnify Salk against, any costs, expenses, or liability that Salk incurs in connection with such action. To the extent recoveries from such action exceed Licensee’s expenses, Licensee agrees to pay Salk ten percent (10%) of such excess recoveries.

 

(ii) Salk may, on its own initiative, join such action at its own expense. In the event Salk joins any such suit prior to the commencement of discovery in such suit and recoveries exceed Salk and Licensee’s expenses, such excess shall be split 75% to Licensee and 25% to Salk in lieu of the payment owed pursuant to the last sentence of Section 8.3(b).

 

(d)                                 In the event that Licensee elects not to institute or prosecute any suit to enjoin or recover damages from any infringer, then Salk alone may, in its sole discretion and at its expense, initiate and conduct an infringement action and any settlement or award which may be obtained shall be solely Salk’s.

 

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(e)                                  The parties agree to allow non-profit research organizations to practice the methodologies included in the Licensed Technology to the extent the results thereof are not used or, to their knowledge, contemplated to be used for the purpose of development or exploitation by commercial entities and that such activity shall not constitute infringement for purposes hereof.

 

8.4                               Defense Against Third Party Infringement Claims. In the event any Licensed Product becomes the subject of a claim for patent or other proprietary right infringement anywhere in the world by virtue of the incorporation of the Patents Rights or Biological Materials therein, the parties shall promptly give notice to the other and meet to consider the claim and the appropriate course of action. Licensee shall have the right to conduct the defense at its own expense of any such suit brought. against Licensee and/or Salk, but no settlement, consent judgment or other voluntary final disposition of the suit which prejudices the rights of Salk in the Patent Rights may be entered into without the prior written consent of Salk, which consent shall not be unreasonably withheld.

 

8.5                               Marking. Licensee agrees to mark and to require any Affiliate or Sublicensee to mark any Licensed Products (or their containers or labels) made, sold, or otherwise distributed by it or them with any notice of patent rights necessary or desirable under applicable law to enable the Patent Rights to be enforced to their full extent in any country where Licensed Products are made, used, sold, or offered for sale.

 

8.6                               Infringement Rights of Sublicensees and Sub-Sublicensees.  Salk acknowledges and agrees that in connection with a sublicense of rights pursuant to Sections 2.1 and 2.2, Licensee shall be entitled to sublicense its rights under Sections 8.3 and 8.4. In the event of such sublicense, Salk acknowledges that any Sublicensee or Sub-sublicensee will be entitled to exercise the rights of Licensee under Sections 8.3 and 8.4, and Salk will assist such Sublicensee or Sub-sublicensee with any infringement suit in the same manner as Salk will assist Licensee, including agreeing to be joined as a party-plaintiff of any action under Section 8.3 if required by law that is brought by such Sublicensee or Sub-sublicensee in accordance with the provisions of such section.

 

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9                                         REPORTING, VERIFICATION AND PAYMENT.

 

9.1                               Books and Records. Licensee agrees to keep proper records of scientific research and keep books of account in accordance with generally accepted accounting practices. Such records and books shall include all information necessary for the accurate determination of royalty payments, Sublicensing Revenue, milestone achievement and diligence obligation. Licensee agrees to deliver to Salk, within thirty (30) days after each calendar quarter for which a payment is due hereunder, a report showing the information on which payments herein provided are calculated, including a breakdown of income from sales of each Licensed Product and to accompany each such report with the payment shown to be due thereby. All amounts accrued for the benefit of Salk shall be deemed held in trust for the benefit of Salk until payment of such amounts is made pursuant to this Agreement. Progress Reports showing records of scientific research are to be provided in accordance with Section 13.3.

 

9.2                               Audit. On reasonable written notice, Salk, at its own expense, shall have the right to have an independent party, inspect and audit the books and records of Licensee, its Affiliates and its Sublicensees during usual business hours for the sole purpose of, and only to the extent necessary for, determining the correctness of royalty payments, Sublicensing Revenue, and milestone achievement under this Agreement. If such examination relates to royalty payments or Sublicensing Revenue, such third party shall be a public accounting firm of recognized national standing. Such examination with respect to any fiscal year shall not take place later than two (2) years following the expiration or termination of this Agreement. The expense of any such audit shall be borne by Salk; provided, however, that, if the audit discloses an error in excess of five percent (5%) in favor of Licensee, then Licensee shall pay, in addition to the amount of any underpayment, the cost to Salk of the audit.

