Document:

Exhibit 10.28  

THE
SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION. 

RESEARCH AND DEVELOPMENT COLLABORATION,

OPTION AND LICENSE AGREEMENT  

 BETWEEN  

 SMITHKLINE BEECHAM CORPORATION D/B/A GLAXOSMITHKLINE

and 

ANACOR PHARMACEUTICALS, INC.  

 

 TABLE OF CONTENTS

 

 

								
	 
	 	 
	 	PAGE
	 ARTICLE 1
	 	DEFINITIONS	 	1
	 ARTICLE 2
	 	 RESEARCH AND DEVELOPMENT COLLABORATION
	 	

12
	 	 	 	 2.1
	 	Overview	 	12
	 	 	 	 2.2
	 	Research Plans	 	12
	 	 	 	 2.3
	 	Research Collaboration Term	 	12
	 	 	 	 2.4
	 	Research Efforts; Diligence	 	13
	 	 	 	 2.5
	 	Additional Target	 	15
	 	 	 	 2.6
	 	Development of Collaboration Compounds	 	15
	 	 	 	 2.7
	 	Material Transfer	 	17
	 	 	 	 2.8
	 	Regulatory Matters; Compliance	 	18
	 	 	 	 2.9
	 	Research Collaboration Costs	 	20
	 	 	 	 2.10
	 	Subcontracting	 	20
	 ARTICLE 3
	 	 MANAGEMENT OF THE COLLABORATION
	 	

20
	 	 	 	 3.1
	 	Joint Research Committee	 	20
	 	 	 	 3.2
	 	Joint Patent Subcommittee	 	23
	 	 	 	 3.3
	 	Joint Project Team	 	23
	 	 	 	 3.4
	 	Alliance Managers	 	24
	 ARTICLE 4
	 	 GRANT OF RIGHTS
	 	

24
	 	 	 	 4.1
	 	Options	 	24
	 	 	 	 4.2
	 	Options	 	25
	 	 	 	 4.3
	 	License Grants	 	27
	 	 	 	 4.4
	 	Technology Transfer after GSK's Option Exercise	 	28
	 	 	 	 4.5
	 	Third Party Licenses	 	28
	 ARTICLE 5
	 	 POST-RESEARCH COLLABORATION ACTIVITIES
	 	

29
	 	 	 	 5.1
	 	GSK Development and Commercialization	 	29
	 	 	 	 5.2
	 	GSK Diligence	 	29
	 	 	 	 5.3
	 	Anacor Development Compounds	 	29
	 	 	 	 5.4
	 	Safety Data Exchange	 	30
	 ARTICLE 6
	 	 MILESTONES AND ROYALTIES; PAYMENTS
	 	

30
	 	 	 	 6.1
	 	Upfront Payment	 	30
	 	 	 	 6.2
	 	Purchase of Stock	 	30
	 	 	 	 6.3
	 	Development Milestones Payable by GSK to Anacor	 	30
	 	 	 	 6.4
	 	Commercialization Milestones	 	34
	 	 	 	 6.5
	 	Royalties	 	34
	 	 	 	 6.6
	 	Payments by Anacor—No Exercise of Option by GSK	 	35
	 	 	 	 6.7
	 	Payments by Anacor—Post-Option Termination by GSK	 	36
	 	 	 	 6.8
	 	Reports and Payment of Milestones	 	38
	 	 	 	 6.9
	 	Reports; Royalty Payments	 	38
	 	 	 	 6.10
	 	Methods of Payments	 	38
	 	 	 	 6.11
	 	Accounting	 	39
	 	 	 	 6.12
	 	Taxes	 	39
	 	 	 	 6.13
	 	Late Payments	 	39
	 ARTICLE 7
	 	 EXCLUSIVITY
	 	

39
	 	 	 	 7.1
	 	Anacor Exclusivity	 	39
	 	 	 	 7.2
	 	GSK Exclusivity	 	40

 

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	 	PAGE
	 ARTICLE 8
	 	 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS
	 	41
	 	 	 	 8.1
	 	Ownership	 	41
	 	 	 	 8.2
	 	Prosecution and Maintenance of Patents	 	42
	 	 	 	 8.3
	 	Patent Costs	 	43
	 	 	 	 8.4
	 	Defense of Claims Brought by Third Parties	 	44
	 	 	 	 8.5
	 	Enforcement of Anacor or GSK Intellectual Property Rights	 	45
	 	 	 	 8.6
	 	Other Agreement(s)	 	46
	 ARTICLE 9
	 	 CONFIDENTIALITY
	 	

47
	 	 	 	 9.1
	 	Confidentiality; Exceptions	 	47
	 	 	 	 9.2
	 	Authorized Disclosure	 	47
	 	 	 	 9.3
	 	Press Release; Disclosure of Agreement	 	48
	 	 	 	 9.4
	 	Termination of Prior Agreement	 	48
	 	 	 	 9.5
	 	Remedies	 	48
	 	 	 	 9.6
	 	Publications	 	49
	 	 	 	 9.7
	 	Clinical Trial Register	 	49
	 ARTICLE 10
	 	 REPRESENTATIONS AND WARRANTIES
	 	

49
	 	 	 	 10.1
	 	Representations and Warranties of Both Parties	 	49
	 	 	 	 10.2
	 	Representations and Warranties of Anacor	 	50
	 	 	 	 10.3
	 	Mutual Covenants	 	51
	 	 	 	 10.4
	 	Disclaimer	 	51
	 ARTICLE 11
	 	 INDEMNIFICATION; INSURANCE
	 	

51
	 	 	 	 11.1
	 	Indemnification by GSK	 	51
	 	 	 	 11.2
	 	Indemnification by Anacor	 	52
	 	 	 	 11.3
	 	Procedure	 	52
	 	 	 	 11.4
	 	Insurance	 	52
	 	 	 	 11.5
	 	LIMITATION OF LIABILITY	 	53
	 ARTICLE 12
	 	 TERM AND TERMINATION
	 	

53
	 	 	 	 12.1
	 	Term; Expiration	 	53
	 	 	 	 12.2
	 	Termination for Cause	 	53
	 	 	 	 12.3
	 	GSK Unilateral Termination Rights	 	54
	 	 	 	 12.4
	 	Termination for Insolvency	 	54
	 	 	 	 12.5
	 	Effect of Termination or Expiration	 	55
	 	 	 	 12.6
	 	Accrued Rights; Surviving Provisions of the Agreement	 	58
	 ARTICLE 13
	 	 REGULATORY
	 	

58
	 	 	 	 13.1
	 	Tolling of Payment Obligations	 	58
	 ARTICLE 14
	 	 MISCELLANEOUS
	 	

59
	 	 	 	 14.1
	 	Dispute Resolution	 	59
	 	 	 	 14.2
	 	Arbitration Request	 	59
	 	 	 	 14.3
	 	Costs	 	60
	 	 	 	 14.4
	 	Governing Law	 	60
	 	 	 	 14.5
	 	Assignment	 	60
	 	 	 	 14.6
	 	Performance Warranty	 	60
	 	 	 	 14.7
	 	Force Majeure	 	61
	 	 	 	 14.8
	 	Notices	 	61
	 	 	 	 14.9
	 	Export Clause	 	62
	 	 	 	 14.10
	 	Waiver	 	62
	 	 	 	 14.11
	 	Severability	 	62

 

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	 	PAGE
	 	 	 	 14.12
	 	Entire Agreement	 	62
	 	 	 	 14.13
	 	Independent Contractors	 	62
	 	 	 	 14.14
	 	Headings; Interpretation	 	62
	 	 	 	 14.15
	 	Books and Records	 	62
	 	 	 	 14.16
	 	Further Actions	 	62
	 	 	 	 14.17
	 	Parties in Interest	 	63
	 	 	 	 14.18
	 	Construction of Agreement	 	63
	 	 	 	 14.19
	 	Supremacy	 	63
	 	 	 	 14.20
	 	Counterparts	 	63

 

 iii

   RESEARCH AND DEVELOPMENT COLLABORATION,

OPTION AND LICENSE AGREEMENT  

        This RESEARCH AND DEVELOPMENT COLLABORATION, OPTION AND LICENSE AGREEMENT (the
"Agreement") is entered into and made effective as of the 5th day of October, 2007 (the "Effective Date") by and between Anacor
Pharmaceuticals, Inc., a Delaware corporation having its principal place of business at 1060 East Meadow Circle, Palo Alto, CA 94303 ("Anacor"),
and SmithKline Beecham Corporation d/b/a GlaxoSmithKline, a Pennsylvania corporation having offices at One Franklin Plaza, Philadelphia, PA 19101
("GSK"). Anacor and GSK are each referred to herein by name or as a "Party" or, collectively, as
"Parties." 

 RECITALS  

        WHEREAS, Anacor possesses proprietary technology and know-how related to
the discovery, identification, synthesis and development of boron-based small molecule drug candidates; 

        WHEREAS, GSK possesses expertise in the pharmaceutical research, development, manufacturing and commercialization of human
pharmaceuticals, and GSK is interested in developing such boron-based small molecule compounds as drug products; 

        WHEREAS, GSK desires to engage in a collaborative effort with Anacor pursuant to which Anacor and GSK will jointly carry out research and
development programs to discover and develop boron-based small molecule compounds directed against four targets, and GSK will have certain options, exercisable at GSK's sole discretion, to further
develop and commercialize such compounds for any and all uses in the Territory (as defined below), all on the terms and conditions set forth herein; and 

        WHEREAS, upon exercise by GSK of its option to such compounds, Anacor desires to grant to GSK, and GSK desires to obtain, an exclusive
license under Anacor IP (as defined below) to make, have made, use, sell, offer for sale and import Products (as defined below) in the Field (as defined below) throughout the Territory on the terms
and conditions set forth herein. 

        NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows: 

 ARTICLE 1  

 DEFINITIONS  

        As used in this Agreement, the following terms shall have the meanings set forth in this Article 1 unless context dictates
otherwise: 

        1.1   "Acceptance" means the earliest date on which the FDA (or equivalent foreign Regulatory Authority) notifies GSK in
writing that it has accepted the NDA (or equivalent foreign regulatory submission (e.g., MAA)) with respect to a Product for substantive review. 

        1.2   "Affiliate" means any Person, whether de jure or  de facto, which directly or indirectly through one
(1) or more intermediaries controls, is controlled by or is under common control with a Party.
A Person shall be deemed to "control" another Person if it (a) owns, directly or indirectly, beneficially or legally, at least fifty percent (50%) of the outstanding voting securities or
capital stock (or such lesser percentage which is the maximum allowed to be owned by a Person in a particular jurisdiction) of such other Person, or has other comparable ownership interest with
respect to any Person other than a corporation; or (b) has the power, whether pursuant to contract, ownership of securities or otherwise, to direct the management and policies of the Person.
For purposes of this Agreement, a "Person" means any corporation, firm, partnership or other entity recognized as having a separate existence under the law. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

 

        1.3   "Agreement" has the meaning assigned to such term in the Preamble. 

        1.4   "Alliance Managers" has the meaning assigned to such term in Section 3.4. 

        1.5   "Anacor" has the meaning assigned to such term in the Preamble 

        1.6   "Anacor Collaboration IP" means any Collaboration IP Controlled by Anacor or its Affiliates. 

        1.7   "Anacor Compound" means a boron-containing small molecule compound Controlled by Anacor or an Anacor Affiliate. 

        1.8   "Anacor Development Compound" means a Collaboration Compound for which Anacor would retain the right to continue to
research, develop, manufacture and commercialize, [***]. 

        1.9   "Anacor Diligence Failure Event" has the meaning assigned to such term in Section 2.4.2. 

        1.10 "Anacor Know-How" means any Information Controlled by Anacor or its Affiliates on the Effective Date or at
any time during the Term (other than Collaboration Know-How) that relates directly (but not necessarily exclusively) to, or is directly (but not necessarily exclusively) useful in
connection with, the making, using or sale of an Anacor Compound, Collaboration Compound, GSK Development Compound and/or Product in the Field in the Territory. 

        1.11 "Anacor IP" means, collectively, (a) Anacor Patents, (b) Anacor Know-How, (c) Anacor
Target Patents, (d) Anacor Target Know-How, and (e) Anacor Collaboration IP. 

        1.12 "Anacor Patents" means any Patents in the Territory Controlled by Anacor or its Affiliates on the Effective Date or at
any time during the Term (other than Collaboration Patents) that claim or cover (a) the composition of matter and/or method of use of an Anacor Compound, Collaboration Compound, GSK Development
Compound and/or Product, or (b) the making, having made, using, selling, offering for sale and/or importing of an Anacor Compound, Collaboration Compound, GSK Development Compound and/or
Product in the Field. 

        1.13 "Anacor Target Know-How" means any Information Controlled by Anacor or its Affiliates on the Effective Date
or at any time during the Term (but excluding Collaboration Know-How) that relates directly (but not necessarily exclusively) to Targets or is reasonably useful for GSK to perform its
obligations with respect to such Targets under the Research Collaboration. 

        1.14 "Anacor Target Patents" means any Patents in the Territory Controlled by Anacor or its Affiliates on the Effective Date
or at any time during the Term (but excluding Collaboration Patents) that claim or cover the composition or use of a Target or that would otherwise be infringed (absent a license as provided herein)
by GSK's performance of its obligations under the Research Collaboration. 

        1.15 "Annual Net Sales" means total Net Sales in the Territory in a particular calendar year. A "calendar year" means a
period of twelve (12) consecutive months beginning on January 1 and ending on December 31. 

        1.16 "Arbitration Request" has the meaning assigned to such term in Section 14.2. 

        1.17 "Back-Up Compound" means, with respect to a Leading Compound, any other Collaboration Compounds or GSK
Development Compounds (as the case may be) in Development that [***]. 

        1.18 "Breaching Party" has the meaning assigned to such term in Section 12.2.1. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        1.19 "Business Day" means a day on which banking institutions in New York, New York, United States are open for business. 

        1.20 "Calendar Quarter" means a period of three (3) consecutive months ending on the last day of March, June,
September, or December, respectively. 

        1.21 "Candidate Selection Activities" means, with respect to any Collaboration Compound, the activities conducted to
determine whether such Collaboration Compound meets the Candidate Selection Criteria. 

        1.22 "Candidate Selection Activities Report" has the meaning assigned to such term in Section 2.6.5(b) and
Section 2.6.5(c), as the case may be. 

        1.23 "Candidate Selection Compound" means a Collaboration Compound resulting from a Project that the JRC determines meets all
of the Candidate Selection Criteria. 

        1.24 "Candidate Selection Criteria" means the criteria for selecting a Candidate Selection Compound, as described in
Section 2.6.2. 

        1.25 "Candidate Selection Option" has the meaning assigned to such term in Section 4.2.1(a). 

        1.26 "Candidate Selection Option Compounds" has the meaning assigned to such term in Section 4.2.1(a). 

        1.27 "Candidate Selection Option Deadline Period" has the meaning assigned to such term in Section 4.2.1(a). 

        1.28 "cGMP" means current Good Manufacturing Practices as defined in Parts 210 and 211 of Title 21 of the U.S. Code of
Federal Regulations, as may be amended from time to time, or any successor thereto. 

        1.29 "Chairperson" has the meaning assigned to such term in Section 3.1.1. 

        1.30 "Claims" has the meaning assigned to such term in Section 11.1. 

        1.31 "Collaboration Compound" means each Anacor Compound that is progressed through the Project(s) by Anacor during the
Research Collaboration Term pursuant to the terms of this Agreement, the Research Plan and as directed by the JRC, including Candidate Selection Compounds, and all Leads and Back-Up
Compounds related thereto. A Collaboration Compound shall not include (a) the compound known as AN2690, a description of which is set forth in Exhibit 1.31, (b) the compound known
as AN2718, (c) any other compounds that inhibit [***] leucyl tRNA synthetase with respect to [***] having at least [***]
compared to bacterial leucyl tRNA synthetase (i.e., LeuRS (as defined below)), and (d) [***]. 

        1.32 "Collaboration IP" means the Collaboration Know-How and the Collaboration Patents. 

        1.33 "Collaboration Know-How" means any Information pertaining to a Collaboration Compound that is discovered,
developed, invented or created solely by or on behalf of (a) a Party (or its agents or contractors), (b) the Parties jointly (or jointly through their respective agents or contractors),
and/or (c) either or both of their respective Affiliates, in each case pursuant to work conducted under the Research Collaboration in accordance with the Research Plans and as directed by the
JRC or during the Research Collaboration Term. 

        1.34 "Collaboration Patent" means any Patent that claims or covers Collaboration Know-How. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        1.35 "Combination Product" means a Product that includes at least one other therapeutically effective active pharmaceutical
ingredient (whether co-formulated or co-packaged with the GSK Development Compound or Anacor Development Compound, as the case may be, in such Product) which is neither the GSK
Development Compound or Anacor Development Compound, as the case may be, nor part of the same molecule as that containing such GSK Development Compound or Anacor Development Compound. To be a
Combination Product, the Product and all its ingredients must be sold together as a single product and invoiced as one product. Notwithstanding the foregoing, drug delivery vehicles, adjuvants, and
excipients shall not be deemed to be "therapeutically effective active pharmaceutical ingredients," and their presence shall not be deemed to create a Combination Product. 

        1.36 "Competitive Infringement" has the meaning assigned to such term in Section 8.5.1. 

        1.37 "Confidential Information" has the meaning assigned to such term in Section 9.1. 

        1.38 "Control," "Controls," "Controlled" or "Controlling" means possession of the ability to grant the licenses or
sublicenses as provided herein without violating the terms of any agreement or other arrangement with any Third Party. A Party shall be deemed to Control Collaboration IP to the extent of its
individual or joint interest therein, as applicable. 

        1.39 "Designated Target" has the meaning assigned to such term in Section 2.5. 

        1.40 "Develop" or "Development" means activities relating to obtaining
Regulatory Approval of a Product, and activities to develop manufacturing capabilities for Products. Development includes, but is not limited to, pre-clinical activities, pharmacology
studies, toxicology studies, formulation, manufacturing process development and scale-up (including bulk compound production), quality assurance and quality control, technical support,
pharmacokinetic studies, clinical studies and regulatory affairs activities. 

        1.41 "Diligent Efforts" means the following: (a) with respect to Anacor, such efforts that are consistent with the
efforts and resources normally used by Anacor in the exercise of its reasonable business discretion relating to the research and development progression of a potential pharmaceutical product owned by
it or to which it has exclusive rights, with similar product characteristics as the Collaboration Compound, which is of similar market potential at a similar stage in its development or product life
as
the Collaboration Compound, taking into account issues of patent coverage, safety and efficacy, product profile, the competitiveness of the marketplace, the proprietary position, the regulatory
structure involved, profitability (including pricing and reimbursement status achieved), and other relevant factors, including technical, legal, scientific and/or medical factors; and (b) with
respect to GSK, such efforts that are consistent with the efforts and resources normally used by GSK in the exercise of its reasonable business discretion relating to a prescription pharmaceutical
product owned by it or to which it has exclusive rights, with similar product characteristics as the Collaboration Compound or GSK Development Compound (as applicable), which is of similar market
potential at a similar stage in its development or product life as the Collaboration Compound or GSK Development Compound (as applicable), taking into account issues of patent coverage, safety and
efficacy, product profile, the competitiveness of the marketplace, the proprietary position, the regulatory structure involved, profitability (including pricing and reimbursement status achieved), and
other relevant factors, including technical, legal, scientific and/or medical factors. 

        1.42 "Disclosing Party" has the meaning assigned to such term in Section 9.1. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        1.43 "Dollars" or "$" means the legal tender of the U.S. 

        1.44 "Effective Date" has the meaning assigned to such term in the Preamble. 

        1.45 "EMEA" means the European Medicines Agency of the European Union, and any successor agency thereto. 

        1.46 "EU Major Markets" means [***]. 

        1.47 "European Commission" means the executive body of the European Union that has legal authority to grant marketing
authorizations approvals for pharmaceutical products in the European Union
following scientific evaluation and recommendation from the EMEA or other applicable Regulatory Authorities. 

        1.48 "European Union" or "EU" means all countries that are officially
recognized as member states of the European Union at any particular time during the Term. 

        1.49 "Executive Officers" has the meaning assigned to such term in Section 3.1.4. 

        1.50 "FDA" means the U.S. Food and Drug Administration, and any successor entity thereto. 

        1.51 "Field" means any use or purpose, including the treatment, palliation, and/or prevention of any human or animal disease,
disorder or condition; provided, however, that the Field shall specifically exclude the treatment, palliation, and/or prevention of onychomycosis. 

        1.52 "First Commercial Sale" means, with respect to any Product, the first sale for which revenue has been recognized by GSK
or Anacor, as the case may be, for use or consumption by the general public of such Product in any country in the Territory after all required Regulatory Approvals have been granted, or such sale is
otherwise permitted, by the Regulatory Authority in such country, excluding registration samples and compassionate use. 

        1.53 "First Dosing in a Phase 1 Clinical Trial" means the date on which the first subject is dosed in a Phase 1
Clinical Trial for a Collaboration Compound that is conducted by or on behalf of Anacor or GSK (or an Affiliate or Sublicensee of either Anacor or GSK). 

        1.54 "First Dosing in Phase 2 Clinical Trial" means the date on which the first subject is dosed in a Phase 2
Clinical Trial for a Collaboration Compound that is conducted by or on behalf of Anacor or GSK (or an Affiliate or Sublicensee of either Anacor or GSK). 

        1.55 "First Dosing in a Phase 3 Clinical Trial" means the date on which the first subject is dosed in a Phase 3
Clinical Trial for a GSK Development Compound that is conducted by or on behalf of GSK (or an Affiliate or Sublicensee of GSK). 

        1.56 "Follow-On Compound" means, [***]. 

        1.57 "FTE" means (a) with respect to Anacor, a full-time technical person dedicated by Anacor to the
Research Collaboration, or in the case of less than a full-time dedicated technical person, a full-time equivalent technical person year, [***].
Technical work on or directly related to the Research Collaboration to be performed by Anacor or GSK may include experimental laboratory work, recording and writing up results, reviewing literature
and references, holding scientific discussions, seminars and symposia, managing and directing scientific staff, and carrying out management duties directly related to the Research Collaboration. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        1.58 "Generic Product" means any pharmaceutical product sold by a Third Party, not authorized by GSK, an Affiliate or
sublicensee, and is approved in reliance on the prior approval of a Product as determined by the applicable Regulatory Authority, on the basis of it being comparable to and substitutable for such
Product. 

        1.59 "GSK" has the meaning assigned to such term in the Preamble. 

        1.60 "GSK Collaboration IP" means any Collaboration IP Controlled by GSK or its Affiliates. 

        1.61 "GSK Development Compound" means [***]. 

        1.62 "GSK Know-How" means any Information Controlled by GSK or its Affiliates at any time during the Term (other
than Collaboration Know-How) that relates directly (but not necessarily exclusively) to a Collaboration Compound and is directly (but not necessarily exclusively) useful for Anacor to
(a) conduct its obligations under the Research Collaboration in accordance with the Research Plan, or (b) make, use or sell an Anacor Development Compound in the Field in the Territory. 

        1.63 "GSK IP" means, collectively, (a) GSK Patents, (b) GSK Know-How, (c) GSK Target
Patents, (d) GSK Target Know-How, and (e) GSK Collaboration IP. 

        1.64 "GSK Patents" means any Patents in the Territory Controlled by GSK or its Affiliates on the Effective Date or at any
time during the Term (other than Collaboration Patents) that claim or cover the composition of matter and/or method of use of a Collaboration Compound and are directly (but not exclusively) useful for
Anacor to (a) conduct its obligations under the Research Collaboration in accordance with the Research Plan, or (b) make, use or sell an Anacor Development Compound in the Field. 

        1.65 "GSK Target Know-How" means any Information Controlled by GSK or its Affiliates on the Effective Date or at
any time during the Term (but excluding Collaboration Know-How) that relates directly (but not necessarily exclusively) to Targets and is reasonably useful for Anacor to perform its
obligations with respect to such Targets under the Research Collaboration. 

        1.66 "GSK Target Patents" means any Patents in the Territory Controlled by GSK or its Affiliates on the Effective Date or at
any time during the Term (but excluding Collaboration Patents) that claim or cover the composition or use of a Target or that would otherwise be infringed (absent a license as provided herein) by
Anacor's performance of its obligations with respect to such Targets under the Research Collaboration. 

        1.67 "Hit" means a Collaboration Compound in Project 1 that, at the time of GSK's exercise of its Option with respect to
Project 1, [***]. 

        1.68 "HSR" has the meaning assigned to such term in Section 4.2.2. 

        1.69 "IND" means any investigational new drug application filed with the FDA pursuant to Part 312 of Title 21 of the
U.S. Code of Federal Regulations, and any amendments thereto. References herein to IND shall include, to the extent applicable, any comparable filing(s) outside the U.S. (such as a clinical trial
application in the European Union). 

        1.70 "Indemnitee" has the meaning assigned to such term in Section 11.3. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        1.71 "Information" means all tangible and intangible (a) information, techniques, technology, practices, trade
secrets, inventions (whether patentable or not), methods, knowledge, know-how, skill, experience, data, results (including pharmacological, toxicological and clinical test data and
results), analytical and quality control data, results or descriptions, software and algorithms and (b) compositions of matter, cells, cell lines, assays, animal models and physical, biological
or chemical material. As used herein, "clinical test data" shall be deemed to include all information related to the clinical or pre-clinical testing of a Collaboration Compound, or
Product, including patient report forms, investigators' reports, biostatistical, pharmaco-economic and other related analyses, regulatory filings and communications, and the like. 

        1.72 "Joint Patent Subcommittee" or "JPS" has the meaning assigned to such
term in Section 3.2. 

        1.73 "Joint Project Team" or "JPT" has the meaning assigned to such term in
Section 3.3. 

        1.74 "Joint Research Committee" or "JRC" has the meaning assigned to such
term in Section 3.1. 

        1.75 "Lead" means a Collaboration Compound that the JRC determines meets all of the Lead Declaration Criteria. 

        1.76 "Lead Declaration Criteria" means criteria for selection of a Lead, as described in Section 2.6.2. 

        1.77 "Lead Declaration Report" has the meaning assigned to such term in Section 2.6.5(a). 

        1.78 "Leading Compound" means, at any particular point in time (a) with respect to Projects 1 and 3, the furthest
advanced Collaboration Compound or GSK Development Compound (as the case may be) under each Project; and (b) with respect to Projects 2 and 4 with respect to each Target Product Profile, the
furthest advanced Collaboration Compound or GSK Development Compound (as the case may be) with respect to a given Target Product Profile. 

        1.79 "Losses" has the meaning assigned to such term in Section 11.1. 

        1.80 "LeuRS" means bacterial leucyl tRNA synthetase. 

        1.81 "MAA" means a regulatory application filed with the EMEA or MHLW, as the case may be, seeking Regulatory Approval of a
Product, and all amendments and supplements thereto filed with the EMEA or MHLW, as the case may be. 

        1.82 "Materials" has the meaning assigned to such term in Section 2.7.1. 

        1.83 "Material IP" means, collectively, Patents covering or claiming Materials and Know-How pertaining
specifically to Materials which, in each case (a) exist as of the date such Materials are transferred as provided in Section 2.6, or (b) are conceived by the "transferring Party"
(as defined in Section 2.6.1) prior to its transfer of such Materials to the other Party as provided in Section 2.6. 

        1.84 "MHLW" means the Ministry for Health, Labor and Welfare of Japan, or the Pharmaceutical and Medical Devices Agency (the
"PMDA," formerly known as IYAKUHIN SOGO KIKO), or any successor to either of them, as the case may be. 

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        1.85 "NDA" means a New Drug Application (as more fully defined in 21 C.F.R. 314.5 et
seq. or its successor regulation) and all amendments and supplements thereto filed with the FDA. 

        1.86 "Necessary License" has the meaning assigned to such term in Section 6.5.3(c). 

        1.87 "Net Sales" means, with respect to any Product, [***] sales price of such Product sold by GSK,
its Affiliates or Sublicensees (the "Selling Party"), in finished product form, packaged and labeled for sale, under this Agreement in arm's length sales to Third Parties, less deductions allowed to
the Third Party customer by the Selling Party, to the extent actually taken by such Third Party customer, on such sales for: 

        1.87.1  trade, quantity, and cash discounts; 

        1.87.2  customary and reasonable credits, rebates and chargebacks (including those to managed-care entities and
government agencies), and allowances or credits to customers on account of rejection or returns (including wholesaler and retailer returns) or on account of retroactive price reductions affecting such
Product; 

        1.87.3  freight, postage and duties, and transportation charges relating to such Product, including handling and insurance
thereto; and 

        1.87.4  sales (such as VAT or its equivalent) and excise taxes, other consumption taxes, customs duties and compulsory
payments to governmental authorities and any other governmental charges imposed upon the importation, use or sale of such Product to Third Parties (excluding any taxes paid on the income from such
sales) to the extent the Selling Party is not otherwise entitled to a credit or a refund for such taxes, duties or payments made. 

        Sales
between GSK and its Affiliates or Sublicensees shall be excluded from the computation of Net Sales and no payments will be payable on such sales except where such Affiliates or
Sublicensees are end users. 

        In
the event a Product is sold which is a Combination Product, for purposes of determining payments due hereunder, Net Sales of Combination Products shall be calculated by multiplying
[***]. For purposes of this Section, "Gross Selling Price" means the list price at which an active ingredient is sold to a Third
Party wholesalers, before discounts, deductions, credits, taxes or allowances. 

        To
the extent the Net Sales is used herein with respect to Products containing Anacor Development Compounds or Products containing those Collaboration Compounds to which Anacor has
rights following termination of this Agreement or a Project under this Article 12, Net Sales shall have the meaning set forth above, with all references to "GSK" replaced by "Anacor." 

        1.88 "Non-breaching Party" has the meaning assigned to such term in Section 12.2. 

        1.89 "Option" means, with respect to Project 1, the Candidate Selection Option and PoC Option, and with respect to Projects
2, 3 and 4, the PoC Option only. 

        1.90 "Option Deadline Period" means the Candidate Selection Option Deadline or the PoC Option Deadline, as applicable. 

        1.91 "Option Deadline Extension Period" has the meaning assigned to such term in Section 4.2.2. 

        1.92 "Party" or "Parties" has the meaning assigned to such term in the Preamble. 

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        1.93 "Patent Costs" means the reasonable fees and expenses paid to outside legal counsel and other
out-of-pocket expenses paid to Third Parties, incurred in connection with the Prosecution and Maintenance of Patents. 

        1.94 "Patent" means (a) all patents and patent applications in any country or supranational jurisdiction in the
Territory, (b) any substitutions, divisions, continuations, continuations-in-part, provisional applications, reissues, renewals,
registrations, confirmations, re-examinations, extensions, supplementary protection certificates and the like of any such patents or patent applications, and (c) foreign
counterparts of any of the foregoing. 

        1.95 "Payee" has the meaning assigned to such term in Section 6.10. 

        1.96 "Payor" has the meaning assigned to such term in Section 6.10. 

        1.97 "Person" means any individual, partnership, joint venture, limited liability company, corporation, firm, trust,
association, unincorporated organization, governmental authority or agency, or any other entity not specifically listed herein. 

        1.98 "Phase 1 Clinical Trial" means a clinical trial of a pharmaceutical product on subjects that generally provides
for the first introduction into humans of such product with the primary purpose of determining safety, metabolism and pharmacokinetic properties and clinical pharmacology of such product. 