 

9.3                               Foreign Payments. Royalties based on Net Sales in any foreign country shall be payable to Salk in the United States in United States Dollars. Dollar amounts shall be calculated using the foreign exchange rate, as published by the Wall Street Journal, in effect for such foreign currency on the last business day of each quarter for which a report is required. Where royalties are due for Net Sales in a country where, for reasons of currency, tax or other regulations, transfer of foreign currency out of such country is prohibited, Licensee has the right to place Salk’s royalties in a bank account in such country in the name of and under the sole

 

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control of Salk; provided, however, that the bank selected be reasonably acceptable to Salk and that Licensee inform Salk of the location, account number, amount and currency of money deposited therein. After Salk has been so notified, those monies shall be considered as royalties duly paid to Salk and will be completely controlled by Salk.

 

9.4                               Taxes. Licensee shall be responsible for any and all taxes that may be levied by a proper taxing authority on royalties or other payments accruing to Salk under this Agreement. Such taxes may not be deducted from royalties or other payments to be paid to Salk hereunder, Licensee acknowledges that Salk, as a not-for-profit corporation, does not qualify under U.S, tax laws for a tax credit on any taxes paid by Licensee.

 

9.5                               Late Payments. Late payments shall be subject to a charge of one and one-half percent (1.5%) per month compounded. The payment of such late charges shall not prevent Salk from exercising any other rights it may have as a consequence of the lateness of any payment.

 

10                                  TERM AND TERMINATION.

 

10.1 Term. Unless earlier terminated under this Section 10, this Agreement shall become effective as of the date of this Agreement and expire on a Licensed Product by Licensed Product and country by country basis (the “Term”) on the expiration of the Primary License Term or Secondary License Term, as applicable.

 

10.2                        Termination

 

(a)                                 Termination by Licensee. Licensee may terminate this Agreement by giving ninety (90) days prior written notice to Salk. Promptly following termination by Licensee pursuant to this Section, Licensee shall return Biological Materials and any other materials, samples, documents, and information, which embody or disclose Patent Rights or any Biological Materials provided to Licensee by Salk in connection with this Agreement, and pay all amounts due as well as all non-cancelable costs incurred by Salk in the performance of its obligations hereunder to Salk through the termination date.

 

(b)                                 Termination By Salk. Salk has the right to terminate this Agreement as follows:

 

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(i) If Licensee does not make a payment due hereunder and fails to cure such non-payment (including the payment of interest in accordance with Section 9.5) within thirty (30) days after the date of notice in writing of Licensee’s failure to meet a payment obligation;

 

(ii) If Licensee defaults in its indemnification and insurance obligations under Section 7 and such default is not cured within fifteen (15) business days of written notice thereof by Salk;

 

(iii)  If Licensee has failed to provide Salk with any of the written responses described in clauses (a), (b) or (c) of Section 13.1 following notice by Salk in accordance with the terms of Section 13.1;

 

(iv)  If Licensee shall become insolvent, shall make an assignment for the benefit of creditors, or shall have a petition in bankruptcy filed for or against it, or a receiver or trustee in bankruptcy or similar officer is appointed to take charge of all or part of Licensee’s property;

 

(v)  If Licensee attempts to use, sublicense, transfer or assign its rights or obligations under this Agreement in any manner contrary to the terms of this Agreement or in derogation of Salk’s proprietary rights.

 

(vi)  If Licensee fails to provide reports (progress reports, royalty reports) or copies of sublicense agreements and fails to cure such deficits within thirty (30) days after the date of notice in writing of such deficit by Salk;

 

(vii)  If Licensee is convicted of a felony relating to the manufacture, use or sale of Licensed Products or Biological Materials; or

 

(viii)  Except as provided in subparagraphs (i) - (vii) above, if Licensee defaults in the performance of any material obligations under this Agreement and the default has not been remedied within thirty (30) days after the date of notice in writing of such default by Salk; provided that, if Licensee has used its best efforts to cure such default within such 30-day period and such default remains uncured despite such best

 

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efforts, then the time period to cure such default shall be 90 days from the date of notice provided that Licensee continues to use its best efforts to cure such default during such 90-day period.

 

The failure of Salk to exercise its rights of termination shall not be deemed to be a waiver of any right Salk might have, nor shall such failure preclude Salk from exercising or enforcing said right upon any subsequent failure by Licensee.

 

10.3                        Consequences of Expiration or Termination.

 

(a)                                 In the event of expiration of this Agreement or termination of the Agreement by either party for any reason whatsoever:

 

(i)                                    Licensee shall not thereby be discharged from any liability or obligation to Salk that became due or payable prior to the effective date of such expiration or termination.

 

(ii)                                The rights and obligations of the parties under Sections 6.3, 7, 9.2, 10.3, 11 and 12 shall survive any expiration or termination of this Agreement.

 

(iii)                            Licensee shall promptly return all materials, samples, documents, information, and other materials which embody or disclose Patent Rights or any Biological Materials; provided, however, that Licensee shall not be obligated to provide Salk with proprietary information which Licensee can show that it independently developed.

 

(iv)                             Upon termination of this Agreement for any reason, Salk will stand in the place of Licensee with respect to a Direct Sublicensee and such Sublicense agreement will survive in accordance with its terms as long as such Direct Sublicensee is current on its payment obligations under the Sublicense and agrees to pay Salk the future annual maintenance fees due under Section 3.2 and Patent Costs due under Section 8.2(b).

 

(b)                                 In the event of termination of the Agreement:

 

27

 

(i)                                    Licensee shall pay all amounts due as well as all non-cancelable costs to Salk incurred in the performance of its obligations hereunder through the termination date; and

 

(ii)                                If Licensee, its Affiliates or its Sublicensees then possess Licensed Product, have started the manufacture thereof or have accepted orders therefor, Licensee, its Affiliates or its Sublicensees shall have the right, for up to one year following the date of termination, to sell their inventories thereof, complete the manufacture thereof and market such fully manufactured Licensed Product, in order to fulfill such accepted orders, subject to the obligation of Licensee to pay Salk the royalty payments therefor as provided in Section 3 of this Agreement;

 

(iii)                            Subject to Section 10.3(b)(i), Licensee shall discontinue and shall cause its Affiliates and Sublicensees to discontinue, the manufacture, use, marketing, offering for sale and sale of Licensed Products.

 

(iv)                             Licensee shall provide a final report of the type described in Section 9.1, including any allowable post-termination sales.

 

11                                  CONFIDENTIAL INFORMATION.

 

All confidential scientific and technical information with respect to the Licensed Technology communicated by Salk to Licensee, including, without limitation, information contained in patent applications, shall be received in strict confidence by Licensee, its Affiliates and Sublicensees, used only for the purposes of this Agreement and not disclosed by Licensee, its Affiliates and Sublicensees or their respective agents or employees without the prior written consent of Salk, unless such information (i) was in the public domain at the time of disclosure, (ii) later became part of the public domain through no act or omission of the recipient party, its employees agents, successors, or assigns, (iii) was lawfully disclosed to the recipient by a third party having the right to disclose it, (iv) was already known by the recipient at the time of

 

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disclosure and recipient can so demonstrate by competent written proof or (v) is required to be disclosed to a governmental agency pursuant to such agency’s rule and regulations in order to secure regulatory approval, provided that Licensee shall first give notice to Salk of such disclosure and shall have made a reasonable effort to maintain the confidentiality of such information. Nothing contained herein shall prevent Licensee or its Affiliates from disclosing information to Sublicensees so long as such Sublicensees agree to be bound by these confidentiality provisions. All progress reports provided to Salk by Licensee shall be treated by Salk as confidential information in the same manner that Licensee is required to treat Salk confidential information pursuant to this Article 11.

 

12                                  CHOICE OF LAW; DISPUTE RESOLUTION.

 

12.1                        Governing Law.  This Agreement is made in accordance with and shall be governed and construed in accordance with the laws of the State of California, as applied to contracts executed and performed entirely within the State of California, without regard to conflicts of laws rules.

 

12.2                        Venue.  If either party brings any action to enforce any terms of or pursuant to this Agreement, such action shall be commenced in the jurisdiction in which other party is located, and the party bringing such action shall not seek to remove such action to any other jurisdiction. The parties hereby irrevocably submit to the jurisdiction of a court of competent jurisdiction in the state in which the other party is located, and, by execution and delivery of this Agreement, each (a) accepts, generally and unconditionally, the jurisdiction of such court and any related appellate court, and (b) irrevocably waives any objection it may now or hereafter have as to the venue of any such suit, action or proceeding brought in such court or that such court is an inconvenient forum.