        1.99 "Phase 2 Clinical Trial" means a clinical trial of a pharmaceutical product on subjects, including possibly
pharmacokinetic studies, the principal purposes of which are to make a preliminary determination that such product is safe for its intended use and to obtain sufficient information about such
product's efficacy to permit the design of further clinical trials. 

        1.100  "Phase 3 Clinical Trial" means one or more clinical trials on sufficient numbers of subjects, which trial(s) are
designed to (a) establish that a drug is safe and efficacious for its intended use; (b) define warnings, precautions and adverse reactions that are associated with the drug in the dosage
range to be prescribed; and (c) support Regulatory Approvals for such drug. 

        1.101  "PoC Compound Criteria" means criteria for selection of a clinical PoC Compound, as described in Section 2.6.2. 

        1.102  "PoC Compound" means a Collaboration Compound resulting from PoC Trials that the JRC (or GSK pursuant to
Section 3.1.4(a)) determines has satisfied the PoC Compound Criteria. 

        1.103  "PoC Option" has the meaning assigned to such term in Section 4.2.1(b). 

        1.104  "PoC Option Compounds" has the meaning assigned to such term in Section 4.2.1(b). 

        1.105  "PoC Option Deadline Period" has the meaning assigned to such term in Section 4.2.1(b). 

        1.106  "PoC Trial" means, with respect to any Collaboration Compound, a [***] Clinical Trial or a
[***] Clinical Trial of such Collaboration Compound that is reasonably designed to demonstrate successfully the PoC Compound Criteria. For clarity, the PoC Trial is intended
only to demonstrate the safety, and to provide preliminary evidence of activity, of a particular Collaboration Compound, and is not intended to be a pivotal trial or to otherwise provide data
sufficient to support Regulatory Approvals. 

        1.107  "PoC Trial Report" has the meaning assigned to such term in Section 2.6.5(c). 

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        1.108  "Product" means any product that includes a GSK Development Compound or Anacor Development Compound, as applicable, or
any base form, prodrug, ester, salt form, crystalline polymorph, hydrate or solvate thereof, whether or not as the sole active ingredient and in any dosage, form or formulation. 

        1.109  "Project" means any of Project 1, Project 2, Project 3, or Project 4. 

        1.110  "Project 1" means the Research Collaboration activities conducted by Anacor and/or GSK pursuant to the Research Plan,
and the development activities conducted by GSK after the exercise of an Option, for the discovery, use, manufacture and development of Collaboration Compounds or GSK Development Compounds, as
applicable, that are inhibitors of the hepatitis C virus [***]. 

        1.111  "Project 2" means the Research Collaboration activities conducted by Anacor and/or GSK pursuant to the Research Plan,
and the development activities conducted by GSK after the exercise of an Option, for the discovery, use, manufacture and development of Collaboration Compounds or GSK Development Compounds, as
applicable, that are antibacterial compounds [***]. 

        1.112  "Project 3" means the Research Collaboration activities conducted by Anacor and/or GSK pursuant to the Research Plan,
and the development activities conducted by GSK after the exercise of an Option, for the discovery, use, manufacture and development of Collaboration Compounds or GSK Development Compounds, as
applicable, [***]. 

        1.113  "Project 4" means the Research Collaboration activities conducted by Anacor and/or GSK pursuant to the Research Plan,
and the development activities conducted by GSK after the exercise of an Option, for the discovery, use, manufacture and development of Collaboration Compounds or GSK Development Compounds, as
applicable, [***]. 

        1.114  "Project Termination" has the meaning assigned to such term in Section 2.4.2. 

        1.115  "Prosecuting Party" has the meaning assigned to such term in Section 8.2.1. 

        1.116  "Prosecution and Maintenance" or "Prosecute and Maintain" means, with regard to a Patent, the preparing, filing,
prosecuting and maintenance of such Patent, as well as re-examinations, reissues, and requests for patent term adjustments and patent term extensions with respect to such Patent, together
with the initiation or defense of interferences, the initiation or defense of oppositions and other similar proceedings with respect to the particular Patent. For clarification, "Prosecution and
Maintenance" or "Prosecute and Maintain" shall not include any other enforcement actions taken with respect to a Patent. 

        1.117  "Receiving Party" has the meaning assigned to such term in Section 9.1. 

        1.118  "Regulatory Approval" means any and all approvals (including price and reimbursement approvals, if required prior to
sale in the applicable jurisdiction), licenses, registrations, or authorizations of any country, federal, supranational, state or local regulatory agency, department, bureau or other government entity
that are necessary for the manufacture, use, storage, import, transport and/or sale of a particular Product in the applicable jurisdiction. 

        1.119  "Regulatory Authority" means the FDA, and any health regulatory authority in any country in the Territory that is a
counterpart to the FDA and holds responsibility for granting regulatory marketing approval for a Product in such country, and any successor(s) thereto, including the European Commission and the MHLW . 

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        1.120  "Research Collaboration" means the program of research, discovery, characterization, optimization and
pre-clinical and clinical testing of Collaboration Compounds pursuant to this Agreement and the Research Plans, as described in Article 2. 

        1.121  "Research Collaboration Term" has the meaning assigned to such term in Section 2.3. 

        1.122  "Research Plan(s)" has the meaning assigned to such term in Section 2.2. 

        1.123  "Royalty Term" has the meaning assigned to such term in Section 6.5.4. 

        1.124  "Subcommittee" has the meaning assigned to such term in Section 3.1.7 

        1.125  "Sublicensee" means, with respect to a particular Product, a Third Party to whom GSK or Anacor, as applicable, has
granted a sublicense or license under any Collaboration IP and/or the technology licensed to such Party pursuant to this Agreement, but excluding distributors. 

        1.126  "Target Product Profile" or "TPP" means, with respect to each Target,
the projected product profile that describes the commercially relevant range of acceptable product performance of a Collaboration Compound against key product characteristics, which shall be used by
the Parties to
guide and shape the progression of and development decisions for Collaboration Compounds directed toward such Target. 

        1.127  "Target" means any of the following: (a) the hepatitis C virus protease, (b) LeuRS,
[***]. 

        1.128  "Term" has the meaning assigned to such term in Section 12.1. 

        1.129  "Territory" means the entire world. 

        1.130  "Third Party" means any entity other than Anacor or GSK or an Affiliate of Anacor or GSK. 

        1.131  "TPP Subprogram" means the Research Collaboration activities conducted by Anacor and/or GSK pursuant to the Research
Plan, and by GSK after the exercise of an Option for Project 2 or Project 4, for the discovery, use, manufacture and development of Collaboration Compounds or GSK Development Compounds, as applicable,
for a particular TPP in Project 2 or Project 4. In the event that Project 4 is an anti-viral program, Project 4 shall have only one TPP Subprogram. 

        1.132  "Transfer Record" has the meaning assigned to such term in Section 2.7.1. 

        1.133  "United States" or "U.S." means the United States of America. 

        1.134  "USPTO Rules" has the meaning assigned to such term in Section 8.2.1. 

        1.135  "Valid Claim" means any claim within an allowed or issued U.S. patent or accepted or issued patent in a jurisdiction
outside the U.S. that has not expired, lapsed, been cancelled or abandoned, or been held unenforceable, invalid or cancelled by a court of competent jurisdiction in an order or decision from which no
appeal has been or can be taken. 

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 ARTICLE 2  

 RESEARCH AND DEVELOPMENT COLLABORATION  

        2.1    Overview.    Pursuant to this Agreement and as further
discussed in this Article 2, Anacor and GSK will jointly undertake the Research Collaboration, the scope of which is the discovery, identification and development of boron-based small molecule
compounds directed toward the Targets, which small molecule compounds GSK shall have certain options to exclusively license on a worldwide basis, as further discussed in Article 4. 

        2.2    Research Plans.    The Research Collaboration activities will
be carried out by Anacor and GSK pursuant to a research operating plan for each Project (as to each Project, the "Research Plan"), which will outline
anticipated discovery, research, and pre-clinical and clinical development activities to be conducted by each Party during the subsequent twelve (12) months in connection with the
each of the Projects. The Research Plan for each of the Projects will be finalized and presented to the JRC for review, comment and approval within thirty (30) Business Days after the formation
of the JRC or, in the case of Project 4, within thirty (30) Business Days after the selection of the Designated Target, if later. From time to time during the Research Collaboration Term (but
no less frequently than once per year), Anacor shall update the Research Plans (or applicable portions thereof) for Project 2, Project 3 and Project 4, and shall submit such updated Research Plans to
the JRC for review, comment, and approval. Similarly, from time to time during the Research Collaboration Term (but no less frequently than once per year), Anacor and GSK shall jointly update the
Research Plan for Project 1 (or applicable portion thereof) and shall submit such updated Research Plan to the JRC for review, comment and approval. Once approved by the JRC, the updated Research Plan
for each Project shall replace the Research Plan for such Project previously in effect. The Research Plans will be reviewed as necessary at each meeting of the JRC, and at any other time upon the
request of either Party, and may be modified by the JRC, as appropriate, to reflect material scientific or commercial developments. In the event of any inconsistency between a Research Plan and this
Agreement, the terms of this Agreement shall prevail and any such inconsistent portion of such Research Plan is hereby expressly rejected. 

        2.3    Research Collaboration Term.    The Research Collaboration
shall commence as soon as practicable after the Effective Date and shall expire upon the sixth (6th) anniversary of the Effective Date, but may
be extended for up to two (2) additional years by mutual written agreement of the Parties (as may be extended, the "Research Collaboration
Term"). Notwithstanding the foregoing, the Research Collaboration shall terminate (and hence the Research Collaboration Term shall expire) with respect to a particular Project
on the date on which GSK exercises (pursuant to either Section 4.2 or Section 14.5) the maximum number of Options permitted hereunder for such Project, as provided in
Section 4.2.1(c), or on such other date agreed by the JRC. Upon the expiration of the Research Collaboration Term with respect to a particular Project, all obligations of the Parties to conduct
any further Research Collaboration activities under this Agreement with respect to such Project shall terminate, but the other rights and obligations under this Agreement shall not otherwise be
affected. 

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        2.4    Research Efforts; Diligence.    During the Research
Collaboration Term, Anacor and GSK shall each use Diligent Efforts to carry out and conduct their respective tasks and objectives under the Research Collaboration in accordance with the terms of this
Agreement, Research Plans and as directed by the JRC (and JPT with respect to Project 1). In support of these efforts, each Party shall maintain and utilize scientific and technical staff,
laboratories, offices and other facilities as needed to perform such its respective Research Collaboration activities as set forth in the Research Plan. Each Party shall use personnel with sufficient
skills and experience as are required to accomplish efficiently and expeditiously the objectives of the Research Collaboration as set forth in the Research Plan in good scientific manner and in
compliance in all material respects with all requirements of applicable laws, rules and regulations and in such number and with such expertise as specifically set forth in Section 2.4.1 below.
Further, with respect to Project 2 and Project 4, it is the Parties' mutual intent, and Anacor acknowledges and agrees, that Anacor will initially focus its efforts on the research and development of
Collaboration Compounds that satisfy one of the following TPPs: [***]. 

        2.4.1    Anacor and GSK Responsibilities.    During the Research Collaboration Term, and
consistent with the Research Plan, as updated or amended from time to time, Anacor and GSK shall provide the following personnel: 

        (a)   Project 1—Lead Generation

          (i)  Anacor and GSK shall [***]. 

         (ii)  GSK's [***]. 

       (iii)  Anacor's [***]. 

        (b)   Project 1—Lead Optimization

          (i)  As of the Effective Date, the Parties anticipate [***]. 

         (ii)  GSK shall [***]. 

       (iii)  Anacor shall [***]. 

        (iv)  For the [***]. 

        (c)   Projects 2, 3, and 4

          (i)  For each of Projects 2, 3, and 4, Anacor [***]. 

         (ii)  GSK [***]. 

        (d)   Each Party agrees to keep full, clear and accurate records for a Project regarding the FTEs provided pursuant to this
Section 2.4.1 during the immediately preceding [***] period. Each Party (the "Auditing Party") shall have a right, upon not less than [***] prior
written notice to the other Party (the "Audited Party"), to have an independent accounting firm (selected by the Auditing Party and mutually acceptable to the Audited Party) review such books and
records relating to such FTEs with respect to such [***] time period for the sole purpose of verifying compliance with this Section 2.4.1. Such audit shall not be
performed more frequently than once per calendar year and shall be conducted under appropriate confidentiality provisions. Such examination is to be made at the expense of the Auditing Party, except
in the event that the results of the audit reveal a shortfall in the number of FTEs provided by the Audited Party (i.e., relative to the number of FTEs required by this Section 2.4.1) of
[***] of more over the period being audited, in which case reasonable audit fees for such examination shall be paid by the Audited Party. 

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        2.4.2    Anacor Diligence Failure Event.    In the event that at any time during the Research
Collaboration Term Anacor materially fails to conduct the Research Collaboration with respect to a given Target and/or Collaboration Compound in accordance with its diligence obligations under
Section 2.4 (including 2.4.1), then GSK shall have the right to allege a failure of diligence on the part of Anacor (an "Anacor Diligence Failure
Event") by written notice of same to Anacor, such notice to set forth the detailed basis for such alleged failure of diligence. Subject to Section 2.4.3 below, upon
receipt of such notice of an Anacor Diligence Failure Event, Anacor shall have [***] within which to cure such Anacor Diligence Failure Event. Upon conclusion of
[***] cure period, if Anacor has not cured such Anacor Diligence Failure Event to GSK's reasonable satisfaction, GSK shall have the right to immediately terminate, upon written
notice to Anacor, the Project to which the Anacor Diligence Failure Event relates (a "Project Termination"). Upon a Project Termination, the Leading
Compound with respect to such Project, all Back-Up Compounds and, solely with respect to Project 1, Follow-On Compounds related thereto, and all other Collaboration Compounds
as provided in Sections 4.1.1(a)(iii), (b)(iii), (c)(iii) and (d)(iii) (as applicable to the terminated Project) shall be deemed to be GSK Development Compounds. In this regard but subject to
Section 2.4.3, Anacor shall grant and does hereby grant, as of the effective date of the Project Termination, an exclusive (even as to Anacor and its Affiliates), worldwide license (with the
right to grant sublicenses) under the Anacor IP to make, have made, use, sell, offer for sale and import Products incorporating such GSK Development Compounds from the terminated Project in the Field
throughout the Territory. GSK shall pay to Anacor a royalty on annual Net Sales of such Product at a rate that is equal to fifty percent (50%) of the applicable royalty rates set forth in
Section 6.5 as follows: (a) in the event that such GSK Development Compound incorporated in such Product has not achieved the Candidate Selection Criteria prior to the effective date of
Project Termination, the applicable royalty rate shall be the royalty rate for the exercise of the Candidate Selection Option with respect to the terminated Project; (b) in the event that such
GSK Development Compound has achieved the Candidate Selection Criteria prior to the effective date of the Project Termination, the applicable royalty rate shall be the royalty rate for the exercise of
the PoC Option with respect to the terminated Project. Except with respect to royalties as provided in this Section 2.4.2, no milestone payments or other fees, costs or payments of any kind
shall be owed to Anacor on account of Collaboration Compounds that become GSK Development Compounds as a result of a Project Termination. The remedies set forth in this Section 2.4.2 shall be
GSK's sole remedy, and Anacor's sole liability, in connection with an Anacor Diligence Failure Event. The Parties understand and agree that, due to the nature of the collaboration under this
Agreement, damages to GSK resulting from a material breach by Anacor of its diligence obligations under this Agreement would be difficult to calculate accurately, and thus the remedies set forth
herein represent a rational relationship between the damages from the material breach of diligence on the one hand, and the cumulative loss to GSK of its expectation interest and its lost investment
and lost potential return on investment due to the upfront payment, milestone payments made and research funding provided hereunder. 

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        2.4.3    Dispute.    In the event that Anacor disputes the allegation of an Anacor Diligence
Failure Event in good faith, Anacor shall have the right to submit such dispute to the Executive Officers in accordance with Section 14.1 within thirty (30) calendar days after receipt
of notice of a Project Termination from GSK as provided in Section 2.4.2 above. If the Executive Officers are unable to resolve the dispute regarding an Anacor Diligence Failure Event and
Anacor decides to resolve such dispute through arbitration as provided in Section 14.2, GSK shall be granted such license, but only on a non-exclusive basis, and without the right
to grant sublicenses except for research and/or development purposes; provided however that upon the first adjudication by arbitration pursuant to Section 14.2 or settlement of such dispute in
GSK's favor, such non-exclusive license shall be converted to an exclusive, worldwide license as provided in Section 2.4.2 above, with the unrestricted right to grant sublicenses,
and if the first adjudication by arbitration pursuant to Section 14.2 or settlement of such dispute is not in GSK's favor, such non-exclusive license shall terminate and revert to
Anacor. During the entire time pending the final resolution of any such dispute, including during Executive Officer consultation or during arbitration, settlement negotiations or any other related
legal proceeding, Anacor shall not grant any license to any Third Party under the Anacor Compound IP or Anacor Collaboration IP with respect to the same subject matter, which would conflict or
otherwise interfere with the potential exclusive license to GSK. 

        2.5    Additional Target.    As soon as possible but in any event no
later than the [***], GSK shall provide irrevocable (unless otherwise agreed to by the Parties) written notice to Anacor of one (1) additional Target to be included in
the Research Collaboration as Project 4 (the "Designated Target"), which target shall [***]. Once a Designated Target is
selected, the Parties shall prepare a Research Plan setting forth the activities to be conducted by Anacor and/or GSK during the Research Collaboration Term for Project 4 and shall submit such
Research Plan to the JRC for review, comment and approval. [***]. 

        2.6    Development of Collaboration Compounds.    

        2.6.1    Anacor Responsibility.    Prior to GSK's exercise of an Option with respect to a
Collaboration Compound and subject to Section 2.6.3, Anacor shall have primary responsibility for conducting the pre-clinical and clinical development activities for each
Collaboration Compound in each Project (including clinical trials and submissions to Regulatory Authorities) in accordance with this Agreement, the Research Plans and as directed by the JRC (and JPT
with respect to Project 1). GSK shall have the opportunity to provide advice to Anacor (which shall be considered in good faith by
Anacor) regarding the development of Collaboration Compounds through GSK's participation in the JRC (and JPT with respect to Project 1), and shall have such other development responsibilities as are
set forth in this Agreement or are mutually agreed by the Parties in writing. 

        2.6.2    Target Product Profiles; Lead Declaration Criteria; Candidate Selection Criteria; PoC Compound
Criteria.    The Parties acknowledge and agree as follows: 

        (a)   the Target Product Profile(s), Lead Declaration Criteria (which Lead Declaration Criteria is subject to approval by GSK
prior to the first JRC meeting), Candidate Selection Criteria, and PoC Compound Criteria for Project 1 are attached hereto as Exhibit 2.6.2(a); 

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        (b)   the Target Product Profile(s), Lead Declaration Criteria, Candidate Selection Criteria, and PoC Compound Criteria for
Project 2 are attached hereto as Exhibit 2.6.2(b); and 

        (c)   the Target Product Profile(s), Lead Declaration Criteria, Candidate Selection Criteria, and PoC Compound Criteria for
Project 3 are attached hereto as Exhibit 2.6.2(c). 

        2.6.3    PoC Trial Design.    The JRC shall be responsible for the design of all PoC Trials
for each Collaboration Compound. Any disputes regarding the design of any PoC Trial, including with respect to content and endpoints of such PoC Trial, that are not resolved by the JRC shall be
presented to GSK to make the final decision as provided in Section 3.1.4(a). Notwithstanding GSK's decision-making authority with respect to the PoC Trial design for a given Collaboration
Compound, in no event shall Anacor be required to conduct a PoC Trial in which the PoC Trial design includes [***]. 

        2.6.4    Reports.    During the Research Collaboration Term, Anacor and GSK shall provide
reasonable progress updates at each Calendar Quarter meeting of the JRC on the status of their respective
activities for each Project, [***] in advance of the applicable JRC meeting. All such exchanges of Information shall be coordinated by the Alliance Managers. 

        2.6.5    Evaluation of Lead Declaration, Candidate Selection Activities and PoC Trial
Results.    

        (a)   In the event that Anacor determines that a Collaboration Compound meets the Lead Declaration Criteria, Anacor shall
promptly notify GSK in writing of such event and shall provide to the JRC, not less than [***] prior to the next regularly scheduled meeting, a data package containing a
reasonably complete set of analysis, results and raw data from the Lead generation and optimization activities for such Collaboration Compound (the "Lead Declaration
Report"). The JRC will, at its next regularly scheduled meeting or at an ad hoc meeting scheduled by the JRC (and in any event within [***] after the
JRC's receipt of the Lead Declaration Report), review the Lead Declaration Report to confirm whether the Collaboration Compound meets the Lead Declaration Criteria. 

        (b)   With respect to [***], in the event that Anacor determines that a Collaboration Compound meets
the Candidate Selection Criteria, Anacor shall promptly notify GSK in writing of such event and shall provide to the JRC, not less than [***] prior to the next regularly
scheduled meeting, a data package containing a reasonably complete set of analysis, results and raw data from the Candidate Selection Activities for such Collaboration Compound (for the purpose of
this Section 2.6.5(b), the "Candidate Selection Activities Report"). The JRC will, at its next regularly scheduled meeting or at an ad hoc
meeting scheduled by the JRC (and in any event within [***] after the JRC's receipt of the Candidate Selection Activities Report), review the Candidate Selection Activities
Report to confirm whether the Collaboration Compound meets the Candidate Selection Criteria. 

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        (c)   With respect to Project 1 only, in the event that Anacor determines that a Collaboration Compound meets the Candidate
Selection Criteria, Anacor shall promptly notify GSK in writing of such event and shall provide to the JRC a data package containing all analysis, results and raw data from the Candidate Selection
Activities for such Collaboration Compound, and any related correspondence or information received from or sent to any Regulatory Authority relating to such Collaboration
Compounds (for the purpose of this Section 2.6.5(c), the "Candidate Selection Activities Report"). Unless otherwise agreed to by the Parties, the
JRC will schedule an ad hoc meeting not more than [***] after receipt of any such Candidate Selection Activities Report to review such Candidate Selection Activities Report and
determine whether or not such Collaboration Compound meets the applicable Candidate Selection Criteria. If the JRC agrees that the Collaboration Compound meets the Candidate Selection Compound
Criteria, GSK shall have a right with respect to Project 1 to exercise its Candidate Selection Option as to such Collaboration Compound pursuant to Section 4.2. 

        (d)   Following completion of any PoC Trial, in the event that Anacor determines that a Collaboration Compound meets the PoC
Compound Criteria, Anacor shall promptly notify GSK in writing of such event and shall provide to the JRC a data package containing all analysis, results and raw data from the PoC Trial for such
Collaboration Compound, and any related correspondence or information received from or sent to any Regulatory Authority relating to such Collaboration Compounds (the "PoC Trial
Report"). Unless otherwise agreed to by the Parties, the JRC will schedule an ad hoc meeting not more than [***] after receipt of any such PoC Trial
report to review such PoC Trial Report and determine whether or not such Collaboration Compound meets the PoC Compound Criteria. If the JRC agrees that the Collaboration Compound meets the PoC
Compound Criteria, GSK shall have a right to exercise its PoC Option as to such Collaboration Compound pursuant to Section 4.2. 

        2.7    Material Transfer.    

        2.7.1  To facilitate the Research Collaboration, either Party (referred to in Section 1.77 and this Section 2.7
as the "transferring Party") may, at its sole discretion, provide to the other Party (referred to in this Section 2.7 as the "receiving Party") certain biological materials or chemical
compounds, such as cell-based assays or research tools, but excluding Collaboration Compounds, owned by or licensed to the transferring Party (such materials or compounds provided
hereunder are referred to, collectively, as "Materials") for use by the receiving Party in furtherance of the Research Collaboration pursuant to the
Research Plans. All transfers of such Materials by the transferring Party to the receiving Party shall be documented in writing (the "Transfer Record"),
which Transfer Record shall set forth the type and name of the Material transferred, the amount of the Material transferred, the date of the transfer of such Material and the proposed use of such
Material by the receiving Party. 

        2.7.2  Except as otherwise provided under this Agreement, all such Materials delivered by the transferring Party to the
receiving Party shall remain the sole property of the transferring Party, shall only be used by the receiving Party in furtherance of the Research Collaboration. The receiving Party shall not cause
the Materials be used or delivered to or for the benefit of any Third Party without the prior written consent of the transferring Party. Further, the receiving Party shall not use the Materials in
research or testing involving human subjects, unless expressly agreed by the transferring Party in writing. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

17

 

        2.7.3  At the time the transferring Party provides Materials to the receiving Party as provided herein, the transferring Party
shall grant, and hereby does grant to the other Party a non-exclusive license under the Material IP Controlled by the transferring Party or its Affiliates to use such Materials for the
purpose set forth in the Transfer Record. In any event, Material IP shall not become nor be deemed Collaboration IP. 

        2.7.4  The transferring Party shall have sole control over all matters pertaining to the prosecution of Material IP and the
defense and enforcement of any Patents included in the Material IP, in each case which Material IP is Controlled by such transferring Party or its Affiliates. In the event that the receiving Party
conceives an invention based on its use of any Materials from the transferring Party as provided in the Transfer Record and obtains patent protection therefor, any such patents shall not fall within
the Material IP Controlled by the transferring Party or its Affiliates. However, receiving Party shall and hereby grants to the transferring Party a non-exclusive,
non-sub-licensable (except as to the transferring Party's Affiliates), perpetual, worldwide, fully-paid and royalty-free license, under all of the
receiving Party's rights in and to such patents and specifically related know how, to conduct any research, development or commercial activities (either alone or with a collaborator or subcontractor
for such purposes) outside the scope of this Agreement. 

        2.7.5  THE MATERIALS SUPPLIED BY THE TRANSFERRING PARTY UNDER THIS SECTION 2.7 ARE SUPPLIED "AS IS" AND THE
TRANSFERRING PARTY MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR THAT THE USE OF THE MATERIALS DOES NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER PROPRIETARY RIGHTS OF A THIRD PARTY. 

        2.7.6  The receiving Party assumes all liability for damages which may arise from its use, storage or disposal of the
Materials. The transferring Party will not be liable to the receiving Party for any loss, claim or demand made by the receiving Party, or made against the receiving Party by any Third Party, due to or
arising from the use of the Materials, except to the extent permitted by Law, when caused by the gross negligence or willful misconduct of the transferring Party. 

        2.8    Regulatory Matters; Compliance.    

        2.8.1    Compliance.    Anacor shall conduct all
pre-clinical activities and Clinical Trials in good scientific manner, and in compliance in all material respects with all requirements of applicable laws, rules and regulations, and all
other applicable requirements of cGMP, good laboratory practice and current good clinical practice. 

        2.8.2    Data Integrity.    

        (a)   Anacor acknowledges the importance to GSK of ensuring that the Projects are undertaken in accordance with the following
good data management practices: 

          (i)  data is being generated using sound scientific techniques and processes; 

         (ii)  data is being accurately and reasonably contemporaneously recorded in accordance with good scientific practices by
Persons conducting research hereunder; 

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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       (iii)  data is being analyzed appropriately without bias in accordance with good scientific practices; and 

        (iv)  data and results are being stored securely and can be easily retrieved. 

        (b)   Anacor agrees that it shall use Diligent Efforts to carry out the Research Collaboration so as to collect and record any
data generated therefrom in a manner consistent with the above requirements as set forth in subsection (a) above. 

        2.8.3    Ownership.    Anacor shall own and maintain all regulatory
filings for Collaboration Compounds developed during the Research Collaboration Term pursuant to this Agreement, including all INDs. In the event that any Regulatory Authorities request a
teleconference, videoconference, or meeting with Anacor with respect to a particular Collaboration Compound during the Research Collaboration Term, Anacor shall provide GSK with the opportunity to
have [***] representative appear as a [***] observer at any such teleconference, videoconference, or meeting. Upon exercise of GSK of an Option with
respect to a Collaboration Compound as provided in Section 4.2 or Section 14.5, or upon GSK's exercise of its rights pursuant to Sections 2.4.2, 4.2.1(e) or 4.2.1(f), Anacor (or
its successor in the event of a Change of Control Event) shall transfer ownership of such regulatory filings for such GSK Development Compound, including all relevant INDs, to GSK, and provide GSK
with copies of such INDs and other regulatory filings, and all pre-clinical and clinical data and results (including pharmacology, toxicology, formulation, and stability studies).
Thereafter, GSK (or its Affiliates) shall own and maintain all regulatory filings and Regulatory Approvals for GSK Development Compounds during the Term. In the event that any Regulatory Authorities
request a teleconference, videoconference, or meeting with GSK with respect to a particular GSK Development Compound or Product, GSK shall provide Anacor with the opportunity to have
[***] representative appear as a [***] observer at any such teleconference, videoconference, or meeting. 

        2.8.4    Adverse Event Reporting.    Beginning on the Effective Date and continuing until such
time, if any, that GSK exercises its Option with respect to a Collaboration Compound as provided in Section 4.2 or Section 14.5, or until such time, if any, that GSK exercises its rights
pursuant to Sections 2.4.2, 4.2.1(e) or 4.2.1(f), Anacor shall be responsible for reporting all adverse drug reaction experiences related to such Collaboration Compound in connection with the
activities of Anacor under this Agreement to the appropriate Regulatory Authorities in the countries in the Territory in which the Collaboration Compound is being developed, in accordance with the
appropriate laws and regulations of the relevant countries and Regulatory Authorities. Anacor shall provide GSK notice of such event within forty-eight (48) hours and provide copies of all
reports to GSK as soon as possible prior to any filing with a Regulatory Authority. Through the JRC, GSK shall have the right to review from time to time Anacor's pharmacovigilance policies and
procedures. GSK and Anacor agree to cooperate and use good faith efforts to ensure that Anacor's adverse event database is organized in a format that is compatible with GSK's adverse event databases. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        2.9    Research Collaboration Costs.    Each Party shall bear its own
costs in connection with performing Research Collaboration activities. Promptly following [***], and thereafter during the Research Collaboration Term on an annual basis, the
Parties shall review their respective commitments for the Research Collaboration to determine the appropriate level of resources [***] to be contributed in the subsequent year
of the Research Collaboration Term, such resources to be determined by mutual agreement of GSK and Anacor. Notwithstanding the foregoing, in no event shall the total resources for all of the Projects
be increased or decreased by [***]; provided, however, that following the end of the Research Collaboration Term with respect to a Project, some or all of the resources that
were focused on such Project may be repurposed to uses outside the Research Collaboration without violating the foregoing provision. 

        2.10    Subcontracting.    Subject to the terms of this Agreement
(including Section 2.4.1(b)(iv) with respect to Anacor), each Party shall have the right to engage Affiliates or Third Party subcontractors to perform certain of its obligations under this
Agreement. Any Affiliate or subcontractor to be engaged by a Party to perform a Party's obligations set forth in the Agreement shall meet the qualifications typically required by such Party for the
performance of work similar in scope and complexity to the subcontracted activity. Notwithstanding the preceding, any Party engaging an Affiliate or subcontractor hereunder shall remain principally
responsible and obligated for such activities. In addition, any Party engaging a subcontractor shall in all cases retain or obtain Control of any and all intellectual property created by or used with
the relevant Party's permission by such subcontractor directly related to such subcontracted activity. However, it is understood that, in some cases, it may not be commercially reasonable for such
Party to obtain exclusive Control of trade secrets or know-how to be created by such subcontractor. To the extent that such exclusive rights cannot be obtained with respect to any
intellectual property from any such subcontractor, prior to entering into such arrangement with such subcontractor, such Party shall bring such matter to the JRC for a determination of whether to
enter into such arrangement. 