 

29

 

12.3                        Dispute Resolution.  If a dispute arises between the parties relating to the interpretation or performance of this Agreement or the grounds for the termination thereof, the parties agree to hold a meeting, attended by individuals with decision-making authority regarding the dispute, to attempt in good faith to negotiate a resolution of the dispute prior to pursuing other available remedies. If the dispute remains unresolved forty-five (45) days after the first meeting for the purpose of dispute resolution, then each party shall have the right to pursue alternate dispute resolution or other remedies legally available to resolve the dispute.

 

13                                  COMMERCIALIZATION.

 

13.1                        Commercial Development Obligation.  In order to maintain in force the license granted hereunder, Licensee shall, either by itself or through its sublicensees, use commercially reasonable efforts and diligence to develop a Licensed Product, and thereafter to produce and sell reasonable quantities of Licensed Product. The parties hereto acknowledge and agree that achievement of the diligence milestones described in Section 13.2 on or before the dates set forth therein shall be evidence of compliance by Licensee with its commercial development obligations hereunder for the time periods specified in Section 13.2. In the event Licensee has not met a diligence milestone as required hereunder, Salk shall provide Licensee with a written notice that specifies the basis for such belief. Upon such notice, Licensee has sixty (60) days to respond in writing with (a)proof of diligence, and/or (b)a plan for cure to Salk’s satisfaction, and/or (c)a reasonable rationale as to why the milestone could not reasonably have been met, or cured, due to factors beyond Licensee’s control; in such instance Licensee must also provide to Salk a revised reasonable diligence timeline, consistent with the revised development timeline of Licensee’s product. In the event that Licensee does not provide either a, and/or b, and/or c above, Salk has the right to terminate the Agreement in accordance with Section 10.2(b).

 

13.2                        Diligence Milestones.  Prior to signing this Agreement, Licensee shall have provided to Salk the Research and Development Plan attached hereto as Exhibit C, under which Licensee intends to bring the subject matter of the Patent Rights to the point of commercial use.

 

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This Research and Development Plan is hereby incorporated by reference into this Agreement and is the basis for the following performance Milestones:

 

a)             Initiation of in vivo testing of murine ActRIIFc

 

b)             In vivo efficacy with murine ActRIIFc in model of human disease

 

c)              Initiation of IND enabling toxicology studies with human ActRIIFc product candidate

 

d)             Initiation of phase I clinical studies with ActRIIFc product candidate

 

e)              Completion of a phase II-A. clinical study with ActRIIFc product candidate

 

The Parties agree that the aforementioned performance Milestones (a) through (e) have been achieved.

 

13.3                        Progress Reports. Licensee shall provide to Salk on or before February 15 of each year a written report of its progress with respect to the scientific research and discovery, development, and commercialization of Licensed Products. Such report shall include the current status of developing such products including if applicable, preclinical studies, clinical trials, manufacturing, sublicensing, marketing and sales during the most recent twelve (12) month period. If multiple technologies are covered by the license granted hereunder, the Progress Report shall provide the information set forth above for each technology and/or each field of use. If actual progress differs from that anticipated in the Research and Development Plan required under Section 13.2, Licensee shall provide to Salk a written explanation of the reasons for the difference and a written proposal for a modified Research and Development Plan.

 

13.4                        U.S. Manufacture. To comply with U.S. Government regulations for the licensing of federally funded inventions, Licensee, its Affiliates and any sublicensee(s) will commit that Licensed Products or Licensed Services sold in the U.S. will be manufactured substantially in the US to the extent required by law. Notwithstanding the foregoing, if during the term of the License Agreement, Licensee, its Affiliates and/or its sublicensees so request to Salk in writing, Salk shall at that time agree to seek a waiver from the U.S. Government with respect to the requirement that Licensed Products for sale in the U.S. be manufactured substantially in the U.S. Licensee understands that Salk cannot guarantee that such waiver can be obtained. Licensee shall bear all costs associated with seeking such waiver.

 

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13.5                        Foreign Registration. Licensee agrees to register this Agreement with any foreign governmental agency that requires such registration, and Licensee shall pay all costs and legal fees in connection therewith. In addition, Licensee shall assure that all foreign laws affecting this Agreement or the sale of Licensed Products are fully satisfied.