 ARTICLE 3  

 MANAGEMENT OF THE COLLABORATION  

        3.1    Joint Research Committee.    Promptly and in any event within
[***], the Parties shall establish a committee (the "Joint Research Committee" or  "JRC") as more fully described in this Section 3.1. The JRC shall
have review and oversight responsibilities for all research and development
activities performed hereunder, including oversight of the Research Collaboration, in each case as more specifically provided herein. Each Party agrees to keep the JRC informed of its progress and
activities under the Research Collaboration. 

[***]
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        3.1.1    Membership.    The JRC shall be comprised of three (3) representatives (or
such other number of representatives as the Parties may agree) from each of GSK and Anacor. Each Party shall provide the other with a list of its initial members of the JRC no later than thirty
(30) days prior to the first scheduled meeting of the JRC. Each Party may replace any or all of its representatives on the JRC at any time upon written notice to the other Party in accordance
with Section 14.7 of this Agreement. Each representative of each Party shall have expertise (either individually or collectively) in pharmaceutical drug discovery and development. Any member of
the JRC may designate a substitute to attend and perform the functions of that member at any meeting of the JRC. Each Party may, in its reasonable discretion, invite non-member
representatives of such Party to attend meetings of the JRC as a non-voting participant, subject to the confidentiality obligations of Article 9. The Parties shall designate a
chairperson (each, a "Chairperson") to oversee the operation of the JRC and prepare minutes as set forth in Section 3.1.3, each such Chairperson
to serve a twelve (12) month term. The right to name the Chairperson shall alternate between the Parties, with Anacor designating the first such Chairperson. 

        3.1.2    Meetings.    During the Research Collaboration Term with respect to a Project, the
JRC shall meet in person or otherwise [***], and more frequently as the Parties mutually deem appropriate, on such dates, and at such places and times, as provided herein or as
the Parties shall agree. Upon conclusion of the Research Collaboration Term with respect to a Project, the JRC shall meet, in person or otherwise, [***] to provide Anacor an
update regarding GSK's efforts under such Project to develop and commercialize GSK Collaboration Compounds (and Products incorporating GSK Development Compounds) and otherwise to perform the
responsibilities assigned to it under this Agreement; provided, however, that during the Royalty Term for a particular Product, the Parties agree to
periodically discuss in good faith the frequency of such ongoing meetings with respect to such Product. Meetings of the JRC that are held in person shall alternate between the offices of the Parties,
or such other place as the Parties may agree. The members of the JRC also may convene or be polled or consulted from time to time by means of telecommunications, video conferences, electronic mail or
correspondence, as deemed necessary or appropriate. Each Party will bear all expenses it incurs in regard to participating in all meetings of the JRC, including all travel and living expenses. 

        3.1.3    Minutes.    The Chairperson shall be responsible for preparing and circulating
minutes of each meeting of the JRC, setting forth, inter alia, a description, in reasonable detail, of the discussions at the meeting and a list of any
actions, decisions or determinations approved by the JRC and a list of any issues to be resolved by the Executive Officers pursuant to Section 3.1.4. Such minutes shall be effective only after
approved by both Parties. With the sole exception of specific items of the meeting minutes to which the members cannot agree and which are escalated to the Executive Officers as provided in
Section 3.1.4 below, definitive minutes of all JRC meetings shall be finalized no later than thirty (30) calendar days after the meeting to which the minutes pertain. If at any time
during the preparation and finalization of the JRC minutes, the Parties do not agree on any issue with respect to the minutes, such issue shall be resolved by the escalation process as provided in
Section 3.1.4. The decision resulting from the escalation process shall be recorded by the Chairperson in amended finalized minutes for said meeting. 

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        3.1.4    Decisions.    Except as otherwise provided herein, all decisions of the JRC shall be
made by consensus, with each Party having collectively one (1) vote in all decisions. In the event that the JRC is unable to reach a consensus decision [***] after it
has met and attempted to reach such decision, then either Party may, by written notice to the other, have such issue referred to the Chief Executive Officer of Anacor, or such other person holding a
similar position designated by Anacor from time to time, and the Senior Vice President of the Infectious Diseases Center of
Excellence for Drug Discovery at GSK, or such other person holding a similar position designated by GSK from time to time (collectively, the "Executive
Officers"), for resolution. The Executive Officers shall meet promptly to discuss the matter submitted and to determine a resolution. If the Executive Officers are unable to
determine a resolution in a timely manner, which shall in no case be more than [***] after the matter was referred to them, the issue shall be resolved as follows: 

        (a)   GSK shall have final decision-making authority with respect to any disputes concerning (i) the establishment of
the PoC Compound Criteria; (ii) whether the PoC Compound Criteria have been satisfied by a particular Collaboration Compound; and/or (iii) subject to Section 2.6.3, the design,
content, and endpoints of a PoC Trial, in each case of (i), (ii) and (iii) without the requirement that such dispute first be presented to a Third Party expert as provided in
Section 3.1.4(b) or subject to further review pursuant to Section 14.1. 

        (b)   Except as set forth in Section 3.1.4, the disputed issue shall be submitted to a mutually agreed Third Party
expert, who will be required to make a decision on such issue within [***] after submission. The decision of such expert shall be binding on the Parties without further review
pursuant to Section 14.1. The Parties shall [***] the costs of such expert. 

        3.1.5    Responsibilities.    The JRC shall perform the following functions, some or all of
which may be addressed directly at each meeting of the JRC: 

        (a)   review and coordinate all of the Parties' activities under a Project during the Research Collaboration Term for such
Project; 

        (b)   subject to approval of both Parties, review, comment on, and approve additional Target Product Profiles for the Projects,
as such additional Target Product Profiles may be proposed from time to time by the Parties, and amend existing Target Product Profiles for the Projects, provided that in any case a decision by a
Party shall not be subject to the dispute resolution process set forth in Section 3.1.4; 

        (c)   review the progress of each Project against the applicable Research Plan; 

        (d)   prepare, review, modify, update and approve the PoC Trial designs, which shall be subject to the dispute resolution
procedure set forth in Section 2.6.3; 

        (e)   review, comment on, and approve the Research Plan for each Project; 

        (f)    confirm that a Collaboration Compound has satisfied the Lead Declaration Criteria, Candidate Selection Criteria, or PoC
Compound Criteria; 

        (g)   serve as an information transfer vehicle to facilitate the discussion of Development and commercialization of GSK
Development Compounds and Products; 

[***]
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        (h)   discuss and attempt to resolve any deadlock issues submitted to it by any Subcommittee, in accordance with the procedures
established in Section 3.1.4; and 

        (i)    such other responsibilities as may be assigned to the JRC pursuant to this Agreement or as may be mutually agreed upon by
the Parties from time to time. 

For
clarity, the JRC shall not have any authority beyond the specific matters set forth above in this Section 3.1.5, and in particular shall not have any power to amend or modify the terms or
provisions of this Agreement. In addition, GSK (and not Anacor or the JRC) shall have the sole right to make decisions in its sole discretion with respect to (i) the exercise of an Option; or
(ii) the development and commercialization of GSK Development Compounds (and resultant Products) after exercise by GSK of an Option with respect thereto. 

        3.1.6    Anacor Right to Withdraw.    Anacor shall have the right to withdraw from
participation on the JRC at any time after the sixth (6th) anniversary of the Effective Date upon written notice to GSK. Upon withdrawal from the JRC, GSK shall have the sole
decision-making authority as provided in Section 3.1.4(a) with respect to any matters that would otherwise have been subject to Section 3.1.4(b). 

        3.1.7    Subcommittee(s).    From time to time, the JRC may establish subcommittees to oversee
particular projects or activities, as it deems necessary or advisable (each, a "Subcommittee"). Each Subcommittee
shall consist of such number of members as the JRC determines is appropriate from time to time. Such members shall be individuals with expertise and responsibilities in the areas of
pre-clinical development, clinical development, patents, process sciences, manufacturing, regulatory affairs, product development and/or product commercialization, as applicable to the
stage of development of the project or activity. 

        3.2    Joint Patent Subcommittee.    [***]
after the Effective Date, the JRC shall establish a Subcommittee (the "Joint Patent Subcommittee" or
"JPS") to be responsible for the coordination of the Parties' efforts in accordance with Article 8 of this Agreement, including the review and
filing of patent applications and assessments of inventorship of inventions created during the Research Collaboration Term. The JPS shall be comprised of an equal number of representatives from each
of GSK and Anacor and shall meet on such dates and at such places and times agreed to by the Parties. All decisions of the JPS on matters for which it has responsibility shall be made by consensus,
with each Party having collectively one (1) vote in all decisions. In the event that the JPS is unable to reach a consensus decision within [***] after it has met and
attempted to reach such decision, then either Party may, by written notice to the other, have such issue submitted to the JRC for resolution in accordance with Section 3.1.4. Each Party will
bear all expenses it incurs in regard to participating in all meetings of the JPS, including all travel and living expenses. 

        3.3    Joint Project Team.    [***] after the
Effective Date, the JRC shall establish a Subcommittee (the "Joint Project Team" or "JPT") to oversee
the conduct of the Research Collaboration with respect to [***]. The JPT shall be comprised of an equal number of representatives from each of GSK and Anacor and shall meet on
such dates and at such places and times agreed to by the Parties. All decisions of the JPT on matters for which it has responsibility shall be made by consensus, with each Party having collectively
one (1) vote in all decisions. In the event that the JPT is unable to reach a consensus decision within [***] after it has met and attempted to reach such decision, then
either Party may, by written notice to the other, have such issue submitted to the JRC for resolution in accordance with Section 3.1.4 and 3.1.4(a). Each Party will bear all expenses it incurs
in regard to participating in all meetings of the JPT, including all travel and living expenses. 

[***]
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        3.4    Alliance Managers.    Promptly after the Effective Date, each
Party shall appoint an individual (who may or may not be an existing member of the JRC) to act as alliance manager for such Party (each, an
"Alliance Manager"). Each Alliance Manager shall thereafter be permitted to attend meetings of the JRC as a nonvoting observer (unless such Alliance
Manager is a member of the JRC), subject to the confidentiality provisions of Article 9. The Alliance Managers shall be the primary point of contact for the Parties regarding the collaboration
activities contemplated by this Agreement and shall facilitate all such activities hereunder including the exchange of Information described in Section 2.6.4. The Alliance Managers shall also
be responsible for assisting the JRC in performing its oversight responsibilities. The name and contact information for such Alliance Managers, as well as any replacement(s) chosen by Anacor or GSK,
in their sole discretion, from time to time, shall be promptly provided to the other Party in accordance with Section 14.7 of this Agreement. 

 ARTICLE 4  

 GRANT OF RIGHTS  

        4.1    Options.    

        4.1.1  Anacor hereby grants to GSK the exclusive right, exercisable at GSK's sole discretion pursuant to the Options in
Section 4.2 below, to elect to include any or all of the following as GSK Development Compounds: 

        (a)   With respect to [***]; 

        (b)   With respect to [***]; 

        (c)   With respect to [***]; and 

        (d)   With respect to [***]. 

        4.1.2  During the Research Collaboration Term, Anacor will not grant to any Third Party rights to any Anacor IP that are
inconsistent with or would interfere with the grant of the licenses resulting from the
exercise of the Options to GSK hereunder. Subject to Section 5.3.2, any Option exercised by GSK shall be irrevocable. 

[***]
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        4.2    Options.    

        4.2.1    Exercise and Expiration of Options.    

        (a)   Subject to Section 4.2.2 and only as to [***] only, within the
[***] on which the JRC confirms that a Collaboration Compound satisfies the applicable Candidate Selection Criteria as provided in this Agreement (the
"Candidate Selection Option Deadline Period"), GSK may in its sole discretion exercise its exclusive option (the "Candidate
Selection Option") to develop and commercialize such Candidate Selection Compound, [***] related thereto and all other Collaboration Compounds as
provided in Section 4.1.1(a)(iii) (collectively, the "Candidate Selection Option Compounds") as GSK Development Compounds by delivering to Anacor
a written notice of GSK's exercise of the Candidate Selection Option prior to the expiration of the Candidate Selection Option Deadline Period, specifying the Candidate Selection Option Compounds for
which such Candidate Selection Option is being exercised. Upon GSK's exercise of its Candidate Selection Option as provided herein, such Candidate Selection Compound (and all other Candidate Selection
Option Compounds) shall be deemed GSK Development Compounds, GSK shall have no further Options with respect to [***] and the Research Collaboration Term shall expire with
respect to [***]. In the event that GSK does not deliver written notice of exercise of the Candidate Selection Option with respect to such Candidate Selection Compound prior to
the expiration of the Candidate Selection Option Deadline Period, the Candidate Selection Option with respect to such Candidate Selection Compound (and all other Candidate Selection Option Compounds)
shall expire and such Candidate Selection Compound (and all other Candidate Selection Option Compounds) will continue to be progressed by Anacor under the Research Collaboration pursuant to this
Agreement, the Research Plan and as directed by the JRC and JPT. Notwithstanding anything contained herein to the contrary, GSK shall also have a right to exercise the Candidate Selection Option with
respect to all Projects and all TPP Subprograms hereunder pursuant to the terms set forth in Section 14.5, even if the JRC has not confirmed that a Collaboration Compound with respect to a
Project or TPP Subprogram has achieved the Candidate Selection Criteria. In the event that GSK exercises the Candidate Selection Option pursuant to the terms set forth in Section 14.5, the
Leading
Compound with respect to such the applicable Project or, in the case of Projects 2 and 4, the applicable TPP Subprogram, shall be deemed to be a Candidate Selection Compound for the purpose of
Section 4.1, and "Candidate Selection Option Compounds" shall be defined as such [***] related thereto, and all other
Collaboration Compounds as provided in Sections 4.1.1(a)(iii), (b)(iii), (c)(iii) and (d)(iii), as applicable. 

[***]
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        (b)   Subject to Section 4.2.2 and with respect to [***] after the date on which the JRC
confirms that a Collaboration Compound satisfies the applicable PoC Criteria as provided in this Agreement (the "PoC Option Deadline Period"), GSK may
in its sole discretion exercise its exclusive option (the "PoC Option") to develop and commercialize such PoC Compound, [***]
related thereto, and all other Collaboration Compounds as provided in Sections 4.1.1(a)(iii), (b)(iii), (c)(iii) and (d)(iii), as applicable (collectively, the "PoC
Option Compounds"), as GSK Development Compounds by delivering to Anacor a written notice of GSK's exercise of the PoC Option prior to the expiration of the PoC Option Deadline
Period, specifying the PoC Option Compounds for which such PoC Option is being exercised. Upon GSK's exercise of its PoC Option as provided herein, (i) such PoC Option Compounds shall be deemed
GSK Development Compounds, (ii) and GSK shall have no other Options with respect to Project 1 or 3, as applicable, (iii) GSK shall have no other Options with respect to the TPP
Subprogram for which the Option was exercised in Project 2 or 4, as applicable, and (iv) the Research Collaboration Term shall expire with respect to Project 1 or 3, as applicable. In the event
that GSK does not deliver written notice of exercise of the PoC Option with respect to such PoC Compound prior to the expiration of the PoC Option Deadline Period, the PoC Option with respect to such
PoC Compounds shall expire, Anacor will thereafter have all rights, itself or with or through an Affiliate or Third Party, as provided in Section 5.3.1, to develop and commercialize such PoC
Compound as an Anacor Development Compound at Anacor's sole expense, subject to any applicable milestone and royalty payments set forth in Section 6.6 if GSK grants Anacor the license set forth
in Section 5.3.1, and all of the other PoC Option Compounds will continue to be progressed by Anacor under the Research Collaboration as provided in this Agreement, the applicable Research Plan
and as directed by the JRC (and the JPT in the case of Project 1). 

        (c)   For clarity, GSK shall have the right prior to the expiration of the Research Collaboration Term to exercise
[***]. 

        (d)   Following exercise of an Option, GSK shall have sole responsibility for the further development, manufacturing, and
registration of the Collaboration Compounds that became GSK Development Compounds as a result of an Option exercise (including clinical activities and submissions to regulatory agencies) pursuant to
the terms of this Agreement. 

        (e)   With respect to Projects 1 and 3, in the event that there are any unexercised Options with respect to such Project(s)
upon the expiration of the Research Collaboration Term with respect to such Projects, GSK shall have the right, exercisable in its sole discretion during [***] after the end of
the Research Collaboration Term with respect to such Project(s) and upon prior written notice to Anacor, to elect to have any Collaboration Compounds included in such Project(s)
[***], as confirmed by the JRC. In the event that GSK makes the election as provided herein with respect to Project 1 and/or 3 [***]. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        (f)    With respect to each TPP Subprogram for Projects 2 and 4, in the event that there are any unexercised Options with
respect to such TPP Subprogram(s) in such Project(s) upon the expiration of the Research Collaboration Term with respect to such Projects GSK shall have the right, exercisable in its sole discretion
during the [***] after the end of the Research Collaboration Term with respect to such Project(s) and upon prior written notice to Anacor, to elect to have any Collaboration
Compounds included in such TPP Subprogram(s) [***]. In the event that GSK makes the election as provided herein with respect to a TPP Subprogram in Project 2 and/or 4
[***]. 

        4.2.2    HSR and Equivalent Foreign Laws.    If GSK reasonably determines in good faith prior
to the expiration of the applicable Option Deadline Period that the exercise of any Option by GSK under this Agreement is required to be filed with the Federal Trade Commission (the
"FTC") under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. §18a)
("HSR") or with equivalent foreign governmental authorities under any similar foreign law, the applicable Option Deadline Period shall be extended
automatically by [***] from the original expiration of the applicable Option Deadline Period (the "Option Deadline Extension
Period") in the event that: (i) the HSR (or similar foreign law) initial waiting period is still pending as of the original date of the expiration of the Option Deadline
Period; or (ii) a "Second Request" to which GSK intends to respond is received from the FTC (or equivalent foreign authority) in connection with such filing and clearance has not been granted
as of the Option Deadline Period. In the event that HSR (or similar foreign law) clearance has still not been granted as of the expiration of the Option Deadline Extension Period, Anacor and GSK shall
promptly meet to discuss in good faith whether an additional extension of the Option Deadline Extension Period is required. In such event, such extension of the Option Deadline Extension Period shall
only be effective with the mutual written approval of the Parties, not to be withheld by Anacor if GSK can demonstrate a credible basis to believe, based on documented correspondence from the FTC (or
equivalent foreign authority) that such HSR (or similar foreign law) clearance is or will more likely than not be forthcoming. In the event that HSR (or similar foreign law) clearance is not granted
upon expiration of the applicable Option Deadline Extension Period, the applicable Option shall be deemed to have expired unexercised. 

        4.3    License Grants.    

        4.3.1    Research Collaboration.    

        (a)   GSK hereby grants to Anacor a non-exclusive, non-royalty bearing license under the GSK IP, solely
as and to the extent necessary or important to conduct activities for which Anacor is responsible under the Research Plans during the Research Collaboration Term. 

        (b)   Anacor hereby grants to GSK a non-exclusive, non-royalty bearing license under the Anacor IP,
solely as and to the extent necessary or important to conduct activities for which GSK is responsible under the Research Plans during the Research Collaboration Term. 

        4.3.2    Development and Commercialization.    Subject to the terms and conditions of this
Agreement and upon GSK's exercise of the relevant Option in accordance with Section 4.2, Anacor shall be hereby deemed to have granted and hereby grants to GSK the exclusive (even as to Anacor)
right and license in the Territory, with the right to grant sublicenses, under the Anacor IP to make, have made, use, sell, offer for sale and import the GSK Collaboration Compounds as and into
Products in the Field during the Term. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

27

 

        4.4    Technology Transfer after GSK's Option
Exercise.    [***] after GSK exercises its Option for any GSK Development Compounds pursuant to Section 4.2 or Section 14.5, or
after GSK's exercise of its rights under Sections 2.4.2, 4.2.1(e) or 4.2.1(f), Anacor shall deliver to GSK, at no cost to GSK, all Information and material in its possession and Control
relating to such GSK Development Compounds. Anacor shall use commercially reasonable efforts with respect to those activities for which it is responsible to ensure orderly transition and uninterrupted
development of the GSK Development Compounds. Anacor shall use commercially reasonable efforts to cooperate with GSK to provide GSK, at no cost to GSK, with any other Information relating to such GSK
Development Compound as may be developed or identified by Anacor during the Term, to the extent that GSK has a license under this Agreement to such Information. 

        4.5    Third Party Licenses.    

        4.5.1  Anacor shall be solely responsible for satisfying all costs and payments of any kind (including all upfront fees,
annual payments, milestone payments and royalty payments) for any license(s) required from a Third Party for (i) use of any Collaboration Compounds in connection with a Project, or
(ii) the use of Anacor's proprietary boron chemistry platform technology as contemplated hereunder for the discovery, research, manufacture or use of Collaboration Compounds or Targets in a
Project, in either case prior to the expiration of the Research Collaboration Term with respect to such Project. In addition, Anacor shall be solely responsible for satisfying all costs and payments
of any kind (including all upfront fees, annual payments, milestone payments and royalty payments) for any license from a Third Party to Anacor that exists as of the Effective Date. Notwithstanding
anything to the contrary herein, this Section 4.5.1 does not apply to any license from a Third Party to GSK that exists as of the Effective Date, and GSK (and not Anacor) shall be solely
responsible for satisfying all costs and payments of any kind thereunder. 

        4.5.2  If GSK determines that it needs to obtain one or more licenses from one or more Third Parties (other than any license
described in Section 4.5.1) to manufacture or commercialize any GSK Development Compound, GSK shall inform Anacor. Anacor shall have the first right to obtain such license(s). In the event that
Anacor obtains such a license, any Patents and/or Know-How licensed to Anacor under such license shall be deemed to be Anacor Collaboration IP, and all costs and expenses incurred by
Anacor under such license(s) shall be [***] by Anacor and GSK. In the event that Anacor decides not to pursue such license(s), GSK may do so. To the extent a license obtained
by GSK pursuant to this Section 4.5.2 is a Necessary License, GSK shall be entitled to the credit set forth in Section 6.5.3(c). 

        4.5.3  Except as set forth in Sections 4.5.1 and 4.5.2, GSK shall be [***] responsible for
obtaining any licenses from Third Parties that GSK determines, in its sole discretion, are required in order to lawfully research, develop, manufacture, and commercialize GSK Development Compounds and
Products in the Field in the Territory. GSK shall be [***] responsible for any costs associated with such licenses, subject to the royalty adjustment set forth in
Section 6.5.3(c), if applicable. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

28

 
 ARTICLE 5  

 POST-RESEARCH COLLABORATION ACTIVITIES  

        5.1    GSK Development and Commercialization.    Following exercise of
an Option with respect to GSK Development Compounds for a Project, GSK, either itself and/or by and through its Affiliates, Sublicensees or contractors, shall be responsible for all development,
manufacturing, marketing, advertising, promotional, launch and sales activities in connection with the marketing of such GSK Development Compounds and Products containing same. Except as set forth in
Sections 4.4 and 4.5, all costs associated with such activities shall be borne solely by GSK. 

        5.2    GSK Diligence.    Following GSK's exercise of an Option with
respect to GSK Development Compounds for a Project, GSK shall use Diligent Efforts to develop and commercialize such GSK Development Compounds. 

        5.3    Anacor Development Compounds.    

        5.3.1    Option Expiration.    In the event that the PoC Option Deadline Period expires
without GSK having exercised its PoC Option with respect to a particular PoC Compound, Anacor shall have the exclusive right, at its sole discretion, to develop such PoC Compound in the Territory in
the Field as an Anacor Development Compound and a Product, alone or with any Third Party or through any Sublicensee. GSK will have no further obligations to make milestone payments to Anacor for such
Anacor Development Compound. Upon a written request from Anacor, GSK hereby grants to Anacor, conditional upon Anacor's request within [***] following the expiration of such
PoC Option Deadline Period, a non-exclusive license, with the right to grant sublicenses, under the GSK IP for the use, manufacture, sale or commercialization of such Anacor Development
Compound, to further develop and commercialize such Anacor Development Compound as a Product in the Territory in the Field. Solely in the event that Anacor requests and receives such license from GSK,
Anacor shall owe to GSK the applicable milestone and royalty payments set forth in Article 6 for such Anacor Development Compound. In the event that Anacor does not request, within
[***] following the expiration of such PoC Option Deadline Period, a non-exclusive, sublicensable license under the GSK IP as provided herein, GSK shall be
free to grant to any Third Party rights under the GSK IP for the use, manufacture, sale or commercialization of such Anacor Development Compound. 

        5.3.2    GSK Development Termination.    After exercising an Option with respect to a
particular set of GSK Development Compounds (i.e., a particular Collaboration Compound, Back-Up Compounds related thereto, and in the case of Project 1, Follow-On
Compounds related thereto), GSK may, at its sole discretion and without any penalty or liability, terminate its development or commercialization of the GSK Development Compounds for a Project upon
written notice to Anacor. In such event: (a) all licenses in and to the Anacor IP for such GSK Development Compounds granted to GSK by Anacor shall be immediately terminated, and (b) GSK
(i) hereby grants, conditional upon the occurrence of such termination, an exclusive license, with the right to grant sublicenses, to Anacor under GSK IP for the use, manufacture, sale or
commercialization of such Anacor Development Compound to further develop and commercialize such Anacor Development Compound as a Product in the Territory in the Field, (ii) shall transfer to
Anacor, as soon as reasonably practicable after such termination, all Information and material in its possession and Control with respect to such Anacor Development Compound, and (iii) shall
assign to Anacor any regulatory filings related to such Anacor Development Compound. In the event of such termination, Anacor shall owe to GSK the applicable milestone and royalty payments set forth
in Article 6 for such Anacor Development Compound. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

29

 

        5.4    Safety Data Exchange.    The Parties shall negotiate in good
faith a safety data exchange agreement with respect to a Product promptly following the earlier of (a) exercise of an Option with respect to such Product, or (b) notice from a Party not
then conducting clinical studies of plans to initiate a clinical study with respect to such Product. The safety data exchange agreement shall facilitate management of safety for all Products covered
under such agreement in accordance with standards which are no less stringent than in the ICH guidelines such that the Parties would be able to comply with all regulatory and legal requirements
regarding the management of safety data by providing for the exchange of relevant information in appropriate format within applicable timeframes. 

 ARTICLE 6  

 MILESTONES AND ROYALTIES; PAYMENTS  

        6.1    Upfront Payment.    GSK shall pay to Anacor a
non-refundable, non-creditable payment of Twelve Million Dollars ($12,000,000) within ten (10) calendar days after receipt of an invoice from Anacor. 

        6.2    Purchase of Stock.    Upon Anacor's request, GSK shall purchase
a total of Ten Million Dollars ($10,000,000) of Anacor equity in the first round of financing by Anacor after the Effective Date that is either (a) an initial public offering or (b) a
private equity offering led by an independent investor and in which GSK's investment is less than fifty (50%) of the total funding in the financing with rights (other than board representation and
visitor rights) that are pari passu with the investors in such financing. Such purchase and issuance of Anacor equity shall be subject to the terms of a mutually agreed separate stock purchase
agreement and other agreements and related documents executed pursuant thereto. In the event of a registered public offering, including an initial public offering, GSK agrees that any shares purchased
pursuant to the equity commitment hereunder that are not part of the initial public offering shall be subject to the same lock-up and underwriter offering limitations required of the other
stockholders of Anacor. In the event of a private offering, GSK agrees that any shares purchased pursuant to the equity commitment hereunder shall be parri passu with other preferred shareholders
purchasing in the same offering as GSK. 

        6.3    Development Milestones Payable by GSK to Anacor.    

        6.3.1    Project 1.    GSK shall make the non-refundable,
non-creditable milestone payments to Anacor that are set forth below in either Section 6.3.1(a) or Section 6.3.1(b), as applicable, upon occurrence of the corresponding
milestone event with respect to a Collaboration Compound resulting from Project 1. Such payments shall be subject to the additional terms and conditions set forth in Sections 6.3.1(c), 6.3.5,
6.8, 6.10 and 6.12. 

        (a)   Candidate Selection Option.    The following milestones shall apply in the event that GSK exercises the
Candidate Selection Option with respect to a Collaboration Compound resulting from Project 1. 

 

 

					
	Event

 
	 	Payment 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

 

 [***]

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

30

 

        (b)   PoC Option.    The following milestones shall apply in the event that GSK exercises the PoC Option with respect
to a Collaboration Compound resulting from Project 1. 

 

 

					
	Event

 
	 	Payment 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

 

 [***]

        (c)   Clarification.    [***] 

        6.3.2    Project 2.    GSK shall make the non-refundable,
non-creditable milestone payments to Anacor that are set forth below in either Section 6.3.2(a) or Section 6.3.2(b) as applicable, upon occurrence of the corresponding
milestone event with respect to a Collaboration Compound resulting from Project 2. Such payments shall be subject to the additional terms and conditions set forth in Sections 6.3.2(c),
6.3.2(d), 6.3.5, 6.8, 6.10 and 6.12. 

        (a)   Candidate Selection Option.    The following milestones shall apply in the event that GSK exercises the
Candidate Selection Option with respect to a Collaboration Compound resulting from a TPP Subprogram in Project 2. For clarity, the Candidate Selection Option milestone payments shall only apply
pursuant to Section 14.5. 

 

 

					
	Event

 
	 	Payment 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

 

 [***]

        (b)   PoC Option.    The following milestones shall apply in the event that GSK exercises the PoC Option with respect
to a Collaboration Compound resulting from a TPP Subprogram in Project 2. 

 

 

					
	Event

 
	 	Payment 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

 

 [***]

        (c)   Clarification.    [***] 

        (d)   Milestone Payment Reduction.    The milestones in Section 6.3.2(a) and 6.3.2(b) above assume that the
Collaboration Compound, GSK Development Compound or Product that incorporates a GSK Development Compound has a [***]. 

 

 

					
	Target Product Profile

 
	 	Milestone Reduction 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

 

 [***]

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

31

 

        6.3.3    Project 3.    GSK shall make the non-refundable,
non-creditable milestone payments to Anacor that are set forth below in either Section 6.3.3(a) or Section 6.3.3(b), as applicable, upon the occurrence of the corresponding
milestone event with respect to a Collaboration Compound resulting from Project 3. Such payments shall be subject to the additional terms and conditions set forth in Sections 6.3.3(c),
6.3.3(d), 6.3.5, 6.8, 6.10 and 6.12. 

        (a)   Candidate Selection Option.    The following milestones shall apply in the event that GSK exercises the
Candidate Selection Option with respect to a Collaboration Compound resulting from Project 3. For clarity, the Candidate Selection Option milestone payments shall only apply pursuant to
Section 14.5. 

 

 

					
	Event

 
	 	Payment 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

 

 [***]

        (b)   PoC Option.    The following milestones shall apply in the event that GSK exercises the PoC Option with respect
to a Collaboration Compound resulting from Project 3. 

 

 

					
	Event

 
	 	Payment 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

 

 [***]

        (c)   Clarification.    [***] 

        (d)   Milestone Payment Reduction.    Notwithstanding anything to the contrary in Section 6.3.3(c) above,
[***]. 

        6.3.4    Project 4.    GSK shall make the non-refundable,
non-creditable milestone payments to Anacor that are set forth below in either Section 6.3.4(a) or Section 6.3.4(b), as applicable, upon the occurrence of the corresponding
milestone event with respect to a Collaboration Compound resulting from Project 4. Such payments shall be subject to the additional terms and conditions set forth in Sections 6.3.4(c) (if
applicable), 6.3.4(d) (if applicable), 6.3.4(e) (if applicable), 6.3.5, 6.8, 6.10 and 6.12. 

        (a)   Candidate Selection Option.    The following milestones shall apply in the event that GSK exercises the
Candidate Selection Option with respect to a Collaboration Compound resulting from Project 4. For clarity, the Candidate Selection Option milestone payments shall only apply pursuant to
Section 14.5. 

 

 

					
	Event

 
	 	Payment 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 

 

 [***]

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

32

 

 

        (b)   PoC Option.    The following milestones shall apply in the event that GSK exercises the PoC Option with respect
to a Collaboration Compound resulting from Project 4. 

 

 

					
	Event

 
	 	Payment 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 

 

 [***]

        (c)   Clarification.    [***] 

        (d)   Milestone Payment Reduction.    The milestones in Section 6.3.4(a) and 6.3.4(b) above assume that the
[***]. 

 

 

					
	Target Product Profile

 
	 	Milestone Reduction 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 

 

 [***]

        (e)   Anti-viral Target.    In the event that the Designated Target is an anti-viral target,
the milestone amounts set forth in this Section 6.3.4 shall be the same as the milestone amounts that would have been applicable had the relevant Collaboration Compound, GSK Development
Compound or Product that incorporates a GSK Development Compound been [***]. 

        6.3.5    Milestone Event Definitions.    

        (a)   The phrase [***] as used in this Article 6 means the date on which
[***]. 

        (b)   The phrase [***] as used in this Article 6 means the date on which
[***]. 

        (c)   The phrase [***] as used in this Article 6 means with respect to
[***], the date on which GSK sends written notice to Anacor that GSK is [***], in accordance with Section 4.2.1(a). 

        (d)   The phrase [***] as used in this Article 6 means the date on which Anacor or its Affiliate
or Sublicensee or GSK or its Affiliate or Sublicensee, as applicable, receives written notice from the [***] or its Affiliate or Sublicensee or by or on behalf of GSK or its
Affiliate or Sublicensee, as applicable, to commercialize the [***] that incorporates a particular Anacor Development Compound or GSK Development Compound, as applicable, in
the Field in the [***]. 

        (e)   The phrase [***] as used in this Article 6 means the date by which GSK or its Affiliate or
Sublicensee has received (i) written notice from [***]. 

        (f)    The phrase [***] as used in this Article 6 means the date on which GSK receives written
notice from [***]. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

33

 

        6.4    Commercialization Milestones.    GSK shall pay to Anacor,
[***]. 

 

 

					
	Event

 
	 	Payment 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 

 

 [***]

        6.5    Royalties.    

        6.5.1    Project 1.    Subject to Section 6.5.3, 6.9, 6.10 and
6.12, with respect to Products containing GSK Development Compounds arising solely out of Project 1, GSK shall pay to Anacor [***] in the Territory at the royalty rates as set
forth in the table below. The applicable royalty rates for a particular Product shall depending on whether GSK elected the GSK Development Compound contained in such Product by exercising a Candidate
Selection Option or a PoC Option. 

 

 

								
	Annual Net Sales in the Territory

 
	 	Royalty Rate—[***]

Option(1) 	 	Royalty Rate—[***]

Option 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 

 

 [***]

        6.5.2    Projects 2, 3 and 4.    Subject to Section 6.5.3, 6.9,
6.10 and 6.12, with respect to Products containing GSK Development Compounds arising out of Project 2, Project 3 or Project 4, GSK shall pay to Anacor [***] in the Territory at
the royalty rates as set forth in the table below. The applicable royalty rates for a particular Product shall depend on whether GSK elected the GSK Development Compound contained in such Product by
exercising a Candidate Selection Option or a PoC Option. 

 

 

								
	Annual Net Sales in the Territory

 
	 	Royalty Rate—[***]

Option(1) 	 	Royalty Rate—[***]

Option 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 

 

 [***]

        6.5.3    Royalty Adjustments.    

        (a)   Know-How Royalty.    If, on a country-by-country and
Product-by-Product basis, there is no Valid Claim of an issued Patent Controlled by Anacor or Controlled jointly by GSK and Anacor that in either case covers
[***] the GSK Development Compound included in such Product, either at the time of First Commercial Sale or anytime thereafter, then GSK shall have no obligation to pay to
royalties on Net Sales of such Product in such country at the royalty rates set forth in Sections 6.5.1 or 6.5.2, but rather, subject to Section 6.5.3(b), GSK shall pay to Anacor a
know-how royalty on Net Sales of such Product in such country at a royalty rate [***] as set forth in the tables in Sections 6.5.1 and 6.5.2 above. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

34

 

        (b)   Royalty Reduction for Competition.    If at any such time that a Generic Product having the same or
substantially the same active ingredient as a Product incorporating the GSK Development Compound enters the market in a given country, and such Generic Product(s) accounts for
[***] of Product and Generic Product in the given country, the royalty rates set forth in Sections 6.5.1, 6.5.2, or 6.5.3, as applicable, shall be
[***]. 

        (c)   Necessary Licenses.    If a Patent or Patents of a Third Party should exist in any country during the Term
covering the composition of matter or manufacture of a GSK Development Compound, or the use of a GSK Development Compound in the Field, and GSK determines in good faith and in its sole discretion that
it would be impractical or impossible for GSK or any Affiliate manufacture or commercialize such GSK Development Compound without obtaining a royalty bearing license from such Third Party under such
Patent or Patents in a particular country (a "Necessary License"), then GSK shall be entitled to a credit, against the any royalty payments due to
Anacor upon sales of a Product containing such GSK Development Compound in such country, of an amount [***] to a Third Party under such Necessary License based upon the sales
of such Product in such country, such credit not to [***] that would otherwise be due to Anacor on Net Sales of such Product. 

        6.5.4    Royalty Term.    The royalties due under Section 6.5.1
or 6.5.2 with respect to a Product, even if reduced as provided in Section 6.5.3(b) or (c), shall commence upon the First Commercial Sale of such Product in a particular country in the
Territory and will expire on a country-by-country basis upon the expiration in such country of the last to expire Valid Claim of an issued Patent Controlled by Anacor or
Controlled jointly by GSK and Anacor [***] the GSK Development Compound included in such Product. The royalties due under Section 6.5.3(a) with respect to a Product,
even if reduced as provided in Section 6.5.3(b) or (c), shall commence on a country-by-country basis upon the expiration in such country of the last to expire Valid
Claim of an issued Patent Controlled by Anacor or Controlled jointly by GSK and Anacor [***] the GSK Development Compound included in such Product or, if no such Valid Claim
exists at the time of First Commercial Sale in a particular country in the Territory, upon the First Commercial Sale of such Product in such country, and such royalties due under
Section 6.5.3(a) with respect to such Product shall continue thereafter; provided, however, that in no event GSK shall have any obligation to pay a royalty to Anacor as provided in
Section 6.5.3(a) during the period that is more [***] in such country. The period during which GSK is paying any royalty to Anacor as provided in this Section 6.5
is referred to in this Agreement as the "Royalty Term"). 

        6.6    Payments by Anacor—No Exercise of Option by
GSK.    With respect to any Collaboration Compound that becomes an Anacor Development Compound upon GSK's failure to exercise its Option with respect thereto and that
Anacor elects to develop and/or commercialize
pursuant to license granted by GSK (at Anacor's request) under the GSK IP pursuant to Section 5.3.1, Anacor shall pay the following milestone and royalty payments set forth in
Sections 6.6.1 and 6.6.2 as consideration for such license. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

35

 

        6.6.1    Development Milestones.    Anacor shall make each of the
following one-time, non-refundable, non-creditable milestone payments to GSK that are set forth below following the first achievement of the corresponding milestone
event with respect to the first (1st) Product that incorporates an Anacor Development Compound. Such payments shall be subject to the terms and conditions set forth in
Section 6.3.5, 6.8, 6.10 and 6.12. 

 

 

					
	Event

 
	 	Payment 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 

 

 [***]

        6.6.2    Royalties.    For the period specified below and subject to
Section 6.3.5, 6.6.3, 6.9, 6.10 and 6.12, Anacor shall pay to GSK a [***] incorporating an Anacor Development Compound, at the following royalty rates: 

        (a)   [***] if the Anacor Development Compound incorporated in such Product arose out of Project 1; and 

        (b)   [***] for all other Products. 

Royalties
due under this Section 6.6.2 with respect to a Product incorporating an Anacor Development Compound shall commence upon [***] of such Product in a particular
country in the Territory and will expire on a country-by-country basis upon the expiration in such country of the last to expire Valid Claim of an issued Patent Controlled by
GSK or Controlled jointly by GSK and Anacor that [***] the Anacor Development Compound included in such Product. 

        6.6.3    Royalty Adjustment.    If, in a particular country, there is
no Valid Claim of an issued Patent Controlled by GSK or Controlled jointly by GSK and Anacor that [***] the Anacor Development Compound included in the Product either at the
time of First Commercial Sale or anytime thereafter, then the royalty rate to be paid by Anacor to GSK on Net Sales of such Product in such country shall be [***]; provided,
however, that in no event Anacor shall have any obligation to pay a royalty to GSK as provided in this Section 6.6.3 during the period that is more than [***] in such
country. 

        6.7    Payments by Anacor—Post-Option Termination by
GSK.    With respect to any GSK Development Compound that becomes an Anacor Development Compound upon GSK's termination of its rights with respect to such GSK
Development Compound following Option exercise
and that Anacor elects to develop and/or commercialize under the license granted by GSK (at Anacor's request) pursuant to Section 5.3.2, Anacor shall owe the payments set forth in
Sections 6.7.1 and 6.7.2 as consideration for such license. 

        6.7.1    Development Milestones.    

        (a)   If GSK terminated development of a GSK Development Compound that is now such Anacor Development Compound
[***] with respect thereto, [***]. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

36

 

        (b)   If GSK terminated development of a GSK Development Compound that is now such Anacor Development Compound
[***] with respect thereto but [***] with respect thereto, Anacor shall make each of the following one-time, non-refundable,
non-creditable milestone payments to GSK after first achievement of the corresponding milestone event with respect to such first (1st) Product that incorporates such Anacor
Development Compound. Such payments shall be subject to the terms and conditions set forth in Section 6.3.5, 6.8, 6.10 and 6.12. 

 

 

					
	Event

 
	 	Payment 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 

 

 [***]

        (c)   If GSK terminated development of a GSK Development Compound that is now such Anacor Development Compound
[***] with respect thereto, Anacor shall make each of the following one-time, non-refundable, non-creditable milestone payments to GSK after
first achievement of the corresponding milestone event with respect to the first (1st) Product that incorporates such Anacor Development Compound. Such payments shall be subject to the
terms and conditions set forth in Section 6.3.5, 6.8, 6.10 and 6.12. 

 

 

					
	Event

 
	 	Payment 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 

 

 [***]

        6.7.2    Royalties.    For the period specified below and subject to
Section 6.3.5, 6.7.3, 6.9, 6.10 and 6.12, Anacor shall pay to GSK a [***] incorporating any such Anacor Development Compound, at the following royalty rates: 

        (a)   [***] if GSK terminated development of the GSK Development Compound that is now such Anacor
Development Compound [***] with respect thereto; 

        (b)   [***] if GSK terminated development of the GSK Development Compound that is now such Anacor
Development Compound [***] with respect thereto but [***] with respect thereto; and 

        (c)   [***] if GSK terminated development of the GSK Development Compound that is now such Anacor
Development Compound [***] with respect thereto. 

Royalties
due under this Section 6.7.2 with respect to a Product incorporating an Anacor Development Compound shall commence upon [***] in a particular country in the
Territory and will expire on a country-by-country basis upon the expiration in such country of the last to expire Valid Claim of an issued Patent Controlled by GSK or
Controlled jointly by GSK and Anacor that [***] the Anacor Development Compound included in such Product. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

37

 

        6.7.3    Royalty Adjustment.    If, in a particular country, there is
no Valid Claim of an issued Patent Controlled by GSK or Controlled jointly by GSK and Anacor that [***] of the Anacor Development Compound included in the Product either at the
time of First Commercial Sale or anytime thereafter, then the royalty rate to be paid by Anacor to GSK on Net Sales of such Product in such country shall be reduced as follows; provided, however ,
that in no event GSK shall have any obligation to pay a royalty to Anacor as provided in this Section 6.7.3 during the period that is [***] in such country: 

        (a)   [***] if GSK terminated development of a GSK Development Compound that is now such Anacor
Development Compound [***] with respect thereto; 

        (b)   [***] if GSK terminated development of such Anacor Development Compound
[***] with respect thereto but [***] with respect thereto; 

        (c)   [***] if GSK terminated development of such Anacor Development Compound
[***] with respect thereto. 

        6.8    Reports and Payment of Milestones.    Anacor shall notify GSK
in writing promptly, but in no event later than [***], after each achievement of (a) the [***] milestone set out in Section 6.3 that
triggers a milestone payment as set forth in Section 6.3 (to the extent achieved by Anacor or its Affiliate or Sublicensee), and (b) each milestone event set forth in Sections 6.6
and 6.7. GSK shall notify Anacor in writing promptly, but in no event later than [***], after the achievement of all other milestones in Section 6.3. GSK shall pay the
appropriate milestone payments due for [***] or [***] as set forth in Section 6.3 within [***] after it notifies Anacor
that it has exercised the applicable Option, as provided in Section 4.2, and GSK shall pay all other milestone payments due within [***] after receipt of an invoice
therefore from Anacor following the achievement of the corresponding milestone event (or [***] in the case of the milestone described in Section 6.8(a)). Anacor shall
pay the appropriate milestone payment as set forth in Sections 6.6 and 6.7 within [***] after receipt of an invoice therefor from GSK following the achievement of the
corresponding milestone event. 

        6.9    Reports; Royalty Payments.    Until the expiration of a Party's
royalty obligations under this Article 6, such Party agrees to make written reports to the other Party within [***] after the end of each Calendar Quarter covering all
sales of Products in the Territory by such Party, its Affiliates and Sublicensees for which invoices were sent during such Calendar Quarter, each such written report in reasonable detail as available
to such Party stating for the period in question: (a) the total Net Sales for each Product (including an itemization of the deductions applied to such gross sales to derive such Net Sales); and
(b) a calculation of the amount of royalty payment due on such Net Sales pursuant to Article 6. The information contained in each report under this Section 6.9 shall be considered
Confidential Information of the Party providing the report. Concurrent with the delivery of each such report, the Party delivering such report shall make the royalty payment due the other Party under
Article 6 for the Calendar Quarter covered by such report. In the case of transfers or sales of any Product between the royalty-paying Party and an Affiliate or Sublicensee of such Party, a
royalty shall be payable only with respect to the sale of such Product to an independent Third Party not an Affiliate or sublicensee of the seller. 

        6.10    Methods of Payments.    All payments due from one Party (the
"Payor") to the other Party (the "Payee") under this Agreement shall be paid in Dollars by wire transfer
to a bank in the United States designated in writing by Anacor. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

38

 

        6.11    Accounting.    Payor agrees to keep full, clear and accurate
records for a maximum period of [***] after the relevant payment is owed pursuant to this Agreement, setting forth the sales and other disposition of Product sold or otherwise
disposed of in sufficient detail to enable royalties and compensation payable to the Payee hereunder to be determined. Payor further agrees, upon not less than [***] prior
written notice, to permit the books and records relating to such [***] period to be examined by an independent accounting firm selected by Payee and reasonably acceptable to
Payor for the purpose of verifying reports provided by Payor under Section 6.9. Such audit shall not be performed more frequently than once per calendar year and shall be conducted under
appropriate confidentiality provisions, for the sole purpose of verifying the accuracy and completeness of all financial, accounting and numerical information and calculations provided under this
Agreement. Such examination is to be made at the expense of Payee, except in the event that the results of the audit reveal an underpayment of royalties, milestones, or other payments to Payee under
this Agreement of [***] for more over the period being audited, in which case reasonable audit fees for such examination shall be paid by Payor. When calculating Net Sales, the
amount of such
sales in foreign currencies shall be converted into Dollars using the standard methodologies employed by Payor for consolidation purposes. Payor shall provide reasonable documentation of the
calculation and reconciliation of the conversion figures on a country-by-country basis as part of its report of Net Sales for the period covered under the report. 

        6.12    Taxes.    If a law or regulation of any country of the
Territory requires withholding of taxes of any type, levies or other charges with respect to any amounts payable hereunder to Payee, Payor shall promptly pay such tax, levy, or charge for and on
behalf of Payee to the proper governmental authority, and shall furnish Payee with documentation of such payment. Payor shall have the right to deduct any such tax, levy or charge actually paid from
payment due Payee or be promptly reimbursed by Payee if no further payments are due Payee. Payor agrees to assist Payee in claiming exemption from such deductions or withholdings under double taxation
or similar agreement or treaty from time to time in force and in minimizing the amount required to be so withheld or deducted. The recipient of any transfer under this Agreement of Patents,
Information, Collaboration Compounds, or Products, as the case may be, shall be solely responsible for any sales, use, value added, excise or other taxes applicable to such transfer. 

        6.13    Late Payments.    Any amount owed by Payor to Payee under this
Agreement that is not paid within the applicable time period set forth herein shall accrue interest at the rate of two percent (2%) above the then-applicable prime commercial lending rate
of Citibank, N.A., San Francisco, California, or, if lower, the highest rate permitted under applicable law. 

 ARTICLE 7  

 EXCLUSIVITY  

        7.1    Anacor Exclusivity.    

        7.1.1    GSK Development Compounds.    Except pursuant to this Agreement, during the Term,
Anacor shall not, either alone or with or for any Third Party, conduct any research, development, manufacturing, or commercialization activities with respect to any GSK Development Compound. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

39

 

 

        7.1.2    Collaboration Compounds.    Except pursuant to this Agreement, during the nine
(9) year period after the Effective Date, Anacor shall not, either alone or with or for any Third Party, research, optimize, develop, or commercialize (a) any Collaboration Compound in
such Project that is not an Anacor Development Compound or any Product that incorporates such a Collaboration Compound, or (b) any compound directed against a Target for such Project against
which a Collaboration Compound that is not an Anacor Development Compound is directed. For clarity, this Section 7.1.2 shall not be construed as prohibiting Anacor, either alone or with or for
any Third Party, from researching, developing or commercializing an Anacor Development Compound in the Field in the Territory. 

        7.1.3    Exceptions.    Notwithstanding the foregoing in this Section 7.1, Anacor shall
have the right to perform the following activities, either alone or with or for a Third Party: 

        (a)   Research, develop, manufacture, or commercialize compounds directed [***]. GSK hereby grants to
Anacor, a non-exclusive license, with the right to grant sublicenses, under the GSK IP solely for the use, manufacture, sale or commercialization of such [***]
product, to further develop and commercialize such [***] product in the Territory. For clarity, as used in this Section 7.1.3(a), the term [***]. 

        (b)   Research, develop, manufacture, or commercialize compounds (other than GSK Development Compounds) directed against
[***], including AN2690 and AN2718 (and any of their respective metabolites and prodrugs, or any acid forms, base forms, esters, salts, stereoisomers, racemates, tautomers and
polymorphs of any of the foregoing); 

        (c)   Conduct chemistry research against any target that, at the time Anacor initiates research on such target, is not a
Target; and 

        (d)   Continue research, and develop, manufacture, and commercialize compounds (other than GSK Development Compounds) directed
against any target referenced in Section 7.1.3(c), and Anacor may grant a Third Party a license to such compounds for any purpose, including indications in the treatment of human disease,
provided that Anacor does not initiate or conduct such research using any of GSK's Confidential Information or any Information generated pursuant to this Agreement. 

        7.2    GSK Exclusivity.    

        7.2.1    Collaboration Compounds.    Subject to Section 7.2.2, during
[***] the Effective Date, GSK shall not, either alone or with or for any Third Party, research, optimize, develop, or commercialize (a) any Collaboration Compound from
Project 2 that is not a GSK Development Compound or any product that incorporates such a Collaboration Compound, or (b) [***]. 

        7.2.2    Exceptions.    

        (a)   Section 7.2.1(b) shall not apply with respect to any compounds that are independently developed by GSK, where
"independently developed" means that GSK has in-licensed from a Third Party or developed such compound without the use of any Confidential Information of Anacor or using any Information
developed under this Agreement. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

40

 

        (b)   Notwithstanding the foregoing in this Section 7.2, GSK shall have the right to conduct non-clinical
research, either alone or with or for a Third Party, with respect to any compound described in Section 7.2.1(a) or 7.2.1(b) following the third (3rd) anniversary of GSK's exercise
of the PoC Option with respect to a GSK Development Compound arising out of Project 2, but only so long as GSK continues to use Diligent Efforts to develop and commercialize such GSK Development
Compound as described in Section 5.2. 

        7.2.3    GSK Activities.    For clarity, except as expressly stated in this
Section 7.2, GSK may, either alone or with or for any Third Party, research, optimize, develop and/or commercialize any compound directed against the Targets. 

 ARTICLE 8  

 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS  

        8.1    Ownership.    

        8.1.1    Solely-Owned Intellectual Property.    Anacor shall retain all of its rights, title
and interest in and to the Anacor IP, and GSK shall retain all of its rights, title and interest in and to the GSK IP, except to the extent that any rights or licenses are expressly granted by one
Party to the other Party under this Agreement. 

        8.1.2    Collaboration IP.    GSK shall be the sole owner of any Collaboration IP discovered,
developed, invented or created solely by or on behalf of GSK personnel, and GSK shall retain all of its rights, title and interest thereto, except to the extent that any rights or licenses are
expressly granted thereunder by GSK to Anacor under this Agreement. Anacor shall be the sole owner of any Collaboration IP discovered, developed, invented or created solely by or on behalf of Anacor
personnel, and Anacor shall retain all of its rights, title and interest thereto, except to the extent that any rights or licenses are expressly granted thereunder to GSK under this Agreement. Any
Collaboration IP that is discovered, developed, invented or created jointly by or on behalf of GSK and Anacor shall be owned jointly by GSK and Anacor, and all rights, title and interest thereto shall
be jointly owned by the Parties, except to the extent that any exclusive rights or licenses are expressly granted to a Party under this Agreement. Except as expressly provided in this Agreement,
neither Party shall have any obligation to account to the other for profits, or to obtain any consent of the other Party to license or exploit patented jointly-owned subject matter, 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 consent or accounting. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

41

 

        8.2    Prosecution and Maintenance of Patents.    

        8.2.1    Patent Filings.    The Party responsible for Prosecution and Maintenance of any
Patents as set forth in Sections 8.2.2 and 8.2.3 below (the "Prosecuting Party") shall use commercially reasonable efforts to obtain a reasonable
scope of protection for Collaboration Compounds, using counsel of its own choice but reasonably acceptable to the other Party. Each Party shall keep the other Party informed as to material
developments with respect to the Prosecution and Maintenance of such Patents, including by providing copies of all office actions or any other substantive documents that such Party receives from any
patent office, including notice of all interferences, reissues, re-examinations, oppositions or requests for patent term extensions, and by providing the other Party the timely opportunity
to have reasonable input into the strategic aspects of such Prosecution and Maintenance. In addition, Anacor will use commercially reasonable efforts to obtain a reasonable scope of protection for
Collaboration Compounds covered by any claims of the Anacor Patents, using counsel of its own choice but reasonably acceptable to GSK, and will consider and discuss in good faith reasonable comments
timely provided GSK. In light of the new prosecution rules promulgated by the United States Patent and Trademark Office, effective November 1, 2007, and the likelihood for future changes in US
Patent System and future changes to the European Patent Convention (EPC) (collectively, the "New Rules") and rules of practice in effect at the
Effective Date (together with the New Rules, the "Rules") each Party will consult with the other Party prior to the filing of any Patents on
Collaboration IP. The Parties will come to an agreement on filing strategy in view of the Rules (e.g., claim limitations and continuation
practice limitations mandated by the New Rules). In addition, the Parties will discuss in good faith with each other the breadth of any such Patent filings in countries outside of the United States.
Should the Parties fail to agree on any matter in this Section 8.2.1, such matter will be presented to the JPS for resolution. 

        8.2.2    Anacor Patents.    In recognition that one or more of the Anacor Patents is or may be
licensed to one or more Third Parties, as described in Section 8.6, during the Term Anacor shall use commercially reasonable efforts to work in consultation with GSK to Prosecute and Maintain
its Anacor Patents in a manner that reasonably separates the compounds and related rights licensed to such Third Parties from those Collaboration Compounds and related rights licensed or to be
licensed (pursuant to an Option) to GSK as contemplated by this Agreement. Such consultation with GSK shall be done in a manner allowing a reasonable opportunity by GSK and Anacor to provide input in
view of the Rules, and each Party agrees to give such input due consideration. Input shall be provided and consideration undertaken and concluded in a timely manner so as not to jeopardize the
pendency of the application under review or otherwise negatively affect or limit the rights of Anacor, GSK or any Third Party licensee of Anacor IP. Should the Parties fail to agree on any matter in
this Section 8.2.2, such matter will be presented to the JPS for resolution. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        8.2.3    Collaboration Patents.    The responsibility and strategy for Prosecution and
Maintenance of any Collaboration Patents shall be mutually agreed by GSK and Anacor. The Parties shall cooperate to prepare and Prosecute and Maintain patent applications included in the Collaboration
Patents in a manner that ensures a reasonable scope of protection for such subject matter and preserves the rights of each collaborator in the Collaboration Patents. In the event of any dispute
regarding the Prosecution and Maintenance of any Collaboration Patents and existing Third Party rights identified under Section 8.6, Anacor shall have the final say with respect to decisions
made prior to GSK's exercise of its Option with respect to such Collaboration Patents or after GSK's termination of Development, and GSK shall have final say after such exercise, with respect to those
claims that cover any Collaboration Compound as to which GSK exercises its Option; provided, however, that neither Party can make a "final say" in any
Prosecution or Maintenance matter that decreases the number of continuation applications, divisional applications or requests for continuing examination that the other Party (or any Third Party) can
Prosecute and Maintain within the Collaboration Patents. If the decision of one Party would result in loss of the other Party's right to file a continuation application, a divisional
application or a request for continuing examination within in the Collaboration Patents, the matter will be presented to the JPS for resolution. 

        8.2.4    Target IP.    Anacor shall use commercially reasonable efforts to work in
consultation with GSK to Prosecute and Maintain its Anacor Target Patents, and GSK shall use commercially reasonable efforts to work in consultation with Anacor to Prosecute and Maintain its GSK
Target Patents; provided, however, that neither Party shall be required to disclose any confidential information that is not specific to the Research Collaboration. Input shall be provided and
consideration undertaken and concluded by the Parties in a timely manner so as not to jeopardize the pendency of the application under review or otherwise negatively affect or limit the rights of any
Party hereto. Should the Parties fail to agree on any matter in this Section 8.2.4, such matter will be presented to the JPS for resolution. 

        8.2.5    Prosecution Lapse.    If, during the Term, the Party responsible for prosecuting a
Patent in the Anacor Patents or Collaboration IP intends to allow such Patent to lapse or become abandoned without having first filed a substitute, the Prosecuting Party shall, whenever practicable,
notify the other Party of such intention at least [***] prior to the date upon which such Patent shall lapse or become abandoned, and such other Party shall thereupon have the
right, but not the obligation, to assume responsibility for the Prosecution and Maintenance thereof at its own expense with counsel of its own choice. 

        8.3    Patent Costs.    

        8.3.1    Collaboration Patents.    Each Party shall be responsible for costs associated with
the Prosecution and Maintenance of any Collaboration Patents that it owns solely. Anacor and GSK shall share equally the Patent Costs associated with the Prosecution and Maintenance of Patents in the
jointly owned Collaboration Patents, unless the Parties otherwise agree. 

        8.3.2    Existing Anacor IP and GSK IP.    Anacor shall be responsible for one hundred percent
(100%) of the Patent Costs incurred by Anacor prior to and after the Effective Date in all countries in the Territory with respect to any Anacor IP. GSK shall be responsible for one hundred percent
(100%) of the Patent Costs incurred by GSK prior to and after the Effective Date in all countries in the Territory with respect to GSK IP. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

43

 

        8.3.3    Patent Costs Following GSK's Exercise of the Option.    Notwithstanding the
foregoing, following GSK's exercise of an Option, GSK, upon receipt of invoice from Anacor, shall reimburse Anacor its reasonable and documented Patent Costs associated with the Prosecution and
Maintenance of all Anacor IP over which Anacor has the responsibility for Prosecution and Maintenance and which contain claims covering such Collaboration Compounds. Patent Costs associated with the
Prosecution and Maintenance of Patents licensed to Third Parties shall be limited to [***]. All such reimbursements shall be limited to those expenses incurred after the
Effective Date. Anacor has the right to choose outside counsel for Prosecution and Maintenance of Anacor Patents over which Anacor has the responsibility for Prosecution and Maintenance; however, if
GSK is not satisfied with external counsel used by Anacor after GSK exercises its Option, GSK has the right to request that Anacor transfer responsibility for Prosecution and Maintenance of such
Anacor Patents to a different external law firm that is reasonably acceptable to Anacor, which request will not be unreasonably denied by Anacor. If Prosecution and Maintenance of any Anacor Patent
transferred to new outside counsel at GSK's request affects Anacor's rights or those of a Third Party licensee of the Anacor Patents, GSK will consult with Anacor before making any decision relevant
to the Prosecution and Maintenance of such Anacor Patent. Consultation will be concluded in a timely manner so as not to adversely affect the rights of any Party under the Anacor Patents. If GSK and
Anacor are unable to agree on Prosecution and Maintenance of such Anacor Patents, the matter will be decided by the JPS. Requests by GSK that, in the judgment of the Anacor,
will adversely affect the existing Third Party rights identified under Section 8.6 will be referred to the JPS for resolution. 

        8.4    Defense of Claims Brought by Third Parties.    

        8.4.1    Collaboration Compounds.    If a Third Party asserts that a Patent or other right
owned by it is infringed by the manufacture, use, sale or importation of any Collaboration Compound as to which GSK has not exercised its Option, or any Anacor Development Compound, Anacor shall have
the primary right but not the obligation to defend against any such assertions at its cost and expense. In the event Anacor elects to defend against any such Third Party claims, Anacor shall have the
sole right to direct the defense of any such Third Party claims and to elect to settle such claims. In the event that Anacor elects not to defend against such Third Party claims within
[***] of learning of same, GSK shall have the right, but not the duty, to defend against such an action and thereafter shall have the right to direct the defense of any such
Third Party claim(s), including the right to settle such claims, but only with the consent of Anacor, not to be unreasonably withheld. In any event, the Parties shall reasonably assist one another and
cooperate in any such litigation at the other's request without expense to the requesting Party. Each Party may at its own expense and with its own counsel join any defense brought by the other Party. 

        8.4.2    GSK Development Compounds.    If a Third Party asserts that a Patent or other right
owned by it is infringed by the manufacture, use, sale or importation of any GSK Development Compound, GSK shall have the primary right but not the obligation to defend against any such assertions at
its cost and expense. In the event GSK elects to defend against any such Third Party claims, GSK shall have the sole right to direct the defense of any such Third Party claims and to elect to settle
such claims. In the event that GSK elects not to defend against such Third Party claims within [***] of learning of same, Anacor shall have the right, but not the duty, to
defend against such an action and thereafter shall have the sole right to direct the defense of any such Third Party claim(s), including the right to settle such claims. In any event, the Parties
shall reasonably assist one another and cooperate in any such litigation at the other's request without expense to the requesting Party. Each Party may at its own expense and with its own counsel join
any defense brought by the other Party. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        8.5    Enforcement of Anacor or GSK Intellectual Property Rights.    