 

14                                  ADDRESSES.

 

Except as otherwise provided, payments to be made hereunder to Salk shall be made by wiring the required amount to Salk’s bank in accordance with Salk’s instructions or by mailing or sending by commercial courier checks for the required amount to Salk’s address. Except as otherwise provided, notices and reports provided for herein shall effectively be given by mailing the same by certified or registered mail or by delivery by commercial courier, in each case properly addressed with charges prepaid. For the purposes of making payments and giving notices, the addresses of the parties hereto are as follows:

 

The Salk Institute for Biological Studies

10010 North Torrey Pines Road

La Jolla, CA 92037

Attn: Licensing Administrator, Office of Technology Management

 

Acceleron Pharma, Inc.

128 Sidney Street

Cambridge, MA 02139

Attn: Legal Department

 

or to such subsequent addresses as either party may furnish the other by giving notice thereof as provided in this Section 14.

 

15                                  MISCELLANEOUS.

 

15.1                        Assignment.

 

(a)                                 Licensee may assign this Agreement as part of:

 

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(i) Sale or other transfer of all or substantially all of Licensee’s entire business (whether by merger, stock sale, sale of assets or otherwise); or

 

(ii) Sale or other transfer of that part of Licensee’s business to which the license granted hereby relates; or

 

(iii) A transaction other than described in (i) or (ii), following payment to Salk of a fee of One Hundred Thousand Dollars ($100,000).

 

(b)                                 Salk shall release Licensee of liability hereunder upon receipt of writing from successor or assignee expressly agreeing to be bound by all the terms and provisions of this Agreement.

 

(c)                                  Licensee shall notify Salk within ten (10) days of any assignment of this Agreement by Licensee and provide the new contact information of assignee.

 

(d)                                 Upon assignment of this Agreement to a successor or assignee as provided under 15.1(a), the term “Licensee” as used herein shall mean such successor assignee.

 

15.2                        Headings.  The headings used in this Agreement are for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

 

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

 

15.4                        Bankruptcy.  Licensee agrees to provide notice to Salk of its intention to file a voluntary petition in bankruptcy or, where known to Licensee, of another party’s intention to file an involuntary petition in bankruptcy for Licensee, said notice to be received by Salk at least one

 

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hundred (100) days prior to filing such petition. Salk may terminate this Agreement upon receipt of such notice at its sole discretion. Unless otherwise provided by law, Licensee’s failure to provide such notice to Salk will be deemed a pre-petition, incurable breach of this Agreement and the Agreement will terminate automatically on the date of filing such voluntary or involuntary petition in bankruptcy. Notwithstanding the above, Licensee agrees to provide notice to Salk upon filing a voluntary petition in bankruptcy.

 

15.5                        Force Majeure.  Any delays 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 immediately notify the other· party and any time for performance hereunder shall be extended by the actual time of delay caused by the occurrence.

 

15.6                        Independent Contractors.  In making and performing this Agreement, Salk and Licensee 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 Salk and Licensee. 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.

 

15.7                        Use of Salk’s Name.  Except as otherwise provided herein or required by law, Licensee will not originate any publication, news release or other public announcement, written or oral, whether in the public press or otherwise, relating to this Agreement or to the performance hereunder, without the prior written approval of Salk, which approval will not be unreasonably

 

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withheld. Such planned publication, news release or other public announcement shall be provided five (5) days in advance for approval by Salk. Salk agrees that Licensee may make known in promotional and technical literature that the Licensed Technology was developed at Salk by Dr. Wylie Vale and other scientists in his/her laboratory and that products are offered under license from Salk; provided, however, that such use shall not state or imply that Salk has any relationship with Licensee other than as licensor or shareholder.

 

15.8                        Publication.  Except as set forth in Section 5.2, Licensee agrees that Salk (including its employees) shall have a right to publish in accordance with its general policies, and that this Agreement shall not restrict, in any fashion, Salk’s right to publish.

 

15.9                        Severability.  If any term, condition or provision of this Agreement is held to be unenforceable by a court having proper jurisdiction for any reason, it shall, if possible, be interpreted rather than voided, in 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 be deemed valid and enforceable to the full extent of the law.

 

15.10                 Waiver.  None of the terms, covenants, and conditions of this Agreement can be waived except by the written consent of the party waiving compliance. Waiver of one term, covenant or condition, shall not be construed as waiver of any other term, covenant or condition.

 

15.11                 Entire Agreement.  This Agreement and Exhibits attached hereto contain the entire agreement and understanding between the parties with respect to the subject matter hereof, and merges all prior discussions, representations and negotiations with respect to the subject matter of this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers or representatives.