        8.5.1    Duty to Notify of Competitive Infringement.    If any Party learns of an
infringement, unauthorized use, misappropriation or threatened infringement or other such activity by a Third Party with respect to any Collaboration IP, Anacor IP or GSK IP by reason of the
manufacture, importation, use or sale of a product identical to or substantially similar to any Collaboration Compound, within the Territory ("Competitive
Infringement"), such Party shall promptly notify the other Party and shall provide such other Party with available evidence of such Competitive Infringement. 

        8.5.2    Prior to Exercise of Option.    Prior to GSK's exercise of its Option, or after GSK's
termination of Development and commercialization, with respect to the Collaboration Compounds that are the subject of any Competitive Infringement, Anacor shall have the primary right, but not the
obligation, to institute, prosecute, and control any action or proceeding with respect thereto by counsel of its own choice, and GSK shall have the right, at its own expense, to be represented in that
action by counsel of its own choice. If Anacor fails to bring any such action or proceeding within a period of [***] after first being notified of such Competitive
Infringement, then GSK shall have the right, but not the obligation, to bring and control any such action by counsel of its own choice, and Anacor shall have the right to be represented in any such
action by counsel of its own choice at its own expense. 

        8.5.3    Following Exercise of Option.    Following GSK's exercise of its Option, and before
GSK's termination of Development and commercialization, with respect to the Collaboration Compounds that are the subject of any Competitive Infringement, GSK shall have the primary right, but not the
obligation, to institute, prosecute, and control any action or proceeding with respect thereto by counsel of its own choice, and Anacor shall have the right, at its own expense, to be represented in
that action by counsel of its own choice. If GSK fails to bring an action or proceeding within a period of [***] after first being notified of such Competitive Infringement,
Anacor shall have the right to bring and control any such action by counsel of its own choice, and GSK shall have the right to be represented in any such action by counsel of its own choice at its own
expense. 

        8.5.4    Share of Recoveries.    If one Party brings any such action or proceeding in
accordance with this Section 8.5, the second Party agrees to be joined as a party plaintiff where necessary and to give the first Party reasonable assistance and authority to file and prosecute
the suit. The costs and expenses of the Party bringing suit under this Section 8.5 shall be borne by such Party, and any damages or other monetary awards recovered shall be shared as follows:
(i) the amount of such recovery actually received by the Party controlling such action shall first be applied to the out-of-pocket costs of such action; and then
(ii) any remaining proceeds shall be allocated between the Parties (A) if such action related solely to GSK Development Compounds (i.e., after exercise by GSK of its Option),
allocated between the Parties such that the Party bringing suit under this Section 8.5 retains [***] and the other Party retains [***] of such
amount, or (B) if such action related solely to products identical to or substantially similar to Collaboration Compounds that are not GSK Development Compounds, retained
[***]. A settlement or consent judgment or other voluntary final disposition of a suit under this Section 8.5 may be entered into without the consent of the Party not
bringing the suit; provided that such settlement, consent judgment
or other disposition does not admit the invalidity or unenforceability of the relevant Patent in the Anacor Patents, Anacor Target Patents, GSK Patents, GSK Target Patents, or Collaboration IP, and  provided
further, that any rights granted under the relevant Patent to continue the infringing activity in such settlement, consent judgment or other
disposition shall be limited to those rights that the granting Party otherwise has the right to grant. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        8.5.5    Other Infringement.    Subject to Sections 8.5.1 through 8.5.4 above, with
respect to the infringement of jointly owned Collaboration IP which is not a Competitive Infringement, each Party may proceed in such manner as the law permits. Each Party shall bear its own expenses,
and any recovery obtained by either Party may be retained by such Party unless otherwise agreed. In addition, Anacor shall retain all rights to pursue an infringement of any Patent solely owned by
Anacor that is other than a Competitive Infringement, and GSK shall retain all rights to pursue an infringement of any Patent solely owned by GSK that is other than a Competitive Infringement. 

        8.5.6    35 USC 271(e)(2) Infringement.    Notwithstanding anything to
the contrary in this Section 8.5, for infringement under 35 USC 271(e)(2) where GSK has exercised its Option under Article 4 of this Agreement and where GSK is the holder of the
applicable NDA, and for so long as GSK maintains or retains its exclusive license under such Option, GSK has the sole right to initiate legal action to enforce all Anacor IP licensed to it pursuant to
Section 4.3.2 against infringement or misappropriation by Third Parties or defend any declaratory judgment action relating thereto at its sole expense 

        8.5.7    Regulatory Data Protection.    To the extent required by law
or permitted by law, each Party will use commercially reasonable efforts to promptly, accurately and completely list, with the applicable Regulatory Authorities during the Term, all applicable Patents
for any Product that such Party intends to, or has begun to commercialize, and that have become the subject of a marketing application submitted to FDA, such listings to include all so called "Orange
Book" listings required under the Hatch-Waxman Act and all so called "Patent Register" listings as required in Canada. Prior to such listings, the Parties will meet to evaluate and identify all
applicable Patents. Notwithstanding the preceding sentence, the Party holding the NDA for the applicable Product will retain final decision making authority as to the listing of all applicable Patents
for such Product, regardless of which Party owns such Patent. 

        8.6    Other Agreement(s).    GSK's rights under this Article 8
with respect to any Anacor Patents or Collaboration Patents shall be subject to the rights that one or more Third Parties may have, or the obligations that Anacor may have, in each case to file,
prosecute, maintain, and/or enforce such Patents under the agreement(s) listed in Exhibit 8.6. 

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 ARTICLE 9  

 CONFIDENTIALITY  

        9.1    Confidentiality; Exceptions.    Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing, the Parties agree that the receiving Party (the "Receiving Party") shall keep confidential
and shall not publish or otherwise disclose or use for any purpose other than as provided for in this Agreement any Information or other confidential and proprietary information and materials,
patentable or otherwise, in any form (written, oral, photographic, electronic, magnetic, or otherwise) which is disclosed to it by the other Party (the "Disclosing
Party") or otherwise received or accessed by a Receiving Party in the course of performing its obligations or exercising its rights under this Agreement including trade
secrets, know-how, inventions or discoveries, proprietary information, formulae, processes, techniques and information relating to a Party's past, present and future marketing, financial,
and research and development activities of any product or potential product or useful technology of the Disclosing Party and the pricing thereof (collectively, "Confidential
Information"), except to the extent that it can be established by the Receiving Party that such Confidential Information: 

        9.1.1  was in the lawful knowledge and possession of the Receiving Party prior to the time it was disclosed to, or learned by,
the Receiving Party, or was otherwise developed independently by the Receiving Party, as evidenced by written records kept in the ordinary course of business, or other documentary proof of actual use
by the Receiving Party; 

        9.1.2  was generally available to the public or otherwise part of the public domain at the time of its disclosure to the
Receiving Party; 

        9.1.3  became generally available to the public or otherwise part of the public domain after its disclosure and other than
through any act or omission of the Receiving Party in breach of this Agreement; or 

        9.1.4  was disclosed to the Receiving Party, other than under an obligation of confidentiality, by a Third Party who had no
obligation to the Disclosing Party not to disclose such information to others. 

        9.2    Authorized Disclosure.    Except as expressly provided
otherwise in this Agreement, a Receiving Party may use and disclose Confidential Information of the Disclosing Party as follows: (i) under appropriate confidentiality provisions similar to
those in this Agreement, in connection with the performance of its obligations or exercise of rights granted or reserved in this Agreement (including the rights to commercialize Products and to grant
licenses and sublicenses hereunder); or (ii) to the extent such disclosure is reasonably necessary in filing or prosecuting patent, copyright and trademark applications, prosecuting or
defending litigation, complying with applicable governmental regulations, obtaining regulatory approval, conducting pre-clinical activities or clinical trials, marketing Products, or
otherwise required by law; provided, however, that if a Receiving Party is required by law or regulation to make any such disclosure of a Disclosing
Party's Confidential Information it will, except where impracticable for necessary disclosures, for example in the event of medical emergency, give reasonable advance notice to the Disclosing Party of
such disclosure requirement and, except to the extent inappropriate in the case of patent applications, will use its reasonable efforts to secure confidential treatment of such Confidential
Information required to be disclosed; or (iii) in communication with investors, consultants, advisors or others on a need to know basis, in each case under appropriate confidentiality
provisions substantially equivalent to those of this Agreement; or (iv) to the extent mutually agreed to in writing by the Parties. 

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        9.3    Press Release; Disclosure of Agreement.    On or promptly after
the Effective Date, the Parties shall jointly issue a public announcement of the execution of this Agreement in such form separately agreed upon between the Parties. Neither Party shall be free to
issue any press release or other public disclosure regarding the Agreement or the Parties' activities hereunder, or any results or data arising
hereunder, except with the other Party's prior written consent, or except as reasonably necessary to comply with all applicable national securities exchange listing requirements or laws, rules or
regulations. The Parties agree to consult with each other reasonably and in good faith with respect to the text and timing of any such press releases prior to the issuance thereof, and a Party may not
unreasonably withhold consent to such releases. Except to the extent required by law or as otherwise permitted in accordance with this Section 9.3, neither Party shall make any public
announcements concerning this Agreement or the subject matter hereof without the prior written consent of the other, which shall not be unreasonably withheld. The principles to be observed by Anacor
and GSK in any such permitted public disclosures with respect to this Agreement shall be: accuracy and completeness, the requirements of confidentiality under this Article 9, and the normal
business practice in the pharmaceutical and biotechnology industries for disclosures by companies comparable to Anacor and GSK. Notwithstanding the foregoing, to the extent information regarding this
Agreement has already been publicly disclosed other than through any act or omission of a Party in breach of this Agreement, either Party may subsequently disclose the same information to the public
without the consent of the other Party. Each Party shall be permitted to disclose the terms of this Agreement, in each case under appropriate confidentiality provisions substantially equivalent to
those of this Agreement, to any actual or potential acquirers, merger partners, and professional advisors. Each Party shall give the other Party a reasonable opportunity to review all filings with the
United States Securities and Exchange Commission describing the terms of this Agreement prior to submission of such filings, and shall give due consideration to any reasonable comments by the
non-filing Party relating to such filing, including the provisions of this Agreement for which confidential treatment should be sought. 

        9.4    Termination of Prior Agreement.    This Agreement supersedes
the Confidential Disclosure Agreement executed by Anacor and GSK dated May 14, 2007 (including any and all amendments thereto). All information exchanged between the Parties under that
Agreement shall be deemed Confidential Information hereunder and shall be subject to the terms of this Article 9. 

        9.5    Remedies.    Each Party shall be entitled to seek, in addition
to any other right or remedy it may have, at law or in equity, a temporary injunction, without the posting of any bond or other security, enjoining or restraining the other Party from any violation or
threatened violation of this Article 9. 

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        9.6    Publications.    Except as provided in this Agreement, neither
Party or its Affiliates shall publish or publicly disclose the results of any of the research and/or development activities conducted under this
Agreement, without the prior written consent of the other Party, except that after the expiration of all Options, the foregoing shall not apply to
Anacor for results that relate to any Anacor Development Compounds, or to GSK for results that relate directly to any GSK Development Compounds. The Parties recognize that it may be useful or required
to publish or publicly disclose the results of development work on Products, and GSK (and its Affiliates and Sublicensees) only shall be free to publish or publicly disclose such results, subject to
the prior review by Anacor for patentability and protection of its Confidential Information. GSK shall provide to Anacor at GSK's earliest practical opportunity any proposed abstracts, manuscripts or
summaries of presentations which cover the results of clinical development of any Product, for review and comment as to matters relating to its patents and Confidential Information. Anacor shall
respond in writing promptly and in no event later than [***] after receipt of the proposed material, or within such reasonably shorter period as is required (and promptly
communicated by GSK to Anacor) by the relevant publication deadline, with comments on the proposed material, which GSK will consider in good faith but have no obligation to accept, or a specific
statement of concern, based upon either the need to seek patent protection. In the event of concern, GSK agrees not to submit such publication or to make such presentation that contains such
information until Anacor is given a reasonable period of time (not to exceed [***]) to seek patent protection for any material in such publication or presentation which it
believes is patentable or to resolve any other issues. This Section 9.6 shall cease to apply with respect to any Product upon the First Commercial Sale of such Product. Furthermore, with
respect to any proposed abstracts, manuscripts or summaries of presentations by investigators or other Third Parties, such materials shall be subject to review under this Section 9.6 to the
extent that GSK or Anacor (as the case may be) has the right to do so. 

        9.7    Clinical Trial Register.    GSK shall have the right to publish
the results or summaries of results of all clinical trials conducted by either Party with respect to a Product or Combination Product incorporating a GSK Development Compound or, to the extent
required by law, Anacor Development Compound, on GSK's clinical trial register, provided that Anacor shall have the right to review all such summaries relating to an Anacor Development Compound prior
to submission of such publication. 

 ARTICLE 10  

 REPRESENTATIONS AND WARRANTIES  

        10.1    Representations and Warranties of Both Parties.    Each Party
hereby represents, warrants, and covenants to the other Party, as of the Effective Date, that: 

        10.1.1  such Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof; 

        10.1.2  such Party has taken all necessary action on its part to authorize the execution and delivery of this Agreement and
the performance of its obligations hereunder; 

        10.1.3  this Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, binding
obligation, enforceable against it in accordance with the terms hereof; 

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        10.1.4  the execution, delivery and performance of this Agreement by such Party does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a party or by which it is bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having
jurisdiction over such Party; 

        10.1.5  no government authorization, consent, approval, license, exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, under any applicable laws, rules or regulations currently in effect, is or will be necessary for, or
in connection with, the transaction contemplated by this Agreement or any other agreement or instrument executed in connection herewith, or for the performance by it of its obligations under this
Agreement and such other agreements except as may be required under the stock purchase agreement or to obtain HSR clearance; and 

        10.1.6  it has not employed (and, to the best of its knowledge without further duty of inquiry, has not used a contractor or
consultant that has employed) and in the future will not employ (or, to the best of its knowledge without further duty of inquiry, use any contractor or consultant that employs) any individual or
entity debarred by the FDA (or subject to a similar sanction of EMEA), or, to the best of its knowledge without further duty of inquiry, any individual who or entity which is the subject of an FDA
debarment investigation or proceeding (or similar proceeding of EMEA), in the conduct of the pre-clinical activities or clinical studies of Collaboration Compounds and its activities under
the Research Collaboration. 

        10.2    Representations and Warranties of Anacor.    Anacor hereby
represents, warrants, and covenants to GSK, as of the Effective Date, that: 

        10.2.1  To the best of its knowledge, Anacor is the owner of, or has a license to, the Anacor IP; 

        10.2.2  To the best of its knowledge, Anacor has the right to grant all rights and licenses it purports to grant to GSK with
respect to the Anacor IP under this Agreement; 

        10.2.3  Anacor has no present knowledge that (a) any of the Anacor Patents or Anacor Target Patents are invalid or
unenforceable; or (b) any settled, pending or threatened claim or lawsuit or legal proceeding of a Third Party against Anacor alleging that the Anacor IP infringes or misappropriates in part or
in whole the intellectual property or intellectual property rights of such Third Party; 

        10.2.4  Subject to Section 7.1.3, Anacor has not granted as of the Effective Date, and during the Term shall not grant,
any right or license to any Third Party relating to any of the Anacor IP that would conflict or interfere with any of the rights or licenses granted to GSK hereunder; and 

        10.2.5  To the best of its knowledge, Anacor has disclosed to GSK all material data and Information, all material
correspondence to/from any Regulatory Authority regardless of whether such data and Information would have a positive, neutral or negative impact on the potential commercial, scientific or strategic
value or attractiveness of the Collaboration Compounds in existence as of the Effective Date. 

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        10.3    Mutual Covenants.    Each Party hereby covenants to the other
Party that: 

        10.3.1  All employees of such Party or its Affiliates and working under this Agreement shall be under the obligation to assign
all right, title and interest in and to their inventions and discoveries, whether or not patentable, if any, to such Party as the sole owner thereof; 

        10.3.2  Such Party shall not employ (or, to the best of its knowledge without further duty of inquiry, shall not use any
contractor or consultant that employs) any individual or entity debarred by the FDA (or subject to a similar sanction of EMEA), or, to the best of its knowledge without further duty of inquiry, any
individual who or entity which is the subject of an FDA debarment investigation or proceeding (or similar proceeding of EMEA), in the conduct of its activities under any Project; 

        10.3.3  Such Party shall perform its activities pursuant to this Agreement in compliance with good laboratory and clinical
practices and cGMP, in each case as applicable under the laws and regulations of the country and the state and local government wherein such activities are conducted, and with respect to the care,
handling and use in research and development activities hereunder of any non-human animals by or on behalf of such Party, shall at all times comply (and shall ensure compliance by any of
its subcontractors) with all applicable federal, state and local laws, regulations and ordinances, and also with the most current best practices in the industry for the proper care, handling and use
of animals in pharmaceutical research and development activities, subject to the other Party's reasonable right of inspection. 

        10.4    Disclaimer.    Except as otherwise expressly set forth in this
Agreement, neither Party makes any representation or extends any warranty of any kind either express or implied, including any warranty that any Patents are valid or enforceable or that their exercise
does not infringe any patent rights of Third Parties. Without limiting the generality of the foregoing, each Party disclaims any warranties with regards to: (a) the success of any study or test
commenced under this Agreement, (b) the safety or usefulness for any purpose of the technology or materials, including any Collaboration Compounds, it provides or discovers under this
Agreement; and/or (c) the validity, enforceability, or non-infringement of any intellectual property rights or technology it provides or licenses to the other Party under this
Agreement. 

 ARTICLE 11  

 INDEMNIFICATION; INSURANCE  

        11.1    Indemnification by GSK.    GSK shall indemnify, defend and
hold harmless Anacor, and its Affiliates, and its or their respective directors, officers, employees and agents, from and against any and all liabilities, damages, losses, costs and expenses
including, but not limited to, the reasonable fees of
attorneys and other professionals (collectively, "Losses"), arising out of or resulting from any and all Third Party suits, claims, actions, proceedings
or demands ("Claims") based upon: 

        11.1.1  the negligence, recklessness or wrongful intentional acts or omissions of GSK and/or its Affiliates and its or their
respective directors, officers, employees and agents, in connection with GSK's performance of its obligations or exercise of its rights under this Agreement; 

        11.1.2  any breach of any representation or warranty or express covenant made by GSK under Article 10 or any other
provision under this Agreement; or 

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        11.1.3  the Development that is actually conducted by and/or on behalf of GSK (excluding any Development carried out by and/or
on behalf of Anacor hereunder), the handling and storage by and/or on behalf of GSK of any chemical agents or other compounds for the purpose of conducting Development by or on behalf of GSK, and the
manufacture, marketing, commercialization and sale by GSK, its Affiliate or Sublicensees of any GSK Development Compound or Product; 

except, in each case above, to the extent such Claim arose out of or resulted from or is attributable to the negligence, recklessness or wrongful
intentional acts or omissions of Anacor and/or its Affiliates, or their respective directors, officers, employees or agents. 

        11.2    Indemnification by Anacor.    Anacor shall indemnify, defend
and hold harmless GSK and its Affiliates, and its or their respective directors, officers, employees and agents, from and against any and all Losses, arising out of or resulting from any and all Third
Party Claims based upon: 

        11.2.1  the negligence, recklessness or wrongful intentional acts or omissions of Anacor and/or its Affiliates and/or its or
their respective directors, officers, employees and agents, in connection with Anacor's performance of its obligations or exercise of its rights under this Agreement; 

        11.2.2  any breach of any representation or warranty or express covenant made by Anacor under Article 10 or any other
provision under this Agreement; or 

        11.2.3  the research and/or Development actually conducted by or on behalf of Anacor (excluding any Development carried out by
GSK), or the storage, handling, manufacture, marketing, commercialization and sale of any Anacor Development Compounds or any Product resulting therefrom by Anacor, its Affiliates, agents or
Sublicensees; 

except, in each case above, to the extent such Claim arose out of or resulted from or is attributable to the negligence, recklessness or wrongful
intentional acts or omissions of GSK and/or its Affiliate, or their respective directors, officers, employees and agents. 

        11.3    Procedure.    In the event that any person (an
"Indemnitee") entitled to indemnification under Section 11.1 or Section 11.2 is seeking such indemnification, such Indemnitee shall
(i) inform, in writing, the indemnifying Party of the claim as soon as reasonably practicable after such Indemnitee receives notice of such claim, (ii) permit the indemnifying Party to
assume direction and control of the defense of the claim (including the sole right to settle it at the sole discretion of the indemnifying Party, taking into consideration in good faith any reasonable
concerns or objections raised by the Indemnitee; provided that such settlement does not impose any obligation on, or otherwise adversely affect, the
Indemnitee or other Party), (iii) cooperate as reasonably requested (at the expense of the indemnifying Party) in the defense of the claim, and (iv) undertake all reasonable steps to
mitigate any loss, damage or expense with respect to the claim(s). 

        11.4    Insurance.    

        11.4.1    Anacor's Insurance Obligations.    Anacor shall maintain, at its cost, with effect
from prior to the date of first administration of any Collaboration Compound (including all Products and any product based thereon) for testing in humans hereunder and during the Term thereafter,
adequate insurance against liability and other risks associated with its activities contemplated by this Agreement, including its clinical trials and its indemnification obligations herein, in such
amounts and on such terms as are customary for prudent practices in the pharmaceutical industry for the activities to be conducted by it under this Agreement. Anacor shall furnish to GSK evidence of
such insurance, upon request. 

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        11.4.2    GSK's Insurance Obligations.    GSK hereby represents and warrants to Anacor that it
is self-insured against liability and other risks associated with its activities and obligations under this Agreement in such amounts and on such terms as are customary for prudent
practices for large pharmaceutical companies in the pharmaceutical industry for the activities to be conducted by it under this Agreement. GSK shall furnish to Anacor evidence of such
self-insurance, upon request. 

        11.5    LIMITATION OF LIABILITY.    EXCEPT FOR A BREACH OF ARTICLE 9
OR FOR CLAIMS OF A THIRD PARTY WHICH ARE SUBJECT TO INDEMNIFICATION UNDER THIS ARTICLE 11 OR AS OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT, NEITHER ANACOR NOR GSK, NOR ANY OF THEIR AFFILIATES OR
SUBLICENSEES WILL BE LIABLE TO THE OTHER PARTY TO THIS AGREEMENT, ITS AFFILIATES OR ANY OF THEIR SUBLICENSEES FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, RELIANCE OR PUNITIVE DAMAGES OR LOST
OR IMPUTED PROFITS OR ROYALTIES, LOST DATA OR COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, WHETHER LIABILITY IS ASSERTED IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT PRODUCT LIABILITY),
INDEMNITY OR CONTRIBUTION, AND IRRESPECTIVE OF WHETHER THAT PARTY OR ANY REPRESENTATIVE OF THAT PARTY HAS BEEN ADVISED OF, OR OTHERWISE MIGHT HAVE ANTICIPATED THE POSSIBILITY OF, ANY SUCH LOSS OR
DAMAGE. 

 ARTICLE 12  

 TERM AND TERMINATION  

        12.1    Term; Expiration.    This Agreement
shall become effective as of the Effective Date and, unless earlier terminated pursuant to the other provisions of this Article 12, shall expire as follows: 

        12.1.1  On a Product-by-Product and country-by-country basis, on the date of
the expiration of all payment obligations under this Agreement with respect to such Product in such country; or 

        12.1.2  In its entirety upon the expiration of all payment obligations under this Agreement with respect to the last Product
in all countries in the Territory. 

        12.1.3  The period from the Effective Date until the date of expiration of this Agreement in its entirety, or as the case may
be, until the date of the expiration of this Agreement in part with respect to a given Product, may be referred to herein as the "Term." 

        12.2    Termination for Cause.    

        12.2.1    Termination for Material Breach.    Either Party (the
"Non-breaching Party") may, without prejudice to any other remedies available to it at law or in equity, terminate this Agreement, on a
Project-by-Project basis during the Research Collaboration Term, or in its entirety, as may be appropriate to protect the interest of the Non-breaching Party
arising from such alleged breach, in the event the other Party (the "Breaching Party") shall have materially breached or defaulted in the performance of
any of its material obligations hereunder (but excluding any diligence failure by Anacor) either with respect to a particular Project or the Agreement as a whole, and such default shall have continued
for [***] after written notice thereof was provided to the Breaching Party by the Non-breaching Party, such notice describing with particularity and in detail the
alleged material breach. 

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        12.2.2    Disagreement.    If the Parties reasonably and in good faith
disagree as to whether there has been a material breach, the Party which seeks to dispute that there has been a material breach may contest the allegation in accordance with Section 14.1.
Notwithstanding the above sentence, the cure period for any allegation made in good faith as to a material breach under this Agreement will run from the date that written notice was first provided to
the Breaching Party by the Non-breaching Party. Any such termination of the Agreement under this Section 12.2 shall become effective at the end of such [***]
period, unless the Breaching Party has cured any such breach or default prior to the expiration of such [***] period. The right of either Party to terminate this Agreement, or
a portion of this Agreement, as provided in this Section 12.2 shall not be affected in any way by such Party's waiver or failure to take action with respect to any previous default. 

        12.2.3    Termination by GSK due to Anacor Diligence Failure
Event.    For clarity, GSK's rights with respect to a material breach by Anacor with respect to its diligence obligations hereunder are exclusively as set forth in
Section 2.4.2. 

        12.3    GSK Unilateral Termination
Rights.    GSK shall have the right, at its sole discretion and without any penalty or liability, exercisable at any time during the Term, to terminate this Agreement
for any reason or no reason at all, (a) in its entirety upon six (6) months' prior written notice to Anacor, or (b) with respect to a Project, immediately upon written notice to
Anacor, in each case (a) and (b) subject to the obligations set forth in Section 12.5.2. 

        12.4    Termination for Insolvency.    

        12.4.1  Either Party may terminate this Agreement, if, at any time, the other Party shall file in any court or agency pursuant
to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or
of substantially all of its assets, or if the other Party proposes a written agreement of composition or extension of substantially all of its debts, or if the other Party shall be served with an
involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within [***] after the filing thereof, or if the other Party shall
propose or be a party to any dissolution or liquidation, or if the other Party shall make an assignment of substantially all of its assets for the benefit of creditors. 

        12.4.2  All rights and licenses granted under or pursuant to any section of this Agreement are and shall otherwise be deemed
to be for purposes of Section 365(n) of Title 11, United States Code (the "Bankruptcy Code") licenses of rights to "intellectual property" as
defined in Section 101(56) of the Bankruptcy Code. The Parties shall retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code. Upon the bankruptcy of
any Party, the non-bankrupt Party shall further be entitled to a complete duplicate of, or complete access to, any such intellectual property, and such, if not already in its possession,
shall be promptly delivered to the non-bankrupt Party, unless the bankrupt Party elects to continue, and continues, to perform all of its obligations under this Agreement. 

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        12.5    Effect of Termination or
Expiration.    

        12.5.1    Upon Expiration.    Following the expiration of the Term
pursuant to Section 12.1, the following terms shall apply: 

        (a)   Subject to the terms and conditions of this Agreement, following expiration of the Term with respect to a Product
incorporating a GSK Development Compound in a country pursuant to Section 12.1.1, GSK shall have an exclusive, fully-paid and royalty-free right and license, with the
right to grant sublicenses, under the Anacor IP, solely to continue to make, have made, use, sell, offer to sell and import such Product in the Field in such country, for so long as it continues to do
so. 

        (b)   Subject to the terms and conditions of this Agreement, following expiration of the Term with respect to a Product
incorporating an Anacor Development Compound in a country pursuant to Section 12.1.1, Anacor shall have an exclusive, fully-paid and royalty-free right and license, with
the right to grant sublicenses, under the GSK IP, solely to continue to make, have made, use, sell, offer to sell and import such Product in the Field in such country, for so long as it continues to
do so. 

        (c)   Subject to the terms and conditions of this Agreement, following expiration of the Term with respect to this Agreement in
its entirety pursuant to Section 12.1.2, GSK shall have an exclusive, fully-paid and royalty-free right and license, with the right to grant sublicenses, under the
Anacor IP, solely to continue to make, have made, use, sell, offer to sell and import Products containing GSK Development Compounds in the Field in the Territory, for so long as it continues to do so. 

        (d)   Subject to the terms and conditions of this Agreement, following expiration of the Term with respect to this Agreement in
its entirety pursuant to Section 12.1.2, Anacor shall have an exclusive, fully-paid and royalty-free, right and license, with the right to grant sublicenses, under the
GSK IP, solely as necessary to continue to make, have made, use, sell, offer to sell, and import Products containing Anacor Development Compounds, for so long as it continues to do so. 

        12.5.2    Upon Unilateral Termination by GSK.    

        (a)   In the event of a unilateral termination of this Agreement in its entirety or any Project by GSK pursuant to
Section 12.3, the following terms shall apply: 

          (i)  Notwithstanding anything contained herein to the contrary, all licenses granted to GSK with respect to GSK Development
Compounds from a terminated Project(s), if any, for which GSK has previously exercised its Option as of the effective date of such termination shall terminate; 

         (ii)  All unexercised Options with respect to such Project(s) as of the date that Anacor receives such notice from GSK shall
be cancelled and of no force and effect; 

       (iii)  If the Parties have discovered one or more Collaboration Compounds (other than GSK Development Compounds) under the
Research Collaboration with activity against a Target that is the subject of the terminated Project (or in the case of termination of the entire Agreement, any Project), such Collaboration Compounds
shall be deemed to be Anacor Development Compounds, and the terms of Section 5.3.1 shall apply with respect to such Anacor Development Compounds; 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

55

 

        (iv)  With respect to a given GSK Development Compound (or Product that incorporates a GSK Development Compound),
(A) such GSK Development Compound shall be deemed to be an Anacor
Development Compound; and (B) the terms and conditions of Section 5.3.2 shall apply with respect to such Anacor Development Compound. 

        (b)   All of Anacor's exclusivity obligations under Section 7.1 shall immediately terminate and no longer be of any
force or effect with respect to the Project(s) being terminated and the Target(s) and Collaboration Compounds relating to such terminated Project(s). 

        12.5.3    Upon Termination by GSK for Cause.    

        (a)   In the event of a termination of this Agreement in its entirety by GSK pursuant to Section 12.2.1 before the end
of the Research Collaboration Term, the Research Collaboration Term shall terminate. 

        (b)   In the event that GSK terminates a Project or this Agreement in its entirety pursuant to Section 12.2.1: 

          (i)  All Options with respect to the terminated Projects (or in the case of termination of the entire Agreement, all Options)
that are unexercised as of the effective date of termination shall be cancelled and of no force and effect; and 

         (ii)  If the Parties have discovered one or more Collaboration Compounds under the Research Collaboration with activity
against a Target that is the subject of the terminated Project (or in the case of termination of the entire Agreement, any Project), GSK shall have a perpetual exclusive license, with the right to
grant sublicenses, under Anacor's interest in the Anacor IP to make, have made, use, sell, offer for sale and import such Collaboration Compounds as GSK Development Compounds and Products derived
therefrom in the Field in the Territory, subject to the following royalty obligations: 

        (1)   if termination occurred before the Collaboration Compound became a Candidate Selection Compound, GSK would pay Anacor a
royalty on [***] at a rate equal to [***] in the Territory; and 

        (2)   if termination occurred after the Collaboration Compound became a Candidate Selection Compound, GSK would pay Anacor a
royalty on [***] at a rate equal to [***] in the Territory. 

       (iii)  All of GSK's exclusivity obligations under Section 7.2 shall immediately terminate and no longer be of any force
or effect with respect to the Project(s) being terminated and the Target(s) and Collaboration Compounds relating to such terminated Project(s). 

        12.5.4    Upon Termination by Anacor for Cause.    

          (i)  In the event of a termination of this Agreement in its entirety by Anacor pursuant to Section 12.2.1 before the
end of the Research Collaboration Term, the Research Collaboration Term shall terminate. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

56

 

        (b)   In the event that Anacor terminates a Project or this Agreement pursuant to Section 12.2.1: 

          (i)  All Options with respect to the terminated Projects (or in the case of termination of the entire Agreement, all Options)
that are unexercised as of the effective date of termination shall be cancelled and of no force and effect. For clarity, GSK shall not be permitted to exercise any Options after receiving notice of
Anacor's termination under Section 12.2.1, without Anacor's prior written consent, unless and until Anacor agrees, or it is determined pursuant to Section 14.1, that GSK has cured the
applicable breach in a timely manner. 

         (ii)  If the Parties have discovered one or more Collaboration Compounds under the Research Collaboration with activity
against a Target that is the subject of such Project, Anacor shall have a perpetual exclusive license, with the right to grant sublicenses, under the GSK IP to make, have made, use, sell, offer for
sale and import such Collaboration Compounds as Anacor Development Compounds and Products derived therefrom in the Territory, subject to the following royalty obligations: 

        (1)   If termination occurred before the Collaboration Compound became a Candidate Selection Compound, Anacor would pay GSK a
royalty on [***] at a rate equal to [***] in the Territory; and 

        (2)   If termination occurred after the Collaboration Compound became a Candidate Selection Compound, Anacor would pay GSK a
royalty on [***] at a rate equal to [***] in the Territory. 

       (iii)  If, on the effective date of termination, there are GSK Development Compounds with activity against a Target that is
the subject of such Project (or in the case of termination of the entire Agreement, any Project), Anacor shall have a perpetual exclusive license, with the right to grant sublicenses, under the GSK IP
to make, have made, use, sell, offer for sale and import such GSK Development Compounds as Anacor Development Compounds and Products derived therefrom in the Territory, subject to the following
royalty obligations: 

        (1)   If termination occurred before the GSK Development Compound became a Candidate Selection Compound, Anacor would pay GSK a
royalty on [***] at a rate equal to [***] in the Territory; and 

        (2)   If termination occurred after the GSK Development Compound became a Candidate Selection Compound, Anacor would pay GSK a
royalty on [***] at a rate equal to [***] in the Territory. 

        (c)   In the event of a termination of this Agreement in its entirety or with respect to any Project(s), all of Anacor's
exclusivity obligations under Section 7.1 shall immediately terminate and no longer be of any force or effect, with respect to the Project(s) being terminated and the Target(s) and
Collaboration Compounds relating to such terminated Project(s). 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        12.5.5    Regulatory Filings.    Upon termination of this Agreement by
Anacor pursuant to Section 12.2.1 or by GSK pursuant to Section 12.3: 

        (a)   If Prior to First Commercial Sale of Product:    At no cost to
Anacor, GSK would exclusively license or assign and deliver to Anacor all relevant documents, safety databases, regulatory filings, and manufacturing information to the extent pertaining specifically
to any Products and which is necessary or important for commercial use and exploitation in the Territory; and 

        (b)   If Following First Commercial Sale of a Product:    At no cost
to Anacor and with respect to all affected countries, GSK would exclusively license or assign and deliver to Anacor all relevant documents, safety data, regulatory filings, manufacturing information,
trademarks as well as any other information, data and materials reasonably requested by Anacor, to the extent pertaining specifically to any Products and which is necessary or important for commercial
use and exploitation in the Territory. In addition, at no cost to Anacor, GSK shall provide for reasonable transitional support, such support to be not less than nine (9) months in countries in
which the Product is approved for marketing. 

        12.6    Accrued Rights; Surviving Provisions of the
Agreement.    

        (a)   Termination, relinquishment or expiration of this Agreement for any reason shall be without prejudice to any rights that
shall have accrued to the benefit of any Party prior to such termination, relinquishment or expiration including the payment obligations under Article 6 hereof and any and all damages arising
from any breach hereunder. Such termination, relinquishment or expiration shall not relieve any Party from obligations which are expressly indicated to survive termination of this Agreement. 

        (b)   The provisions of Articles 9 and 11 and Sections 2.7.2 (first sentence only), 2.7.4, 2.7.5, 2.7.6, 6.11,
8.1, 8.4, 8.6, 12.5, 12.6, 14.4, 14.8, 14.10, 14.11, 14.14, 14.15, 14.17, and 14.18, as well as any applicable definitions in Article 1, shall survive the termination or expiration of this
Agreement for any reason, in accordance with their respective terms and conditions, and for the duration stated, and where no duration is stated, shall survive indefinitely. 

 ARTICLE 13  

 REGULATORY  

        13.1    Tolling of Payment Obligations.    If
the exercise by GSK of any Option under Article 4 requires the making of filings under HSR, or under any similar premerger notification provision in the European
Union or any other jurisdiction, then all rights and obligations related to the exercise of such Option shall be tolled until the applicable waiting period has expired or been terminated or until
approval or clearance from the reviewing authority has been received, and each Party agrees to cooperate at the request of the Party which decides in its sole discretion to respond to any such request
for information to expedite review of such transaction. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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  ARTICLE 14  

 MISCELLANEOUS  

        14.1    Dispute Resolution.    Unless otherwise set forth in this
Agreement, in the event of a dispute arising under this Agreement between the Parties, the either Party shall have a right to 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 14.1 within sixty (60) calendar days of
referring such dispute to the Executive Officers, either Party may have the given dispute settled by binding arbitration pursuant to Section 14.2. 

        14.2    Arbitration Request.    If a Party intends to begin an
arbitration to resolve a dispute arising under this Agreement, such Party shall provide written notice (the "Arbitration Request") to the other Party of
such intention and the issues for resolution. From the date of the Arbitration Request and until such time as the dispute has become finally settled, the running of the time periods as to which Party
must cure a breach of this Agreement becomes suspended as to any breach that is the subject matter of the dispute. 

        14.2.1    Additional Issues.    Within twenty (20) Business
Days after the receipt of the Arbitration Request, the other Party may, by written notice, add additional issues for resolution. 

        14.2.2    No Arbitration of Patent/Confidentiality Issues.    Unless
otherwise agreed by the Parties, disputes relating to Patents and non-disclosure, non-use and maintenance of Confidential Information shall not be subject to arbitration, and
shall be submitted to a court of competent jurisdiction. 

        14.2.3    Arbitration Procedure.    The Arbitration shall be held in
the continental United States under the rules of the American Arbitration Association ("AAA"). The arbitration shall be conducted by three
(3) arbitrators who are knowledgeable in the subject matter at issue in the dispute. One (1) arbitrator will be selected by Anacor, one (1) arbitrator will be selected by GSK, and
the third arbitrator will be selected by mutual agreement of the two (2) arbitrators selected by the Parties. The arbitrators may proceed to an award, notwithstanding the failure of either
Party to participate in the proceedings. The arbitrators shall, within fifteen (15) calendar days after the conclusion of the arbitration hearing, issue a written award and statement of
decision describing the essential findings and conclusions on which the award is based, including the calculation of any damages awarded. The arbitrators shall be authorized to award compensatory
damages, but shall not be authorized to award non-economic damages or punitive damages, or to reform, modify or materially change this Agreement. The arbitrators also shall be authorized
to grant any temporary, preliminary or permanent equitable remedy or relief the arbitrators deem just and equitable and within the scope of this Agreement, including an injunction or order for
specific performance. The award of the arbitrators shall be the sole and exclusive remedy of the Parties (except for those remedies set forth in this Agreement). Judgment on the award rendered by the
arbitrators may be enforced in any court having competent jurisdiction thereof, subject only to revocation on grounds of fraud or clear bias on the part of the arbitrators. Notwithstanding anything
contained in this Section 14.2 to the contrary, each Party shall have the right to institute judicial proceedings against the other Party or anyone acting by, through or under such other Party,
in order to enforce the instituting Party's rights hereunder through specific performance, injunction or similar equitable relief. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        14.3    Costs.    Each Party shall bear its own attorneys' fees,
costs, and disbursements arising out of the arbitration, and shall pay an equal share of the fees and costs of the arbitrators; provided, however, that the arbitrators shall be authorized to determine
whether a Party is the prevailing Party, and if so, to award to that prevailing Party reimbursement for its reasonable attorneys' fees, costs and disbursements (including, for example, expert witness
fees and expenses, photocopy charges and travel expenses). 

        14.4    Governing Law.    This Agreement and any dispute arising from
the performance or breach hereof shall be governed by and construed and enforced in accordance with the laws of the State of New York without reference to conflicts of laws principles. 

        14.5    Assignment.    Either Party may assign this Agreement to any
Affiliate of such Party without the prior written consent of the other Party; provided, that such Party provides the other Party with written notice of such assignment and remains fully liable for the
performance of such Party's obligations hereunder by such Affiliate. Further, each Party may assign this Agreement without the prior written consent of the other Party, to its successor in interest by
way of merger, acquisition, or sale of all or substantially all of its assets to which this Agreement relates; provided, that such Party provides the other Party with written notice of such
assignment; provided further, that if such assignment involves a transaction in which Anacor: (a) merges or consolidates with any other entity (other than a wholly-owned subsidiary of Anacor);
or (b) effects any other transaction or series of transactions, such that the stockholders of Anacor immediately prior thereto, in the aggregate, no longer own, directly or indirectly,
beneficially or legally, at least fifty percent (50%) of the outstanding voting securities or capital stock of the surviving entity following the closing of such merger, consolidation, other
transaction or series of transactions (a "Change in Control Event"), then GSK shall, notwithstanding anything in this Agreement to the contrary, have
the right to either: (i) continue the Agreement in full force and effect; or (ii) exercise [***] 

        14.5.1    Solely with respect to the [***];    

        14.5.2    In the event that [***];    

        14.5.3    In the event that a Change in Control Event occurs
[***];    

        14.5.4    In the event that a Change in Control Event occurs [***];
and    

        14.5.5    In the event that a Change in Control Event occurs
[***].    

[***]
The terms and conditions of this Agreement shall be binding upon and shall inure to the benefit of the successors, heirs, administrators and permitted assigns of the
Parties. 

        14.6    Performance Warranty.    Each Party hereby acknowledges and
agrees that it shall be responsible for the full and timely performance as and when due under, and observance of all the covenants, terms, conditions and agreements set forth in this, Agreement by its
Affiliate(s) and Sublicensees. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        14.7    Force Majeure.    No Party shall be held liable or responsible
to the other Parties nor be deemed to be in default under, or in breach of any provision of, this Agreement for failure or delay in fulfilling or performing any obligation of this Agreement when such
failure or delay is due to force majeure, and without the fault or negligence of the Party so failing or delaying. For purposes of this Agreement,  force majeure is defined as causes beyond the control of the Party, including acts of God; acts, regulations, or laws of any government; war; civil
commotion; destruction of production facilities or materials by fire, flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure of public utilities or common carriers. In such
event Anacor or GSK, as the case may be, shall immediately notify the other Parties of such inability and of the period for which such inability is expected to continue. The Party giving such notice
shall thereupon be excused from such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled for up to a maximum of ninety
(90) calendar days, after which time Anacor or GSK, the Party not affected by the force majeure, may terminate this Agreement. To the extent
possible, each Party shall use reasonable efforts to minimize the duration of any force majeure.

        14.8    Notices.    Any notice or request required or permitted to be
given under or in connection with this Agreement shall be deemed to have been sufficiently given if in writing and personally delivered or sent by certified mail (return receipt requested), facsimile
transmission (receipt verified), or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below: 

 

 

			
	If to Anacor, addressed to:	 	Anacor Pharmaceuticals, Inc.

1060 East Meadow Circle

Palo Alto, CA 94303-4230

Attention: Chief Executive Officer

Facsimile: (650) 739-0139
	
 with a copy to:	
 	
Cooley Godward Kronish LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA 94306

Attention: Glen Y. Sato, Esq.

Facsimile: (650) 849-7400
	
 If to GSK, addressed to:	
 	
SmithKline Beecham Corporation d/b/a GlaxoSmithKline

One Franklin Plaza

Philadelphia, PA 19101

Attn: Senior Vice President, Worldwide Business Development

Facsimile: (610) 270-5166
	
 with a copy to	
 	
SmithKline Beecham Corporation d/b/a GlaxoSmithKline

2301 Renaissance Boulevard

King of Prussia, PA 19406-2772

Vice President and Associate General Counsel, Business Development Transactions Team

Facsimile: (610) 787-7084

 

 or
to such other address for such Party as it shall have specified by like notice to the other Parties, provided that notices of a change of address shall be effective only upon
receipt thereof. If delivered personally or by facsimile transmission, the date of delivery shall be deemed to be the date on which such notice or request was given. If sent by overnight express
courier service, the date of delivery shall be deemed to be the next business day after such notice or request was deposited with such service. If sent by certified mail, the date of delivery shall be
deemed to be the third business day after such notice or request was deposited with the U.S. Postal Service. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        14.9    Export Clause.    Each party acknowledges that the laws and
regulations of the United States restrict the export and re-export of commodities and technical data of United States origin. Each party agrees that it will not export or
re-export restricted commodities or the technical data of the other party in any form without the appropriate United States and foreign government licenses. 

        14.10    Waiver.    Neither Party may waive or release any of its
rights or interests in this Agreement except in writing. The failure of either Party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition. No waiver by either Party of any condition or term in any one or more instances shall be
construed as a continuing waiver of such condition or term or of another condition or term. 

        14.11    Severability.    If any provision hereof should be held
invalid, illegal or unenforceable in any jurisdiction, the Parties shall negotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original intent of
the Parties and all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the Parties hereto as
nearly as may be possible. Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction. 

        14.12    Entire Agreement.    This Agreement, together with the
Schedules and Exhibits hereto, set forth all the covenants, promises, agreements, warranties, representations, conditions and understandings between the Parties hereto and supersede and terminate all
prior agreements and understanding between the Parties. There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the
Parties other than as set forth herein and therein. No subsequent alteration, amendment, change or addition to this Agreement shall be binding upon the Parties hereto unless reduced to writing and
signed by the respective authorized officers of the Parties. 

        14.13    Independent Contractors.    Nothing herein shall be construed
to create any relationship of employer and employee, agent and principal, partnership or joint venture between the Parties. Each Party is an independent contractor. Neither Party shall assume, either
directly or indirectly, any liability of or for
the other Party. Neither Party shall have the authority to bind or obligate the other Party and neither Party shall represent that it has such authority. 

        14.14    Headings; Interpretation.    Headings used herein are for
convenience only and shall not in any way affect the construction of or be taken into consideration in interpreting this Agreement. Further, in this Agreement: (a) the word "including" shall be
deemed to be followed by the phrase "without limitation" or like expression; (b) the singular shall include the plural and vice versa; and (c) masculine, feminine and neuter pronouns and
expressions shall be interchangeable. 

        14.15    Books and Records.    Any books and records to be maintained
under this Agreement by a Party or its Affiliates or Sublicensees shall be maintained in accordance with U.S. generally accepted accounting principles in the case of Anacor, and shall be maintained in
accordance with International Financial Reporting Standards (IFRS) in the case of GSK, consistently applied, except that the same need not be audited. 

        14.16    Further Actions.    Each Party shall execute, acknowledge and
deliver such further instruments, and do all such other acts, as may be necessary or appropriate in order to carry out the expressly stated purposes and the clear intent of this Agreement. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        14.17    Parties in Interest.    All of the terms and provisions of
this Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by the Parties hereto and their respective successors, heirs, administrators and permitted assigns. 

        14.18    Construction of Agreement.    The terms and provisions of
this Agreement represent the results of negotiations between the Parties and their representatives, each of which has been represented by counsel of its own choosing, and neither of which has acted
under duress or compulsion, whether legal, economic or otherwise. Accordingly, the terms and provisions of this Agreement shall be interpreted and construed in accordance with their usual and
customary meanings, and each of the Parties hereto hereby waives the application in connection with the interpretation and construction of this Agreement
of any rule of law to the effect that ambiguous or conflicting terms or provisions contained in this Agreement shall be interpreted or construed against the Party whose attorney prepared the executed
draft or any earlier draft of this Agreement. 

        14.19    Supremacy.    In the event of any express conflict or
inconsistency between this Agreement and the Research Plan or of any Schedule or Exhibit hereto, the terms of this Agreement shall control. The Parties understand and agree that the Schedules and
Exhibits hereto are not intended to be the final and complete embodiment of any terms or provisions of this Agreement, and are to be updated from time to time during the Term, as appropriate and in
accordance with the provisions of this Agreement. 

        14.20    Counterparts.    This Agreement may be signed in
counterparts, each and every one of which shall be deemed an original, notwithstanding variations in format or file designation which may result from the electronic transmission, storage and printing
of copies of this Agreement from separate computers or printers. Facsimile signatures and signatures transmitted via PDF shall be treated as original signatures. 

*
- * - * - * 

[***]
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        IN WITNESS WHEREOF, the Parties have caused this Research and Development Collaboration, Option and License Agreement to be executed by
their duly authorized representatives as of the Effective Date. 

 

 

					
	 Anacor Pharmaceuticals, Inc.	 	 
	
 By:	
 	
/s/ David P. Perry

 	
 	

 
	Name:	 	David P. Perry	 	 
	Title:	 	President & Chief Executive Officer	 	 
	
 SmithKline Beecham Corporation

d/b/a GlaxoSmithKline	
 	

 
	
 By:	
 	
/s/ Donald F. Parman

 	
 	

 
	Name:	 	Donald F. Parman	 	 
	Title:	 	Vice President & Secretary	 	 

 

 [***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

  EXHIBIT 1.31  

[***]

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

 EXHIBIT 2.6.2(a)  

 TARGET PRODUCT PROFILE(S), [***] 

[***]

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

 EXHIBIT 2.6.2(b)  

 TARGET PRODUCT PROFILE(S), [***] 

[***]

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

 EXHIBIT 2.6.2(c)  

 TARGET PRODUCT PROFILE(S), [***] 

[***]

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

 EXHIBIT 8.6  

        License, Development, and Commercialization Agreement, executed on February 2, 2007, between Anacor and Schering Corporation 

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

   AMENDMENT #1 TO RESEARCH AND DEVELOPMENT COLLABORATION,

OPTION AND LICENSE AGREEMENT  

        This AMENDMENT #1 TO RESEARCH AND DEVELOPMENT COLLABORATION, OPTION AND LICENSE
AGREEMENT ("Amendment") is entered into and made effective as of the 15th day of December, 2008 (the
"Amendment Effective Date") by and between Anacor Pharmaceuticals, Inc., a Delaware corporation having its principal place of business at 1020
East Meadow Circle, Palo Alto, CA 94303 ("Anacor"), and SmithKline Beecham Corporation d/b/a GlaxoSmithKline, a Pennsylvania corporation having
offices at One Franklin Plaza, Philadelphia, PA 19101 ("GSK"). Anacor and GSK are each referred to herein by name or as a
"Party" or, collectively, as "Parties." 

        WHEREAS, Anacor and GSK are parties to that certain Research and Development Collaboration, Option and License Agreement, dated as of
October 5, 2007 (the "Agreement"); 

        WHEREAS, Anacor and GSK desire to amend the Agreement as set forth below. 

        NOW THEREFORE, the Parties hereby agree as follows: 

        1.     All capitalized terms used in this Amendment that are not otherwise defined herein will have the meanings given to them in
the Agreement. 

        2.     The term "Project", as defined in Section 1.109 of the Agreement, shall be deleted and restated in its entirety as
set forth below: 

"  'Project' means any of Project 1, Project 2, Project 3, Project 4 or any New Project." 

        3.     The term "Target", as defined in Section 1.127 of the Agreement, shall be deleted and restated in its entirety as
set forth below: 

"
'Target' means any of the following: (a) the hepatitis C virus protease, (b) LeuRS, [***]" 

        4.     New Targets and New Projects. 

        (a)   The Parties may agree at any time during the Research Collaboration Term to include a new target (each, a
"New Target") as a new project (each, a "New Project"); provided that any New Target will be either
[***] target. 

        (b)   The Parties acknowledge and agree that all of the terms and conditions in the Agreement will apply to each New Target and
New Project; provided, however, that (i) if the New Target is [***] target, the FTEs, Target Product Profiles, Lead
Selection Criteria, Candidate Selection Criteria and PoC Compound Criteria for each New Project, and all milestones and royalties payable by GSK or Anacor, as applicable, will be the same as those for
Project 2; and, (ii) if the New Target is [***], the Parties will, promptly after the selection of such New Target, negotiate and agree in good faith and in a manner
consistent with the principles used with other Projects, upon the FTEs, Target Product Profiles, Lead Selection Criteria, Candidate Selection Criteria and PoC Compound Criteria for each New Project,
and all milestones and royalties payable by GSK or Anacor, as applicable, that will apply to such New Target. 

        (c)   Once the New Target is selected for a New Project, the Parties shall prepare a Research Plan setting forth the activities
to be conducted by Anacor and/or GSK during the Research Collaboration Term for such New Project and shall submit such Research Plan to the JRC for review, comment and approval. 

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

 

        5.     A new Section 2.4.1(d) shall be added to the Agreement as follows (and what is currently referred to as
Section 2.4.1(d) in the Agreement shall be renumbered as Section 2.4.1(e)): 

        "(d) Anacor Funding Commitment.    In addition to the foregoing, Anacor acknowledges and
agrees that during the Research Collaboration Term, it will spend not less than [***] (the "Funding Commitment") in carrying out
its tasks and obligations under the Research Collaboration in accordance with the terms of the Agreement, Research Plans and as directed by the JRC (and JPT with respect to Project 1). For purposes of
this Section 2.4.1(d), satisfaction of the Funding Commitment shall be considered on a Project-specific basis based on the Research Plans approved by the JRC." 

        6.     Section 2.4.1(e) of the Agreement (formerly Section 2.4.1(d)) shall be deleted and restated in its entirety
as follows: 

        "(e) Audit Rights. 

          (i)  GSK agrees to keep full, clear and accurate records for a Project regarding the FTEs provided pursuant to this
Section 2.4.1 during the immediately preceding [***]. Anacor shall have a right, upon not less than sixty (60) calendar days' prior written notice to GSK to have
an independent accounting firm (selected by Anacor and mutually acceptable to GSK) review such books and records relating to such FTEs with respect to such [***] time period
for the sole purpose of verifying compliance with this Section 2.4.1. Such audit shall not be performed more frequently than once per calendar year and shall be conducted under appropriate
confidentiality provisions. Such examination is to be made at the expense of Anacor, except in the event that the results of the audit reveal a shortfall in the number of FTEs provided by GSK
(i.e., relative to the number of FTEs required by this Section 2.4.1) of five percent (5%) or more over the period being audited, in which case reasonable audit fees for such examination
shall be paid by GSK. 

         (ii)  Anacor shall keep full, clear and accurate records regarding (a) amounts spent on the Research Collaboration
pursuant to Section 2.4.1(d), and (b) FTEs provided pursuant to Section 2.4.1 during the
immediately preceding [***]. GSK shall have a right, upon not less than sixty (60) calendar days' prior written notice to Anacor to have an independent accounting firm
(selected by the GSK and mutually acceptable to the Anacor) review such books and records relating to the Funding Commitment and/or the FTEs for the sole purpose of verifying Anacor's compliance with
the Funding Commitment and FTE commitment pursuant to Section 2.4.1. Such audit shall not be performed more frequently than once per calendar year and shall be conducted under appropriate
confidentiality provisions. Such examination is to be made at the expense of the GSK, except in the event that the results of the audit reveal a shortfall in the Funding Commitment
(i.e., relative to the Funding Commitment for a particular Project as set forth in the Research Plan) or the results of the audit reveal a shortfall in the number of FTEs provided by Anacor
(i.e., relative to the number of FTEs required by this Section 2.4.1) of, in either case, [***] or more over the period being audited, in which case reasonable
audit fees for such examination shall be paid by Anacor." 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        7.     Anacor's address and facsimile number in Section 14.8 of the Agreement is hereby amended to read as follows: 

"Anacor
Phamaceuticals, Inc.

1020 East Meadow Circle

Palo Alto, CA 94303-4230

Attention: Chief Executive Officer

Facsimile: (650) 543-7661" 

        8.     In connection with Anacor's Series E Financing (the "Series E
Financing"), Anacor and GSK have entered into to that certain Series E Preferred Stock Purchase Agreement and related documents of even date herewith, pursuant to which
GSK purchased Thirty Million U.S. Dollars (U.S. $30,000,000) in preferred stock of Anacor. The Parties acknowledge and agree that GSK's participation in the Series E Financing satisfies any
obligation of GSK to purchase Anacor equity as provided in Section 6.2 of the Agreement. 

        9.     The term "GSK Collaboration Compounds" in Section 3.1.2 and Section 4.3.2 is hereby deleted and replaced
with the term "GSK Development Compounds". 

        10.   This Amendment amends the terms of the Agreement as expressly provided above, and the Agreement, as so amended and
including all of its other terms and provisions that are not amended, remains in full force and effect. This Amendment and any dispute arising from the performance or breach hereof shall be governed
by and construed and enforced in accordance with the laws of the State of New York without reference to conflicts of laws principles. This Amendment may be executed in counterparts, all of which taken
together shall be regarded as one and the same instrument. 

[The remainder of this page is intentionally left blank.]

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
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        IN WITNESS WHEREOF, the Parties have caused this Amendment No. 1 to Research and Development Collaboration, Option and License
Agreement to be executed by their duly authorized representatives as of the Amendment Effective Date. 

 

 

			
	 Anacor Pharmaceuticals, Inc.
	
 By:	
 	
/s/ David P. Perry

 
	Name:	 	David P. Perry
	Title:	 	President & Chief Executive Officer
	
 SmithKline Beecham Corporation

d/b/a GlaxoSmithKline
	
 By:	
 	
/s/ William J. Mosher

 
	Name:	 	William J. Mosher
	Title:	 	Secretary

 

 

   AMENDMENT #2 TO RESEARCH AND DEVELOPMENT COLLABORATION,

OPTION AND LICENSE AGREEMENT  

        This AMENDMENT #2 TO RESEARCH AND DEVELOPMENT COLLABORATION, OPTION AND LICENSE
AGREEMENT ("Amendment") is entered into and made effective as of the 20th day of May, 2009 (the
"Amendment Effective Date") by and between Anacor Pharmaceuticals, Inc., a Delaware corporation having its principal place of business at 1020
East Meadow Circle, Palo Alto, CA 94303 ("Anacor"), and SmithKline Beecham Corporation d/b/a GlaxoSmithKline, a Pennsylvania corporation having offices
at One Franklin Plaza, Philadelphia, PA 19101 ("GSK"). 

        WHEREAS, Anacor and GSK are party to that certain Research and Development Collaboration, Option and License Agreement, dated as of
October 5, 2007, amended December 24, 2008 (the "Agreement"); and 

        WHEREAS, Anacor and GSK now desire to further amend the Agreement as set forth below. 

        NOW THEREFORE, in consideration of the mutual promises and agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 

        1.     For the purpose of this Amendment: 

        (a)   "Anacor/GATB Compound" means any boron-containing small molecule compound having [***], which
compound is synthesized (i) by or for Anacor or (ii) by the TB Alliance, in each case in accordance with or pursuant to the Anacor/TB Alliance Agreement. The
Anacor/GATB Compounds include the TB-Selective Anacor/GATB Compounds and the Multiple-Active Anacor/GATB Compounds. 

        (b)   "Anacor/TB Alliance Agreement" means that certain Research and License Agreement dated May 20, 2009, by and
between Anacor and the TB Alliance. 

        (c)   "Existing TB-Selective Compound" means any boron-containing small molecule compound that was synthesized by
or for Anacor prior to the effective date of the Anacor/TB Alliance Agreement and that has [***]. 

        (d)   "GSK/TB Alliance Agreement" means that certain Research Collaboration Agreement, dated December 2, 2004, by and
between Glaxo Group Limited, an Affiliate of GSK, and the TB Alliance, as extended and transferred to GlaxoSmithKline Investigación Y Desarollo, S.L., another Affiliate of GSK, by the
Novation, Amendment And Extension Agreement dated 4th December 2007. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

 

        (e)   "Multiple-Active Anacor/GATB Compound" means any Anacor/GATB Compound that has [***]. 

        (f)    "TB-Selective Anacor/GATB Compound" means any Anacor GATB Compound that has [***]. 

        (g)   "TB Alliance" means [***]. 

        (h)   "TB Candidate Selection Criteria" means the criteria set forth in Exhibit A. 

        (i)    "TB Field" means the treatment and prophylaxis of tuberculosis. 

        2.     Any capitalized terms used in this Amendment and not defined herein shall have the meaning given to such terms in the
Agreement. 

        3.     Notwithstanding Section 7.1.2 of the Agreement, Anacor shall be permitted to research, optimize, and develop
Existing TB-Selective Compounds and Anacor/GATB Compounds in accordance with the Anacor/TB Alliance Agreement for use solely in the TB Field and to grant licenses to the TB Alliance
pursuant to the Anacor/TB Alliance Agreement with respect to the Existing TB-Selective Compounds and TB-Selective Anacor/GATB Compounds in the TB Field. At each Calendar
Quarter meeting of the JRC, Anacor shall provide a summary of all data generated by Anacor or received by Anacor from the TB Alliance with respect to each Anacor/GATB Compound. At GSK's reasonable
request, Anacor shall provide more detailed disclosures of such data (via the JRC). 

        4.     All Multiple-Active Anacor/GATB Compounds shall be deemed to be Anacor Compounds for all purposes under the Agreement,
subject to any additional or amended rights and obligations of the Parties with respect to such Multiple-Active Anacor/GATB Compounds that are set forth in this Amendment. Without limiting GSK's right
to exercise Options with respect to Anacor Compounds under the Agreement, GSK shall have the following additional rights and responsibilities with respect to Multiple-Active Anacor/GATB Compounds: 

        (a)   Subject to Section 4.2.2 of the Agreement, within the [***] on which the JRC confirms that
a Multiple-Active Anacor/GATB Compound satisfies the TB Candidate Selection Criteria, GSK may in its sole discretion exercise its exclusive option (the "TB Candidate Selection Option") to develop and
commercialize such Multiple-Active Anacor/GATB Compound solely in the TB Field by delivering to Anacor a written notice of GSK's exercise of such TB Candidate Selection Option prior to the end of such
[***] (subject to Section 4.2.2 of the Agreement), specifying the Multiple-Active Anacor/GATB Compound(s) and all Back-Up Compounds (each of which shall be a
Multiple-Active Anacor/GATB Compound) with respect thereto for which such TB Candidate Selection Option is being exercised. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        (b)   Upon GSK's exercise of a TB Candidate Selection Option for any Multiple-Active Anacor/GATB Compound and
Back-Up Compounds thereto pursuant to Section 4(a), to the extent that Anacor has not already granted to GSK a license with respect to such Multiple-Active Anacor/GATB Compound and
such Back-Up Compounds pursuant to Section 4.3.2 of the Agreement, Anacor shall hereby be deemed to have granted and hereby grants to GSK the exclusive (even as to Anacor) right and
license in the Territory, with the right to grant sublicenses, under the Anacor IP to make, have made, use, sell, offer for sale, and import such Multiple-Active Anacor/GATB Compound, and all
Back-Up Compounds thereto that are also Multiple-Active Anacor/GATB Compounds, solely in the TB Field. 