 

SALK INSTITUTE FOR BIOLOGICAL STUDIES

	
By:
    	
/s/   Michael T. White
    	
 
    
	
 
    	
Duly   authorized
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Michael   T. White
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Senior   Director, Office of Technology Management
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
8-6-2010
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
LICENSEE
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   John Knopf
    	
 
    
	
 
    	
Duly   authorized
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
John   Knopf
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Chief   Executive Officer
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
8-24-2010
    	
 
    

 

36

 

EXHIBIT A

 

PATENT RIGHTS

 

Activin Receptors

 

U.S. PATENTS

 

U.S. Patent No. 5,885,794 issued March 23, 1999,

Cloning and Recombinant Production of Receptor(s) of the Activin/TGF-B Superfamily,

Mathews and Vale, Inventors.

Application Serial No. 300,584, filed September 2, 1994, which is a Continuation application based on U.S. Application Serial No. 880,220, filed May 8, 1992, which is a CIP application of U.S. Application Serial No. 773,229, filed October 9, 1991, which is a CIP application of U.S. Application Serial No. 698,709 filed May 10, 1991, now abandoned.

 

U.S. Patent No. 6,162,896 issued December 19, 2000,

Recombinant Vertebrate Activin Receptors,

Mathews, Tsuchida and Vale, Inventors.

Application Serial No. 476,123, filed June 7, 1995, which is a CIP application based on U.S. Application Serial No. 300,584, filed September 2, 1994, now U.S. Patent No. 5,885,794.

 

U.S. PATENT APPLICATIONS PENDING

 

U.S. Application Serial No. 09/742,684, filed December 19, 2000.

Cloning and Recombinant Production of Receptor(s) of the Activin/TGF-B Superfamily,

Mathews, Tsuchida and Vale, Inventors.

Divisional application based on U.S. Application Serial No. 476,123, June 7, 1995, now U.S. Patent No. 6,162,896.

 

 

EXHIBIT B

 

Biological Materials

 

Licensee is not requesting any Biological Materials upon execution of this Agreement. Should any Biological Materials be transferred to Licensee from Salk during the Term of the Agreement, this Exhibit B will be updated to indicate the Biological Materials transferred and the date of such transfer.

 

 

EXHIBIT C

 

Licensee Research and Development Plan

 

Development of ActRIIa and/or ActRlIb as Human Therapeutics for the Treatment of Muscle Wasting Disorders

 

1)                   Year 1 - Development of Constructs and Cell Lines:

Following signing the agreement with The Salk Institute Acceleron will make gene constructs fusing the extracellular portion of the ActRII receptors to the amino terminal end of a murine Fc (mActRIIaFc, and mActRIIbFc). Acceleron will develop mammalian cell lines that secrete these soluble receptors. The activity of the secreted receptors will be determined in cell based assays monitoring the signaling of GDF-8, Activin, BMP-7, Nodal, and BMP-6. If we observe an IC50 of the soluble receptors of less than 5uM we will initiate the next phase of the program.

 

2)                   Year 2 – Evaluation of Soluble ActRII Receptors In Vivo:

The expression of the mActRIIaFc, and mActRIIbFc will be amplified in mammalian cell lines for a period of up to six-nine months. The desired expression level is at least 3 mg/L with 50mg/L being most desirable. At least 10 L of conditioned media will be processed to purify 30mg of mActRIIaFc, and mActRIIbFc suitable for in vivo studies. This material will be administered to mice at a dose of 5mg/kg once per week for a period of 12 weeks and the muscle weights determined. If a muscle mass increase of 20% or greater is observed we will proceed with a dose response study. If a dose of less than 3 mg/kg for 3 months provides a half maximal response we will scale up the cell line production and purification.

 

3)                   Year 3 – Evaluation in Disease Models:

Acceleron will purify larger amounts of murine material and monitor the effects in murine models of human disease including, Muscular dystrophy, ALS, Glucocorticoid induced muscle wasting and diet induced obesity (diabetes). If the results with the soluble murine receptors are positive 1) Treated SOD mice have greater than 15 days of survival vs untreated SOD mice 2) Muscular dystrophy mice - significant delay in the onset of muscle weakness and fibrosis (at least 2 months), reversal of muscle weakness and fibrosis more desirable 3) Delay in the development of insulin resistance and or hyperglycemia, or better reversal of insulin resistance and or hyperglycemia. If we have failed to observe any adverse events which would preclude using the soluble receptors as human therapeutics for the diseases listed, and the above studies are repeated at least once with positive results, we will construct the corresponding human FC fusion receptor and begin cell line development.