        (c)   As soon as reasonably practicable after GSK exercises a TB Candidate Selection Option for any Multiple-Active Anacor/GATB
Compound and Back-Up Compounds thereto pursuant to Section 4(a), to the extent that GSK has not already exercised an Option with respect to such Multiple-Active Anacor/GATB Compound
and Back-Up Compounds thereto, Anacor shall deliver to GSK, at no cost to GSK, all Information and material in its possession and Control relating to such Multiple-Active Anacor/GATB
Compound and Back-Up Compounds thereto that are relevant to the TB Field. Anacor shall use commercially reasonable efforts with respect to those activities for which it is responsible to
ensure orderly transition and uninterrupted development of such Multiple-Active Anacor/GATB Compound and Back-Up Compounds thereto in the TB Field. Anacor shall use commercially reasonable
efforts to cooperate with GSK to provide GSK, at no cost to GSK, with any other Information relating to such Multiple-Active Anacor/GATB Compound and Back-Up Compounds thereto that is
relevant to the TB Field as may be developed or identified by Anacor during the Term, to the extent that GSK has a license under this Agreement to such Information. 

        (d)   GSK and/or its Affiliates shall have the right to contribute to the TB Alliance, for development in the TB Field in
accordance with the GSK/TB Alliance Agreement, any Multiple-Active Anacor/GATB Compounds or Back-Up Compounds thereto to which GSK acquires rights through exercise of the TB Candidate
Selection Option or the PoC Option. Notwithstanding anything to the contrary in the Agreement, GSK and its Affiliates shall not owe any payments to Anacor under the Agreement with respect to the
development or commercialization of a Multiple-Active Anacor/GATB Compound or any Back-Up Compounds in the TB Field, whether or not such development and commercialization is done in
collaboration with the TB Alliance. For the avoidance of doubt, GSK shall be obligated to pay all payments that come due under the Agreement as a result of the development or commercialization of such
Multiple-Active Anacor/GATB Compound or any Back-Up Compounds thereto as a GSK Development Compound outside the TB Field. 

        (e)   For the avoidance of doubt, GSK's exercise of the TB Candidate Selection Option for any Multiple-Active Anacor/GATB
Compound prior to GSK's exercise of a PoC Option for such Multiple-Active Anacor/GATB Compound shall not amend or alter in any way each Party's rights and
obligations under the Agreement with respect to such Multiple-Active Anacor/GATB Compound outside the TB Field during the period that is prior to GSK's exercise or the expiration of the PoC Option for
such Multiple-Active Anacor/GATB Compound, including without limitation, those rights and obligations set forth in Section 2.4 and in Article 4 of the Agreement. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        (f)    To the extent that GSK exercises neither the TB Candidate Selection Option nor the PoC Option with respect to a
Multiple-Active Anacor/GATB Compound and Anacor subsequently develops and commercializes such Multiple-Active Anacor/GATB Compound, notwithstanding anything to the contrary in the Agreement, Anacor
shall not owe any payments to GSK under the Agreement with respect to the development or commercialization of such Multiple-Active Anacor/GATB Compound in the TB Field, whether or not such development
and commercialization is done in collaboration with the TB Alliance. For the avoidance of doubt however, Anacor shall be obligated to pay all payments that come due under the Agreement as a result of
the development or commercialization of such Multiple-Active Anacor/GATB Compound or any Back-Up Compounds thereto as an Anacor Development Compound outside the TB Field. 

        (g)   Any Multiple-Active Anacor/GATB Compound with respect to which GSK exercises the TB Candidate Selection Option shall be
included in the definition of GSK Development Compound solely for purposes of Article 11 of the Agreement and any Multiple-Active Anacor/GATB Compound that is developed and commercialized by
Anacor in the TB Field as provided in Paragraph 4(f) of this Amendment shall be included in the definition of Anacor Development Compound solely for purposes of Article 11 of the
Agreement. 

        (h)   To the extent that GSK makes any publication, press release, or another public disclosure concerning a Multiple-Active
Anacor/GATB Compound or GSK Development Compound that GSK is developing or commercializing in the TB Field, GSK shall ensure such publication, press release, or public disclosure acknowledges that
such compound is licensed from Anacor. 

        5.     All Existing TB-Selective Compounds and TB-Selective Anacor/GATB Compounds to which Anacor has
granted a license to the TB Alliance pursuant to the Anacor/TB Alliance Agreement are hereby expressly excluded from the definition of Anacor Compounds under the
Agreement, and GSK shall have no rights under the Agreement with respect to such Existing TB-Selective Compounds and TB-Selective Anacor/GATB Compounds. The rights of GSK
and/or its Affiliates with respect to such Existing TB-Selective Compounds and TB-Selective Anacor/GATB Compounds shall be as set forth in the GSK/TB Alliance Agreement, but
only to the extent that such rights are consistent with the rights granted by Anacor to TB Alliance under the Anacor/TB Alliance Agreement. For clarity, a compound shall be deemed an Existing
TB-Selective Compound or TB-Selective Anacor/GATB Compound upon meeting the criteria set forth in Section 1(c) or 1(f), respectively (i.e., at the hit stage), and
not upon meeting the TB Candidate Selection Criteria or any other candidate selection criteria. Anacor shall not owe any payments to GSK under the Agreement with respect to the development or
commercialization of such Existing TB-Selective Compound or TB-Selective Anacor/GATB Compound in the TB Field. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        6.     This Amendment will immediately terminate and be of no further force or effect with respect to either Party upon the
effective date of the expiration or earlier termination for any reason of the Anacor/TB Alliance Agreement; provided, however, that Section 4 (including all subsections thereof) shall survive
any such termination, but only with respect to compounds that were identified as Multiple-Active Anacor/GATB Compounds prior to the expiration or earlier termination of the Anacor/TB Alliance
Agreement. This Section 6 and Section 7 shall also survive any such termination. 

        7.     This Amendment amends the terms of the Agreement as expressly provided above, and the Agreement, as so amended and
including all of its other terms and provisions that are not amended, remains in full force and effect. This Amendment and any dispute arising from the performance or breach hereof shall be governed
by and construed and enforced in accordance with the laws of the State of New York without reference to conflicts of laws principles. This Amendment may be executed in counterparts, all of which taken
together shall be regarded as one and the same instrument. 

        IN WITNESS WHEREOF, the Parties have caused this Amendment No. 2 to Research and Development Collaboration, Option and License
Agreement to be executed by their duly authorized representatives as of the Amendment Effective Date. 

 

 

					
	 Anacor Pharmaceuticals, Inc.	 	 
	
 By:	
 	
/s/ David P. Perry

 	
 	
 
	Name:	 	David P. Perry	 	 
	Title:	 	President & Chief Executive Officer	 	 
	
 SmithKline Beecham Corporation

d/b/a GlaxoSmithKline	
 	

 
	
 By:	
 	
/s/ William J. Mosher

 	
 	
 
	Name:	 	William J. Mosher	 	 
	Title:	 	Vice President & Secretary	 	 

 

 [***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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   AMENDMENT NO. 3 TO RESEARCH AND DEVELOPMENT COLLABORATION,

OPTION AND LICENSE AGREEMENT  

        This AMENDMENT No. 3 TO RESEARCH AND DEVELOPMENT COLLABORATION, OPTION AND LICENSE
AGREEMENT ("Third Amendment") is entered into and made effective as of the 21st day of July 2009 (the
"Amendment Effective Date") by and between Anacor Pharmaceuticals, Inc., a Delaware corporation having its principal place of business at 1020
East Meadow Circle, Palo Alto, CA 94303 ("Anacor"), and SmithKline Beecham Corporation d/b/a GlaxoSmithKline, a Pennsylvania corporation having offices
at One Franklin Plaza, Philadelphia, PA 19101 ("GSK"). 

        WHEREAS, Anacor and GSK are parties to that certain Research and Development Collaboration, Option and License Agreement, dated as of
October 5, 2007, as amended on December 16, 2008 and May 20, 2009 (the "Agreement"); and 

        WHEREAS, Anacor and GSK now desire to further amend the Agreement as set forth below. 

        NOW THEREFORE, in consideration of the mutual promises and agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 

        1.     All capitalized terms used in this Third Amendment that are not otherwise defined herein will have the meanings given to
them in the Agreement. 

        2.     Section 1.7 is hereby deleted in its entirety and replaced as follows: 

        "1.7    "Anacor Compound" means a (a) boron-containing small molecule
compound; or (b) [***] that, in either case, is Controlled by Anacor or an Anacor Affiliate. 

        3.     This Third Amendment amends the terms of the Agreement as expressly provided above, and the Agreement, as so amended and
including all of its other terms and provisions that are not amended, remains in full force and effect. This Third Amendment and any dispute arising from the performance or breach hereof shall be
governed by and construed and enforced in accordance with the laws of the State of New York without reference to conflicts of laws principles. This Third Amendment may be executed in counterparts, all
of which taken together shall be regarded as one and the same instrument. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

1

 

        IN WITNESS WHEREOF, the Parties have caused this Amendment No. 3 to Research and Development Collaboration, Option and License
Agreement to be executed by their duly authorized representatives as of the Amendment Effective Date. 

 

 

					
	 Anacor Pharmaceuticals, Inc.	 	 
	
 By:	
 	
/s/ David P. Perry

 	
 	
 
	Name:	 	David P. Perry	 	 
	Title:	 	President & Chief Executive Officer	 	 
	
 SmithKline Beecham Corporation

d/b/a GlaxoSmithKline	
 	

 
	
 By:	
 	
/s/ Andrew Spaltenstein    8/9/09

 	
 	
 
	Name:	 	Andrew Spaltenstein	 	 
	Title:	 	Vice President, HCV DPU	 	 

 

 2EXHIBIT 10.29  

THE
SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION. 

COLLABORATIVE RESEARCH, LICENSE &

COMMERCIALIZATION AGREEMENT  

 between  

 ANACOR PHARMACEUTICALS, INC.  

 and  

 ELANCO ANIMAL HEALTH, a division of ELI LILLY AND COMPANY  

 

        This COLLABORATIVE RESEARCH, LICENSE & COMMERCIALIZATION AGREEMENT (this "Agreement") is effective from the Effective Date by and
between: 

        ANACOR PHARMACEUTICALS, INC. a privately-held Delaware corporation, having a place of business at 1020 East Meadow
Circle, Palo Alto, CA 94303-4230 (hereafter referred to as "Anacor"); 

 and  

        ELI LILLY AND COMPANY, a publicly-traded Indiana corporation, operating through its
Elanco Animal Health division and having a principal place of business at 2500 Innovation Way N., Greenfield, Indiana 46140-9163 USA and its Affiliates (hereafter collectively referred to
as "Elanco"). 

 INTRODUCTION  

        A.    WHEREAS, Anacor and/or its Affiliate(s) possesses proprietary technology and know-how that allow it to develop
and commercialize technology, including boron-based technology. 

        B.    WHEREAS, Anacor and/or its Affiliate(s) have facilities and personnel that enable it to design, develop and possibly
manufacture various embodiments of Anacor's technology. 

        C.    WHEREAS, Anacor and/or its Affiliate(s) possess know-how, expertise and intellectual property rights
pertaining to the design, development and manufacturing of products utilizing Anacor's technology. 

        D.    WHEREAS, Elanco is engaged in the research, development, marketing, manufacturing and distribution of food chain and
companion animal products including animal health pharmaceutical and diagnostic products. 

        E.    WHEREAS, Elanco desires to engage in a collaborative effort with Anacor pursuant to which Anacor and Elanco will jointly
carry out research and development programs to discover and develop compounds in the target areas in the Field in the Territory. 

        F.     WHEREAS, Anacor desires to grant Elanco, and Elanco desires to obtain, a license under Anacor's intellectual property
rights to further develop and commercialize the compounds resulting from such research and development programs as products in the Field in the Territory, subject to the terms and conditions set forth
herein. 

        NOW
THEREFORE, in consideration of the foregoing premises and the following mutual covenants and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows: 

 ARTICLE I

DEFINITIONS  

         Interpretation.    In this Agreement, unless the context otherwise requires, a reference to: 

	(a)
	a
paragraph, section, exhibit or schedule is a reference to a paragraph, section, exhibit or schedule to this Agreement;

	(b)
	any
document includes a reference to that document (and, where applicable, any of its provisions) as amended, novated, supplemented or replaced from time to
time;

	(c)
	a
statute or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any
of them; 

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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	(d)
	the
singular includes the plural and vice versa, except as it regards the definitions of Party and Parties;

	(e)
	a
Party, person or entity includes:

	(i)
	an
individual, firm, company, corporation, association, trust, estate, state or agency of a state, government or government department or agency, municipal
or local authority and any other entity, whether or not incorporated and whether or not having a separate legal personality; and

	(ii)
	an
employee, agent, successor, permitted assign, executor, administrator and other representative of such party, person or entity;

	(f)
	one
gender includes the other;

	(g)
	"written"
and "in writing" include any means of reproducing words, figures or symbols in a tangible and visible form;

	(h)
	a
month or year is a reference to a calendar month or calendar year, as the case may be;

	(i)
	individuals
or persons include companies and other corporations and vice versa;

	(j)
	the
word "including" shall be deemed to be followed by the phrase "without limitation" or like expression; and

	(k)
	Capitalized
terms in this Agreement refer to the terms defined on first use, including the following: 

        "Affiliate" means any corporation or other entity that controls, is controlled by, or is under common control with a Party to this
Agreement. A corporation or other entity will be regarded as in control of another corporation or entity if the latter corporation or entity owns or directly or indirectly controls more than fifty
percent (50%) of the voting stock or other ownership interest of the former corporation or other entity, or if the latter corporation or entity possesses, directly or indirectly, the power to direct
or cause the direction of the management and policies of the former corporation or other entity or the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the
former corporation or other entity. 

        "Agreement" means this formal legal document if ultimately signed by both Parties, effective as of the Effective Date. 

        "Anacor Invention" means any Invention (other than a Joint Invention) that is discovered, made, or conceived by or on behalf of Anacor
and/or its Affiliates (other than by Elanco or its Affiliates) in the course of performing its activities under the Product Development Plan. For clarity, any invention by
Anacor and/or its Affiliates outside the Product Development Plan will be solely owned by Anacor and/or its Affiliates and will not be deemed an Anacor Invention, unless such invention uses or
incorporates Elanco Confidential Information or Elanco IP. 

        "Anacor Patent Rights" means any and all Patent Rights Controlled by Anacor and/or its Affiliates during the term of this Agreement that
are necessary or reasonably useful for the development, manufacture, sale or commercialization of an Elanco Compound or Product in the Field. 

        "Anacor Research IP" means any and all Patent Rights, Inventions and Technology Controlled by Anacor and/or its Affiliates that are
necessary or reasonably useful for Elanco to conduct its activities under the Product Development Plan. 

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

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        "Anacor Technology" means any and all Technology Controlled by Anacor and/or its Affiliates during the Research Term that is necessary or
reasonably useful for the development, manufacture, sale or commercialization of an Elanco Compound or Product in the Field. 

        "Backup Compound" means, with respect to an Elanco Compound (as defined in clause (a) of the definition of Elanco Compound), those
Candidate Compounds selected by Elanco pursuant to Section 4.8 as backup compounds for such Elanco Compound. 

        "Candidate Compound" means a compound discovered or developed under the Product Development Plan that uses or incorporates Anacor Patent
Rights, Anacor Research IP, Anacor Technology or Anacor Inventions and that [***]. 

        "Companion Animal" means entire species, groups or individual non-human animals whose primary purpose is not for food, fur or
wool production, including canine, equine and feline species. 

        "Confidential Information" means all know-how, trade secrets, technical information, specifications, data, formulae,
intellectual property or software of a Party relating to or arising out of this Agreement including: 

	(a)
	all
communications between the Parties or information of whatever kind whether recorded or not and, if recorded, in whatever medium, relating to or arising
out of the Product Development Plan, the Design & Development Program, the Anacor Patent Rights, the Elanco Patent Rights, the Elanco Inventions, Anacor Inventions, Anacor Technology, Elanco
Research IP, Anacor Research IP, Elanco IP or this Agreement, whether disclosed prior to or after entering into this Agreement;

	(b)
	any
information that the Party indicates in writing is information of a confidential nature or which is marked "confidential";

	(c)
	all
Information or Confidential Information (each as defined in the applicable Existing Agreement) disclosed under the Existing Agreements; and

	(d)
	all
copies and excerpts of the communications, information, notes, reports and documents in whatever form referred to in paragraph (a), (b) or
(c) of this definition. 

        "Control" means, with respect to any information or intellectual property right, possession of the ability to grant the licenses or
sublicenses as provided herein without violating the terms of any agreement or other arrangement with any Third Party, provided, in any event, that Anacor shall not, after the Effective Date, alter
its Control in the Field with respect to Anacor Technology or Anacor Patent Rights to the detriment of Elanco's rights under this Agreement. 

        "Design & Development Program" means the work performed by Anacor and Elanco and/or their respective Affiliate(s) during the
Research Term in accordance with the Product Development Plan as revised from time to time as provided in this Agreement. 

        "Development Committee" means the joint committee composed of representatives of Anacor and Elanco, as described in this Agreement. 

        "Development Decision" means a decision to move a Candidate Compound (including up to [***] Backup Compounds
selected pursuant to Section 4.8) into Product development made by Elanco in the drug development process following [***]. 

        "Dollar" or "$" means the lawful currency of the United States of America. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

4

 

        "Effective Date" means the last date of signature on this Agreement. 

        "Elanco Compound" means (a) a Candidate Compound directly resulting from the Design & Development Program that is selected
by Elanco for development and commercialization as a Product following a Development Decision, and (b) the [***] Backup Compounds to such selected compound that are
selected pursuant to Section 4.8. Subject to Section 2.9, Elanco Compounds shall not include (i) any compound that is subject to an option or license granted by Anacor to a Third
Party prior to the Effective Date, (ii) any of the compounds referred to by Anacor as [***], and all backup compounds thereto,
(iii) [***], (iv) any compound useful for treating, diagnosing or preventing [***], unless agreed otherwise by Anacor and (v) any
[***], unless agreed otherwise by Anacor. 

        "Elanco Invention" means any Invention (other than a Joint Invention) that is discovered, made, or conceived by or on behalf of Elanco
and/or its Affiliates (other than by Anacor or its Affiliates) in the course of performing its activities under the Product Development Plan. For clarity, any invention by Elanco and/or its Affiliates
outside the Product Development Plan will be solely owned by Elanco and/or its Affiliates and will not be deemed an Elanco Invention, unless such invention uses or incorporates Anacor Confidential
Information, Anacor Patent Rights, Anacor Inventions or Anacor Technology. 

        "Elanco IP" means any and all Patent Rights, Inventions and Technology owned and/or controlled by Elanco. 

        "Elanco Patent Rights" means any and all Patent Rights covering or claiming an Elanco Invention. 

        "Elanco Research IP" means any and all Patent Rights and Technology Controlled by Elanco and/or its Affiliates that are necessary or
reasonably useful for Anacor to conduct its activities under the Product Development Plan. 

        "Existing Agreements" means the following agreements between the Parties, each as amended as of the [***];
[***]. 

        "Field" means (a) [***], applications and uses for, [***],
[***], [***] [***]. Notwithstanding the foregoing, "Field" shall not include: (i) [***],
(ii) [***], (iii) subject to Section 2.9, the use of any Anacor Technology in a field that is subject to an option or license granted by Anacor to a Third
Party prior to the Effective Date, and (iv) the treatment, diagnosis or prevention of [***], unless agreed otherwise by Anacor. For clarity, the Field shall not include
any use that is aimed at the diagnosis, treatment, prevention and/or control of any human diseases or condition, including any studies with or in non-human animals for the purpose of
researching or developing products intended for human use. 

        "First Commercial Sale" of any Product means the first sale for use by an end-user customer of such Product in a country. 

        "[***] means a fixed-dose [***] as may be added by the Parties pursuant to
Section 5.7(a). 

        "Generic Product" means, with respect to a particular Product and country, a product that (a) is sold by a Third party (who is not
authorized or licensed by Elanco or its Affiliates, or by Anacor or its Affiliates at the request of Elanco, and who did not purchase such product in a chain of distribution that included Elanco or
its Affiliates or sublicensees), and (b) contains the same Elanco Compound as such Product. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

5

 

        "GxP" means compliance with all relevant Regulatory Agency requirements for Good Clinical Practices (per FDA/CVM guidance "Good Clinical
Practices: VICH GL9"), Good Laboratory Practices (per FDA/CVM regulation "21 CFR Part 58"), and Current Good Manufacturing Practices (per FDA/CVM regulation "21 CFR Part 211, 225 or
226"), and equivalents in all countries outside the United States. 

        "Invention" means patentable and non-patentable ideas, discoveries or other Technology made or conceived by or on behalf of
one or more employee(s), contractor(s) or agent(s) of Anacor or Elanco, which arise in the performance of a Party's obligations under, and during the term of, this Agreement. 

        "Joint Invention" means an Invention discovered, made, or conceived jointly by Anacor employee(s), contractor(s) or agent(s) and Elanco
employee(s), contractor(s) or agent(s). 

        "Joint Patent Rights" means Patent Rights covering or claiming a Joint Invention. 

        "NADA" means a New Animal Drug Application, as defined in the U.S. Food, Drug and Cosmetic Act, as amended, and applicable regulations
promulgated thereunder by the U.S. Food and Drug Administration or its successor, or any other equivalent application submitted to a Regulatory Agency for approval to market a Product in the U.S. or
any other country. 

        "Net Sales" means, with respect to a Product, the gross amount invoiced by Elanco (including any Elanco Affiliate) or any sublicensee
thereof to unrelated Third Parties (excluding any sublicensee who resells such Product) for Product sales in the Territory, less the following actual amounts incurred or accrued (as may be adjusted
from time to time) for: 

	(a)
	Customary
trade, quantity and cash discounts allowed;

	(b)
	[***];

	(c)
	Discounts,
refunds, rebates, chargebacks, retroactive price adjustments and similar allowances, limited to reasonable adjustments and allowances which
effectively reduce the net selling price;

	(d)
	Actual
Product returns or allowances;

	(e)
	[***];

	(f)
	Any
tax imposed on the sale, delivery or use of the Product, including sales, use, excise or value added taxes, but excluding any tax on income; and

	(g)
	[***].

        Such
amounts will be determined from the books and records of Elanco, Elanco Affiliates and/or sublicensee(s) (as applicable), maintained in accordance with U.S. Generally Accepted
Accounting Principles (also known as "GAAP") or, in the case of sublicensees, such similar accounting principles, consistently applied. Elanco further
agrees in determining such amounts, it will use Elanco's then-current standard procedures and methodology consistently applied across all of its products, including Elanco's
then-current standard exchange rate methodology for the translation of foreign currency sales into U.S. Dollars or, in the case of sublicensees, such similar methodology, consistently
applied. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

6

 

        In
the event that the Product is sold as part of a Combination Product (where "Combination Product" means any pharmaceutical product which
comprises the Product and other active compound(s) and/or ingredients), not to include the [***], the Net Sales of the Product, for the purposes of determining royalty
payments, shall be determined by multiplying the Net Sales of the Combination Product (as defined in the standard Net Sales definition) by the fraction, A / (A+B) where A is the
[***] of the Product when sold separately in finished form, and B is the [***] of the other product(s) sold separately in finished form. 

        In
the event that the [***] of the Product can be determined but the [***] of the other product(s) cannot be determined, Net Sales for
purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product by the fraction A / C where A is the [***] of the Product
when sold separately in finished form and C is the [***] of the Combination Product. 

        In
the event that the [***] of the other product(s) can be determined but the [***] of the Product cannot be determined, Net Sales for
purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product by the following formula: one (1) minus B / C where B is the
[***] of the other product(s) when sold separately in finished form and C is the [***] of the [***]. 

        In
the event that the [***] of both the Product and the other product(s) in the Combination Product cannot be determined, the Net Sales of the Product shall be
determined by the Parties in good faith to reasonably reflect the fair market value of the contribution of the Product in the Combination Product to the total market value of such Combination Product. 

        The
[***] for a Product, other product(s), or Combination Product shall be [***]. When determining the [***] of a
Product, other product(s), or Combination Product, the [***] for the respective Product, other product(s), or Combination Product. In the [***] will be
used for the Product, other product(s), or Combination Product. Any over or under payment due to a difference between [***] will be paid or credited in the first royalty
payment of the following Calendar Year. 

        "Notice" means the definition provided in Section 11.6. 

        "Parties" means Anacor and Elanco. 

        "Party" means Anacor or Elanco. 

        "Patent Rights" means rights under all patents, provisional and non-provisional, (including all reissues, extensions,
substitutions, confirmations, re-registrations, re-examinations, re-validations, patents of addition, supplementary protection certificates or the equivalents
thereof) and under all provisional and non-provisional patent applications (including all continuations, continuations-in-part and divisionals thereof). 

        "POC Study(ies)" means one or more initial Candidate Compound proof-of-concept studies that Elanco may conduct in
accordance with the Product Development Plan, and if so at Elanco's expense, to determine whether to select such Candidate Compound as an Elanco Compound. The criteria for establishing POC Studies
will be determined within thirty (30) days after the Effective Date and attached as Exhibit B of this Agreement. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

7

 

  
        "Primary Contact Person" means the respective individuals designated by Anacor and Elanco, as noted in Exhibit D, who will be
responsible for the day-to-day interactions between the Parties related to the Design & Development Program and the management of the day-to-day
operations of the Design & Development Program. Each Party may change its Primary Contact Person upon Notice to the other Party. 

        "Product" means any product that includes an Elanco Compound, whether or not as the sole active ingredient and in any dosage form or
formulation and regardless of mode of delivery, which product is registered or sold by or for Elanco or its Affiliates or their respective sublicensees in the Field in the Territory. 

        "Product Development Plan" means the written plan setting forth the activities to be conducted by the Parties during the Research Term for
each Project and estimated timelines therefor, as amended from time to time by the Development Committee pursuant to Section 4.2(a). 

        "Program Year" means each twelve (12) calendar month period during the term of the Design & Development Program, except that
(a) the first Program Year will not be twelve (12) calendar months in length, but will be the period from the Effective Date through 31-December of that calendar year, and
(b) the last Program Year will not be twelve (12) calendar months in length, but will be the period from 1-January through the end of the Research Term in the last Program
Year. 

        "Project" means one of the research and development projects to be conducted by the Parties under the Design & Development Program
in the following focus areas: (a) [***] in focus areas to be determined by the Development Committee pursuant to Section 4.2(c). 

        "Protocol Concurrence" means Elanco's receipt of Regulatory Agency approval of submitted study designs of pivotal safety and efficacy
study(ies). 

        "Reasonable Commercial Efforts" means effort, expertise and resources normally used by [***] in the development
and/or commercialization of a compound or product owned or controlled by [***] which is of similar market potential at a similar stage in its development or product life,
taking into account issues of safety and efficacy, product profile, the competitiveness of the marketplace, the proprietary position of the compound or product, the regulatory structure involved, the
profitability of the applicable products, and other relevant factors. 

        "Regulatory Agency" means any governmental authority that regulates Products, including the Drug Enforcement Administration (DEA),
including the Controlled Substance Section (CSS); Environmental Protection Agency (EPA); Food and Drug Administration (FDA), including the Center for Veterinary Medicine (CVM) and the Center for Drug
Evaluation and Research (CDER); Food Safety and Inspection Service (FSIS); U.S. Department of Agriculture (USDA); or any counterparts thereof in jurisdictions outside of the USA. 

        "Rejected Field" has the meaning provided in Section 2.2(b). 

        "Research Term" means the period of time commencing on the Effective Date and expiring 48 (forty-eight) months after the Effective Date,
unless terminated sooner by the Parties pursuant to Section 4.1. 

        "Technology" means specifications, sketches, drawings, schematics, prototypes, methods, protocols, know-how, trade secrets,
chemical structures, all proprietary data, information, inventions, regulatory submissions, material, compounds, strains, cell lines or other intellectual property of any kind, excluding Patent
Rights. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

8

 

        "Territory" means worldwide. 

        "Third Party" means any entity, including any natural person, other than Anacor or Elanco and their respective Affiliates. 

        "Valid Claim" means either (a) a claim of an issued and unexpired patent which has not been held permanently revoked, unenforceable
or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid
or unenforceable through re-examination, reissue or disclaimer or otherwise; or (b) a claim of a pending patent application, which claim was filed in good faith and has not been
abandoned or finally disallowed without the possibility of appeal or refiling of said application, provided that no more than [***] years has passed from the filing date of
such patent application. 

 ARTICLE II

LICENSING AND TRADEMARKS; EXCLUSIVITY  

        2.1    License Grant to Elanco.    Subject to the terms and conditions of this Agreement,
Anacor hereby grants to Elanco (a) the sole and exclusive (even as to Anacor) sub-licensable (solely in accordance with Section 2.5) license under Anacor Technology, Anacor
Patent Rights, Anacor Inventions and Anacor's interest in Joint Patent Rights, if any, to research, develop, make, have made, use, sell, have sold, offer for sale, import and export Elanco Compounds
and Products in the Field in the Territory and (b) a co-exclusive (with Anacor), non-sub-licensable license under the Anacor Research IP during the Research
Term solely for Elanco to conduct its activities under the Product Development Plan, including to research and develop Candidate Compounds, in each of case (a) and (b) subject to
Anacor's retained rights under the Anacor Technology, Anacor Patent Rights, Anacor Inventions, Joint Patent Rights and Anacor Research IP to conduct Anacor's obligations under the Product Development
Plan during the Research Term. 

        2.2    Anacor Rights and Rights Retained; Rejected Fields; Field.    

        (a)   Anacor
retains its rights for any and all purposes outside the Field in the Territory to use the Anacor Technology, Anacor Patent Rights, Anacor Inventions and Anacor
Research IP (including to research, develop, make, have made, use, sell, have sold, offer for sale, import, export and license products and processes). 

        (b)   Anacor
shall have a right to propose focus areas at any time during the Research Term. Each Anacor Project proposal shall include a description of the efforts, all
supporting data and an estimate of the resources contemplated by each of the Parties to conduct such Project. Any such Project shall be in addition to the resource requirements of the ongoing
Projects. Each such focus area that is proposed by Anacor and not agreed as a Project by Elanco or Elanco's Development Committee members [***] shall be deemed a
"Rejected Field" and thereafter excluded from the definition of Field. 

        (c)   Within
thirty (30) days after the end of the Research Term, the Parties shall amend this Agreement to specify all focus areas of the designated Projects under
this agreement [***]. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

9

 

        2.3    License Grant to Anacor.    Subject to the terms and conditions of this Agreement,
Elanco hereby grants to Anacor (a) the sole and exclusive sub-licensable license under the Elanco Inventions, Elanco Patent Rights and Elanco's interest in Joint Patent Rights, if
any, to research, develop, make, have made, use, sell, have sold, offer for sale, import and export any products other than Products (or any other product containing an Elanco Compound) outside the
Field in the Territory and (b) a nonexclusive, non-sub-licensable license under the Elanco Research IP during the Research Term solely for Anacor to conduct its
activities under the Product Development Plan. 