 

4)                   Year 4 – Process Development of Human Material:

The key aspect here is to develop a production cell line and obtain high expressing lines that will limit the COGS. Multiple transfections we be performed and cell lines amplified over a period of about 6 months. Material (hActIIaFc and hActRIIbFc) will be purified and tested in a short-term model of muscle mass increase for 2 weeks in rodents. If the in vivo tests are positive, the cell lines will be scaled up under GLP conditions and the product candidates will

 

 

be purified for IND enabling Toxicology studies. Toxicology studies will be initiated externally.

 

5)                   Year 5 – Completion of Tox Studies and Initiation of Phase I:

Results of toxicology studies will be obtained three months after submission of material sufficient to perform studies. Once the toxicology studies have been reviewed and are determined to be acceptable for the clinical indication we are focused on, we will initiate a clinical manufacturing program. Clinical manufacturing will require about 1 year to produce enough material for a 2 year ALS clinical study of about 250 patients. Once enough material is available, a one month phase I pharmacokinetics 12 patient clinical study with the selected product (either hActRIIaFc or hActRIIbFc) will be initiated.

 

6)                   Years 6-10 – Clinical Studies:

Assuming no adverse events during the first phase I study additional studies will be conducted. The exact plan including timing, numbers of trials, numbers of patients, endpoints, etc. will depend on the indication as well as discussions with the FDA and clinical experts in the field. Early studies under consideration assuming that ALS is the first indication are as follows: (1) 12 week escalating dose 40 patient study monitoring muscle strength, (2) Phase IIa 220 patient 12 month study measuring survival, maximum voluntary isometric contraction (MVIC), changes in functional status, respiratory function and other secondary outcomes.

 

 

Exhibit D

 

Letter Agreement Concerning Payment of Sublicense Revenues, dated March 30, 2009

 

 

CONFIDENTIAL

 

March 30, 2009

 

Michael T. White, Ph.D., CLP

Senior Director

Office of Technology Management

The Salk Institute

10010 North Torrey Pines Road

La Jolla, CA 92037-1099

 

Re:                             Letter Agreement Concerning Payment of Sublicense Revenues

 

Dear Michael:

 

As we discussed earlier this month, we have reached an agreement concerning the payment of a share of Sublicensing Revenue to the Salk Institute under Section 3.5 of the Salk/Acceleron License Agreement (“License Agreement”). For this letter, the term “Sublicensing Revenue” shall have the meaning set forth in Section 1.14 of the License Agreement.

 

The Salk Institute and Acceleron recognize (a) that the patent rights licensed under the License Agreement are for the United States only; and (b) that the exclusive license granted by Acceleron to Celgene for the development of ActRIIA-Fc products (the “Celgene Agreement”) included world-wide rights. Therefore it is appropriate to evaluate the share of Sublicensing Revenue due to the Salk Institute in view of the territorial reach of the Salk patent rights.

 

The Salk Institute and Acceleron have agreed that the US portion constitutes 95% of the North American rights which in turn constitute 50% of the world-wide rights. For calculating payment due under Section 3,5 of the License Agreement, we agreed to use the following formula:

 

Total Sublicensing Revenues received x 15% x 50% x 95% = Section 3.5 amount payable to the Salk Institute (or 7.125% of Sublicensing Revenue)

 

We agreed to use this formula for Sublicensing Revenues in connection with the Celgene Agreement, including those listed in Sections 5.1(i) and 5.2 of the Celgene Agreement.

 

128 Sidney Street, Cambridge, MA 02139     tel  617 649 9200     Fax  617 649 9988     www.acceleronpharma.com

 

 

If this letter reflects your understanding of this agreement, please countersign below and return a copy to me at your convenience.

 

	
Regards,
    
	
 
    
	
/s/ John Quisel
    	
 
    
	
 
    
	
 
    
	
John Quisel
    
	
VP, Intellectual Property and Legal Affairs
    
	
Acceleron Pharma, Inc
    
	
 
    
	
This Letter Agreement accurately reflects the   understanding of the Salk Institute
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Michael T. White
    	
 
    	
 
    	
Date:
    	
4-2-2009

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