        2.4    Rights Reverting to Anacor.    Elanco shall inform Anacor via Notice promptly after
deciding to cease development or commercialization of any Elanco Compound or Product, [***]. Without limiting any other applicable provisions of this Agreement, Anacor's rights
granted to Elanco to a specific Elanco Compound or Product, as applicable, will revert to Anacor [***] if:  

	(a)
	Elanco
informs Anacor via Notice that [***] or that Elanco is ceasing development or commercialization of such Elanco Compound or
Product [***]; or

	(b)
	Anacor
provides Notice to Elanco under Section 5.1, and Elanco fails to pay or opts not to pay any valid milestone payment due to Anacor in
accordance with Section 5.1; or

	(c)
	this
Agreement is terminated by Elanco in accordance with Section 10.8. 

If
any such Elanco Compound or Product reverts to Anacor in accordance with this Section 2.4, then Anacor will again have Anacor's rights with respect to such reverted Elanco Compound or
Product, to use and exploit such reverted rights. In addition, Elanco hereby grants to Anacor, effective upon such reversion, a fully-paid, sub-licenseable, perpetual,
irrevocable, exclusive license under the Elanco Inventions and Elanco Patent Rights, and any other Technology and Patent Rights Controlled by Elanco or its Affiliates that claim, cover or embody such
Elanco Compound or Product or its manufacture or use, to make, have made, use, sell, offer for sale and import the reverted Elanco Compound and Product in the Territory (i) in the Field
[***] and (ii) outside the Field. For clarity, the "rights to Technology and Patent Rights Controlled by Elanco or its Affiliates" in the preceding sentence shall be
limited to Technology and Patent Rights embodied in or necessary to manufacture or use, to make, have made, use, sell, offer for sale and import the reverted Elanco Compound and Product as of the date
of reversion. 

        2.5    Sublicenses.    Subject to the other provisions of this Agreement, and upon the prior
written approval of Anacor, not to be unreasonably withheld, Elanco shall have the sole right to sublicense any and all rights licensed to Elanco under Section 2.1; provided, however, that
Elanco's sublicensee shall not have the right to grant further sublicenses without the prior written consent of Anacor, which shall be at Anacor's sole discretion. Any such sublicense by Elanco shall
be consistent with the terms of this Agreement, and shall include an obligation for each such sublicensee to comply with the applicable obligations of Elanco set forth in this Agreement. Elanco shall
be responsible for any breach of this Agreement that is caused by the performance (or failure to perform) of its sublicensee. The grant of a sublicense will not relieve Elanco of its obligations under
this Agreement, except to the extent they are satisfactorily performed by such sublicensee. 

        2.6    Trademarks.    Elanco will be free to use and to register in any trademark office any
trademark for use with a Product in its sole discretion, except for trademarks proprietary to Anacor and its Affiliates. Elanco will own all right, title and interest in and to any such trademark in
its own name during and after the term of this Agreement, except as provided in Section 10.3, except for trademarks proprietary to Anacor and its Affiliates. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

10

 

        2.7    Anacor Exclusivity.    Except for Anacor's activities under the Product Development
Plan and except with respect to a Product whose rights have reverted to Anacor pursuant to Section 2.4, Anacor shall not, either alone or with or for any Third Party or through outlicense to
any Third Party, research, develop or commercialize any compound in the Field during the Research Term [***]. For clarity, the definition of Field as used in this
Section 2.7 shall be subject to adjustment during the Research Term to exclude Rejected Fields, and shall be [***]. 

        2.8    Elanco Exclusivity.    Except pursuant to this Agreement, Elanco and its Affiliates
shall not, either alone or with or for any Third Party, research, develop or commercialize any small molecule compound [***], in each case (a) and (b) during the
Research Term and for [***] thereafter. For clarity, the foregoing shall not restrict Elanco from conducting any research or development with compounds
[***], so long as the research is not directed toward developing a product for sale that contains a [***] in the final product. 

        2.9    Anacor Compounds Outside the Field.    With respect to any compounds that are
(a) subject to an option or license granted by Anacor to a Third Party prior to the Effective Date, (b) [***], (c) compounds useful for treating,
diagnosing or preventing [***] or (d) any other compound that [***], Anacor shall notify, via Notice, Elanco if any such compounds are no longer
being developed by Anacor or its Third Party licensee or optionee, and in such event such compounds shall no longer be excluded from the definitions of Field and Elanco Compound. Notwithstanding
anything to the contrary in the definitions of Field and Elanco Compound, or elsewhere in this Agreement, Anacor shall not have the right to exclude from such definitions, at any particular time, any
compound that was an Elanco Compound prior to such Notice. 

        2.10    No Implied Licenses.    Except as expressly set forth in this Agreement, neither Party
grants to the other Party any license, express or implied, under its intellectual property rights. 

 ARTICLE III

DEVELOPMENT COMMITTEE  

        3.1    Development Committee Formation and Composition.    A joint committee comprised of four
(4) members, two (2) named representatives of each of Elanco and Anacor (the "Development Committee"), if not listed in Exhibit D
below, will be appointed within thirty (30) days of the Effective Date. Each Party will provide the other Party via Notice with the name, title, e-mail address, telephone number and
facsimile number of their respective Development Committee members and such information will be set forth in Exhibit D. The Development Committee will meet as needed, but not less than once
each quarter during the Research Term or upon such schedule as agreed upon by the Development Committee. Such meetings will be at such times agreed to by Anacor and Elanco, and will alternate between
the offices of the Parties unless the Parties otherwise agree, or will be in such other form (e.g., telephone or video conference) as the members of the Development Committee will agree. 

        3.2    Development Committee Functions and Powers.    The Development Committee will be
responsible for review and oversight of the Design & Development Program consistent with each Party's internal policies and procedures. Notwithstanding anything to the contrary, the Development
Committee will have no right, power or authority to amend this Agreement. The principal functions of the Development Committee will include:  

	(a)
	approving
the Product Development Plan and any amendments thereto; 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

11

 

	(b)
	determining
additional Projects to be conducted under the Design & Development Program or whether to terminate any ongoing Project;

	(c)
	monitoring
the progress and results achieved under the Design & Development Program;

	(d)
	fostering
the collaborative relationship between the Parties;

	(e)
	facilitating
the transfer and development of Anacor Technology in accordance with this Agreement; and

	(f)
	such
other functions in regard to the Design & Development Program as mutually agreed by the Parties. 

A
Party may change one or more of its representatives to the Development Committee at any time. Members of the Development Committee may be represented at any meeting by another member of the
Development Committee, or by a deputy. Either Party may permit additional employees and consultants to attend and participate (on a non-voting basis) in the Development Committee meetings,
subject to the confidentiality provisions of this Agreement. 

        3.3    Decisions of the Development Committee.    A quorum of the Development Committee will
be present at any meeting of the Development Committee if one (1) representative of each Party is present at such meeting in person or by telephone or videoconference. If a quorum exists at any
meeting, a unanimous vote of the members of the Development Committee present at such meeting is required to take any action on behalf of the Development Committee. No actions may be taken by the
Development Committee at a meeting if a quorum is not present. If the Development Committee fails to reach unanimity on a matter before it for decision, the matter shall be referred to the Chief
Executive Officer of Anacor and the President of Elanco for attempted resolution by good faith negotiations. If such officers fail to reach a resolution within thirty (30) days after the matter
is referred to them, then (a) if the matter relates to the inclusion of a new Project under the Design & Development Program, such Project shall not be included, unless the Parties
subsequently mutually agree on the research area and scope of Project; (b) the matter shall be resolved consistent with Elanco's position to the extent such matter relates to the development of
Elanco Compounds and/or their use in the Field; (c) the matter shall be resolved consistent with Anacor's position to the extent such matter relates to technical issues involving Anacor's
Patent Rights or Technology; and (d) respect to all other matters, the matter shall be
resolved in accordance with the dispute resolution provisions set forth in Section 12.1 of this Agreement. 

        3.4    Chair.    The Development Committee will be chaired by one Elanco representative
appointed by Elanco. The chair does not have a second or casting vote. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

12

 

        3.5    Minutes and Reports.    The Development Committee will be responsible for keeping
accurate minutes of its deliberations that record all proposed decisions and all actions recommended or taken. Within ten (10) business days of each meeting, the chair will provide the Parties
with draft minutes of such meeting and a draft of a written accompanying report describing in reasonable detail the status of the Design & Development Program, a summary of the work and
progress to date, any issues requiring resolution and any proposed decisions and actions recommended or taken to all members of the Development Committee. Minutes will be deemed approved unless a
Development Committee representative of either Party objects to the accuracy of such minutes or accompanying report by providing Notice to the other Party's Development Committee representatives
within thirty (30) days of receipt of such minutes and report. In the event that any such objection is not resolved by the Development Committee, such minutes and accompanying report will be
amended to reflect such unresolved dispute. All records of the Development Committee will be considered Confidential Information of each Party and will be available to both Parties. 

        3.6    Information and Results.    Except as otherwise provided, the Parties will make
available and disclose to one another all results of the work conducted pursuant to the Design & Development Program prior to and in preparation for the Development Committee meetings, by the
deadline and in the form and format to be designated by the Development Committee. 

        3.7    Subcontracts.    Each Party may subcontract to Affiliates and Third Parties portions of
the Design & Development Program to be performed by such Party with the prior written approval of the other Party, not to unreasonably withheld; provided, however, that such Affiliate and Third
Party subcontractors will be required to enter into appropriate obligations of confidentiality including a grant of exclusive license rights by the subcontractor to the subcontracting Party (said
agreements of which signed copies will be submitted to the Development Committee upon request by Anacor), unless such
subcontracting would not require the transfer of Confidential Information to the Affiliate or Third Party subcontractor, and further provided that the Parties' rights under this Agreement are not
adversely affected. 

 ARTICLE IV

DESIGN & DEVELOPMENT PROGRAM; PRODUCT DEVELOPMENT AND COMMERCIALIZATION  

        4.1    Performance of Design & Development Program.    Anacor and Elanco will establish
a program under which Anacor and Elanco will use Reasonable Commercial Efforts to collaboratively develop Product(s), with the initial goal of developing compounds in the [***]
Project, with the understanding that new Projects will be added during the Research Term as provided in Section 3.3 and Section 4.2. Each Party shall use Reasonable Commercial Efforts to
conduct the activities allocated to such Party in the Product Development Plan, according to the timelines set forth therein. In general, and as more specifically set forth in the Product Development
Plan, Anacor shall be responsible for conducting [***] under the Design & Development Program, and Elanco shall be responsible for conducting
[***] under the Design & Development Program. Except for payments under Section 4.10 or as otherwise expressly set forth in this Agreement, each Party shall be
solely responsible for all internal and external costs and expenses it incurs to conduct its activities under the Design & Development Program. Elanco shall have the right to terminate the
Research Term effective no earlier than [***] from the Effective Date, upon [***] days prior written notice to Anacor. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

13

 

 
        4.2    Product Development Plan.    

	(a)
	The
Design & Development Program will be conducted in accordance with the Product Development Plan, which describes the work to be pursued by Anacor
and Elanco during each Program Year during the Research Term. The initial Product Development Plan for the [***] Project is attached hereto as Exhibit A. Within thirty
(30) days after the Effective Date, Elanco will provide a revised, comprehensive version of such initial Product Development Plan to the Development Committee for review and approval. As
additional Projects are added pursuant to Section 4.2(c), Elanco will prepare and provide a Development Plan to the Development Committee for review and approval within thirty (30) days
following the selection of each new Project by the Development Committee. Except for the first Program Year, the Product Development Plan will be updated and approved by the Development Committee no
later than ninety (90) days prior to the start of each Program Year. The Product Development Plan in effect at any time may only be amended by the Development Committee, subject to
Section 3.3. If at any time during the Program Year, either Party determines that a change to the Product Development Plan is necessary, such Party will prepare and submit to the Development
Committee a written proposal detailing its proposed changes to the Product Development Plan, and the Development Committee will consider and act on such proposed changes at the next meeting, or sooner
if necessary in light of the proposed change.

	(b)
	The
Development Committee will identify [***] as needed to provide research activity for the Anacor research teams for consideration
as part of the Design & Development Program. Anacor may, but shall not be obligated to, also recommend compounds identified by Anacor outside of the Design & Development Program for
consideration as potential Candidate Compounds by the Development Committee.

	(c)
	During
the Research Term, the Development Committee shall identify additional Projects necessary to adequately provide research areas for the Anacor
research teams as outlined in Section 4.10(a), and may terminate any ongoing Project. Promptly after a selection decision for a Project, the Development Committee shall amend the Product
Development Plan to include a description of the activities allocated to each Party under such additional Project and estimated timelines therefor. For clarity, the focus area of and activities of any
such new Project shall be included under this Agreement only with the mutual written agreement of both Parties. 

        4.3    Sharing of Testing, Marketing, Manufacturing and Regulatory Data.    The Parties will
provide to each other, at no charge, access to testing and pilot manufacturing data generated under the Design & Development Program relevant to Products in the Field, subject to existing
confidentiality obligations. The Parties will provide to each other, at no charge, access to regulatory data relevant to Products in the Field, or if required in response to inquiries from Regulatory
Agencies related to Products, subject to existing confidentiality obligations. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

14

 

        4.4    Results and Records.    The Parties will make available and disclose to one another all
results of the work conducted pursuant to the Design & Development Program, and will keep such records as described herein; provided that each Party will maintain such results and records of
the other Party in confidence in accordance with the confidentiality provisions in this Agreement, and will not use such results or records of the other Party except to the extent otherwise permitted
by this Agreement. The Parties will maintain records of the results in sufficient detail and in good scientific manner appropriate for patent purposes, and in a manner that properly reflects all work
done and results achieved in the performance of the Design & Development Program (including all data in the form required to be maintained under any applicable governmental regulations). Such
records will include reports, research notes, charts, graphs, computations, analyses, recordings, photographs, and other graphic or written data specifically relevant to the Design &
Development Program. 

        4.5    Availability of Employees.    Each Party agrees to make its employees and
non-employee consultants reasonably available at their respective places of employment to consult with the other Party on issues arising during the Research Term in connection with the
Design & Development Program or in connection with any request related to a Product or the Design & Development Program from any Regulatory Agency, including regulatory, scientific,
technical and clinical testing issues. 

        4.6    Visit of Facilities.    Representatives of the Parties may, upon reasonable advanced
notice and at times reasonably acceptable to the other Party, visit the portions of the other Party's facilities where activities are being performed in connection with the Design & Development
Program, and consult informally, during such visits and by telephone, facsimile and e-mail, with the other Party's personnel performing work on the Design & Development Program.
Notwithstanding the foregoing, either Party may restrict the other's access to its facilities as required to protect the confidentiality of information not directly related to the Design &
Development Program. 

        4.7    Material Transfer.    To facilitate the conduct of the Design & Development
Program, either Party may provide to the other Party certain biological materials or chemical compounds owned by or licensed to the supplying Party for use by the other Party in furtherance of the
Design & Development Program (collectively, "Materials"). Except as otherwise provided under this Agreement, all such Materials delivered to the
other Party shall remain the sole property of the supplying Party, shall be used only in furtherance of the Design & Development Program and solely under the control of the other Party (or its
Affiliates), shall not be used or delivered to or for the benefit of any Third Party without the prior written consent of the supplying Party, and shall not be used in research or testing involving
human subjects, unless expressly agreed. The Materials supplied under this Section 4.7 are supplied "as is" and must be used with prudence and appropriate caution in any experimental work,
since not all of their characteristics may be known. 

        4.8    Selected Design.    Sample Development Decision criteria for the
[***] Project are attached hereto as Exhibit C. Within thirty (30) days after the Development Committee identification of an additional Project, Elanco shall
provide to Anacor sample Development Decision criteria for such Project. During the Design & Development Program, following a Development Decision, Elanco will have the right to select such
Candidate Compound as an Elanco Compound, and up to [***] additional Candidate Compounds as Backup Compounds with respect to such Elanco Compound, for development and
commercialization. [***] Within ten (10) days after making a Development Decision, Elanco will notify the Development Committee of the selected Elanco Compound
(including Backup Compounds) via Notice. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

15

 

        4.9    Product Development by Elanco.    Upon Elanco's selection of an Elanco Compound, Elanco
will conduct and, as between the Parties, will be solely responsible for all development activities in the Field and Territory for Products containing such Elanco Compound, including the preparation
and submission of the appropriate regulatory documents required for commercialization within the Field and Territory, and all such activities shall be at Elanco's sole expense. Elanco will comply with
all applicable laws and regulations in developing Products, including all applicable GxP. Elanco will use Reasonable Commercial Efforts to develop and commercialize each Elanco Compound as a Product
throughout the Territory. On an annual basis, Elanco will provide Anacor with a written report summarizing Elanco's development activities and results with respect to each Elanco Compound and Product
since the last such report. 

        4.10    Technology Maintenance by Anacor.    

	(a)
	Elanco
will pay Anacor, as described in "(b)" of this Section 4.10, for conducting the activities allocated to Anacor in the Product Development
Plan. Unless agreed otherwise by the Parties, Anacor will not commence any work or incur such expenses for activities that are not set forth in the Product Development Plan. With respect to the
activities to be undertaken by Anacor as mutually agreed under this Agreement, Elanco will pay [***] to Anacor per quarter until the end of the Research Term, unless terminated
sooner pursuant to Section 4.1 or Article 10, but subject to Section 10.4 or 10.8, for these activities; provided, that the first such payment shall be prorated for the period
commencing on the Effective Date and ending on September 30, 2010. Such amounts shall be Anacor's sole compensation for the activities conducted by Anacor under the Product Development Plan.
Anacor will conduct the activities allocated to Anacor in the Product Development Plan including a minimum staffing of [***] research teams that consist of
[***] scientists each directly involved in activities. For clarity, each team will consist of at least [***] to conduct the activities allocated to
Anacor in the Product Development Plan.

	(b)
	For
expenses described in "(a)" of this Section 4.10, Elanco will pay Anacor within [***] days of Anacor's electronic
submission of invoice via the [***] for any such expenses, provided that Anacor will not submit such invoice for any quarter earlier than [***]. 

        4.11    Regulatory Approvals of Product.    Elanco will assume all responsibility and related
expense for Regulatory Agency approvals of Products in the Field and Territory. 

        4.12    Manufacturing of Products.    Elanco will have the exclusive right and obligation in
the Field to manufacture, or have manufactured, Products for all development, Regulatory Agency approval, and commercialization purposes in the Field. Elanco will assume all responsibility and related
expense for manufacturing and supply of commercial quantities of Products to Elanco customers. 

        4.13    Elanco Marketing and Sales of Products.    Elanco will assume all responsibility and
related expenses for marketing and sales of Products to Elanco customers. 

        4.14    Regulatory Issues and Obligations, Ownership and Survival Rights.    Elanco will own
the marketing authorizations, plus the veterinary master file and any foreign equivalents (collectively, "VMF") for Products developed and
commercialized by Elanco, at its sole expense, but will assign to Anacor, in perpetuity and free of royalties to Elanco, each such regulatory registration and VMF if Elanco terminates this Agreement
during the term of this Agreement other than for Anacor's breach, or if Anacor terminates this Agreement for an Event of Default by Elanco pursuant to Section 10.10. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

16

 

        4.15    Regulatory / Quality Assurance / Quality Control.    The Parties will allow
Regulatory, Quality Assurance and Quality Control personnel from the other Party or its contractors timely and reasonable access to audit trial protocols, pilot scale manufacturing documents,
procedures manuals, and other Product development-related items relating to the Product Development Plan or the Design & Development Program. Any such audit shall be conducted no more
frequently than once per year unless reasonably required more frequently to timely address regulatory issue(s). The Party conducting the audit will bear all costs and expenses of either Party in
connection with such audit. 

        4.16    Product Quality.    Elanco will determine, in its sole and reasonable business
judgment, Product quality standards including: [***] Elanco will also determine and specify to the Development Committee, in its sole and reasonable business judgment, such
Product quality standards that must be included in any manufacturing requirements for Products. 

        4.17    Additional Anacor Development Activities.    The Parties acknowledge that Elanco may
benefit from Anacor's expertise in conducting certain development activities with respect to Elanco Compounds or Products. Upon Elanco's request, the Parties will discuss the terms under which Anacor
would conduct Product development activities for Elanco after the Research Term or outside the scope of the Design & Development Program, at a mutually agreed compensation rate. 

 ARTICLE V

FINANCIALS  

        5.1    Consideration.    Elanco shall notify Anacor within ten (10) days after each
achievement of a milestone under Section 5.3, 5.4, 5.5 or 5.6. In each instance for the technology access fees and milestone payments described below, if Elanco fails to pay or opts not to pay
the relevant owed payment within [***] days of Elanco's receipt of Notice from Anacor that the relevant payment was not made by the applicable due date, Anacor's rights shall
revert as described in Section 2.4. 

        5.2    Technology Access Fee.    Within [***] days after the Effective
Date, Elanco shall pay a one-time, non-refundable, non-creditable signing fee payment of [***] to Anacor for the licenses granted herein. 

        5.3    Development Decision Milestone(s).    Furthermore, if Elanco wishes to maintain its
exclusive license rights to Product(s) in the Field in the Territory, Elanco will pay to Anacor not more than [***] days following Elanco's making a positive Development
Decision for each Elanco Compound in the Field, a one-time (per Elanco Compound), non-refundable, non-creditable payment of [***]. For
clarity, Elanco will make only one (1) payment per Elanco Compound, which includes the lead compound and up to [***] Backup Compounds. Thus, the replacement of a lead
Elanco Compound with a Backup Compound does not warrant an additional Development Decision payment. 

        5.4    Protocol Concurrence.    Furthermore, if Elanco wishes to maintain its exclusive
license rights to the Product(s) and Elanco Compounds in the Field in the Territory, Elanco will pay to Anacor for each Product, not more than [***] days following Elanco's
receipt of Protocol Concurrence from a Regulatory Agency, the following:  

	a)
	A
one-time (per Product), non-refundable, non-creditable payment of [***] for the receipt of
Protocol Concurrence for a Product containing an Elanco Compound arising from the [***] Project; 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

17

 

	b)
	A
one-time (per Product), non-refundable, non-creditable payment of [***] for the receipt of
Protocol Concurrence for a Product containing an Elanco Compound arising from a Project other than the [***] Project. 

        5.5    Regulatory Agency Submission Milestone(s).    Furthermore, if Elanco wishes to maintain
its exclusive license rights to Product(s) and Elanco Compounds in the Field in the Territory, Elanco will pay to Anacor not more than [***] days following Elanco's receipt of
the first Regulatory Agency acceptance for filing of Elanco's full or administrative NADA or terminal submission thereof (i.e., a complete regulatory dossier) for each Product in the Field, a
one-time (per Product), non-refundable, non-creditable payment of [***]. For clarity, only one payment will be made for a particular Product
submitted regardless of the number of countries in which regulatory submissions are made for that Product. As used in this Section 5.5, "acceptance for filing" means the receipt by Elanco or
its Affiliate or sublicensee of written notice from the applicable Regulatory Authority that such NADA is officially filed. 

        5.6    Regulatory Agency Approval Milestone(s).    Furthermore, if Elanco wishes to maintain
its exclusive license rights to Product(s) and Elanco Compounds in the Field in the Territory, Elanco will pay to Anacor not more than [***] days following Elanco's receipt of
the first Regulatory Agency approval of Elanco's full or administrative NADA or terminal submission thereof (i.e., a complete regulatory dossier) for each Product in the Field, a
one-time (per Product), non-refundable, non-creditable payment of:  

	(a)
	[***]
for a Product containing an Elanco Compound arising from the [***] Project. For clarity, only one
payment will be made for a particular Product approved regardless of the number of countries in which regulatory approvals are granted for that Product;

	(b)
	[***]
for a Product containing an Elanco Compound arising from the [***] Project. For clarity, only one
payment will be made for a particular Product approved regardless of the number of countries in which regulatory approvals are granted for that Product;

	(c)
	[***]
for a Product containing an Elanco Compound arising from each Project selected under Section 4.2(c). For clarity, only
one payment will be made for a particular Product approved regardless of the number of countries in which regulatory approvals are granted for that Product. 

        5.7    Patent Royalties.    For each Product, Elanco will pay to Anacor on a quarterly basis
the following royalties ("Patent Royalties"):

	(a)
	Royalties
of [***]% on Net Sales in a calendar year by Elanco, its Affiliates and
sublicensees, of a [***] in the Territory, on a Product-by-Product basis during the period that such Product, its manufacture, use, sale, offer for sale
or importation is covered by a Valid Claim of any Anacor Patent Rights or Joint Patent Rights in the country of sale. The Parties agree that if a fixed-dose combination Product containing
[***] is not commercially viable because of the royalty rates payable to Anacor under this Agreement, the Parties shall, upon Elanco's request, discuss in good faith the
inclusion of such combination product as a [***], including an appropriate royalty reduction. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

18

 

	(b)
	Royalties
of [***]% on Net Sales in a calendar year greater than $0 (Zero), up to
and including [***] by Elanco, its Affiliates and sublicensees, for Products other than [***] in the Territory, on a
Product-by-Product basis during the period that such Product, its manufacture, use, sale, offer for sale or importation is covered by a Valid Claim of any Anacor Patent Rights
or Joint Patent Rights in the country of sale.

	(c)
	Royalties
of [***]% on Net Sales in a calendar year greater than
[***], up to and including [***] by Elanco, its Affiliates and sublicensees, for Products other than [***] in the Territory, on
a Product-by-Product basis during the period that such Product, its manufacture, use, sale, offer for sale or importation is covered by a Valid Claim of any Anacor Patent
Rights or Joint Patent Rights in the country of sale.

	(d)
	Royalties
of [***]% on Net Sales in a calendar year greater than
[***] by Elanco, its Affiliates and sublicensees, for Products other than [***] in the Territory, on a Product-by-Product basis
during the period that such Product, its manufacture, use, sale, offer for sale or importation is covered by a Valid Claim of Anacor Patent Rights or Joint Patent Rights in the country of sale. 

        5.8    Know-How Royalties.    If, for a given Product and country, there is no
Valid Claim of any Anacor Patent Rights or Joint Patent Rights in the country of sale that covers the Product or its manufacture, use, sale, offer for sale or importation, then Elanco will pay to
Anacor on a quarterly basis royalties at a rate that is [***] of the Patent Royalties. 

        5.9    Royalty Reduction for Generic Products.    If, in any country where a Product is sold
in exercise of the license granted to Elanco by Anacor hereunder where there is at least one Valid Claim covering such Product, and Generic Products are sold by any Third Party and such Generic
Products achieve [***] or more share of total units of products in the segment in which the relevant Products compete in such country in a calendar quarter, then each of the
Patent Royalties, with respect to such country and such Product shall be reduced by [***]
for the subsequent calendar quarter and thereafter; provided that if such market share of such Generic Products is less than [***] in any calendar quarter thereafter, the
royalty reduction under this Section 5.9 shall no longer apply, commencing with the subsequent calendar quarter. This reduction applies on a Product-by-Product and
country-by-country basis, and may simultaneously be in effect with respect to multiple Products and countries. 

        5.10    Royalty Term.    Royalties under Sections 5.7 and 5.8 shall be payable on a
Product-by-Product and country-by-country basis from the First Commercial Sale of such Product in such country until the later of (a) the
expiration of all Valid Claims of the Anacor Patent Rights and Joint Patent Rights in such country covering the Product or its manufacture, use, sale, offer for sale or importation, and
(b) [***] years after the First Commercial Sale of such Product in such country (the "Royalty Term" for such Product and country). 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

19

 

        5.11    Audits.    Upon request via Notice from Anacor, Elanco will permit an independent
auditing firm selected by Anacor and approved by Elanco, not to be unreasonably withheld, to have access during normal business hours to such of the records of Elanco as may be reasonably necessary to
verify the accuracy royalty payments of Elanco relating to amounts paid or payable to Anacor hereunder in respect of any calendar year ending not more than thirty-six (36) months
prior to the date of such request. Except as described in the next paragraph, all such audits will be conducted at the expense of Anacor and not more than once in each calendar year. In the event that
Elanco restates or otherwise has made an adjustment to the royalty payable to Anacor for any particular royalty reporting period, Elanco shall certify upon the disclosure of such resatement or payment
of such adjustment that no further adjustment or payments to Anacor are required after such payment or disclosure. 

        In
the event such independent auditing firm concludes that additional payments of any kind as required by this Agreement were owed to Anacor during such period, the additional amounts
will be paid within sixty (60) days of the date Anacor delivers to Elanco such independent auditing firm's written report so concluding. The fees charged by such accountant will be paid by
Anacor, unless the audit discloses that the amounts payable by Elanco for the audited period exceed $50,000 (Fifty Thousand Dollars) or are more than ten percent (10%) of the amounts actually paid for
such period, in which case Elanco will pay the reasonable fees and expenses charged by the independent auditing firm. 

        Elanco
will include in each sublicense granted by it pursuant to this Agreement a provision requiring the sublicensee to make reports to Elanco, to keep and maintain sufficient records
of Product sales and Net Sales pursuant to such sublicense, and to grant access to such records to Elanco to the same extent required of Elanco under this Agreement. 

        The
Parties agree that all information subject to review under this Section 5.11 or under any sublicense agreement is confidential and that it will cause its independent auditing
firm to retain all such information in confidence. 

        5.12    Royalty Payment Terms.    Royalties shown to have accrued by each royalty report
provided for under this Agreement will be due and payable on the date such royalty report is due. Payment of royalties in whole or in part may be made in advance of such due date. Any underpayments or
overpayments with respect to any prior period will be added (including any accrued interest thereon) or deducted, as the case may be, from the next quarterly royalty payment following the
identification of such underpayment or overpayment. 

        5.13    Royalty Reports.    Royalty reports are due for each calendar quarter
[***] days after the end of the quarter. For each calendar quarter, the royalty report will set out on a Product-by-Product basis, Net Sales and the
royalty amount due. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

20

 

        5.14    Withholding of Taxes.    Any withholding of taxes levied by tax authorities outside
the United States on the milestone and royalty payments hereunder will be borne by Anacor. If any such withholding tax is levied by such tax authorities, Elanco will deduct such tax from the sums
otherwise payable by it hereunder, shall pay such tax to the proper tax authorities on behalf of Anacor, and shall promptly furnish Anacor with documentation of such payment. Elanco agrees to
cooperate with Anacor in the event Anacor claims exemption from such withholding or seeks deductions under any double taxation or other similar treaty or agreement from time to time in force, such
cooperation to include providing receipts of payment of such withheld tax or other documents reasonably available to Elanco. Elanco
will assist Anacor in minimizing the amount required to be so withheld or deducted. The recipient of any transfer under this Agreement of Patent Rights, Technology, Candidate Compounds, Elanco
Compounds or Products, as the case may be, shall be solely responsible for any sales, use, value added, excise or other taxes applicable to such transfer. 

        5.15    Exchange Controls.    Except as otherwise provided in this Agreement, all payments to
be made by Elanco pursuant to this Agreement will be paid in U.S. Dollars by wire transfer to a bank account designated by Anacor in writing. If at any time legal restrictions prevent the prompt
remittance of part or all royalties with respect to any country where Product is sold, payment will be made through such lawful means or methods as Elanco may determine. When in any country the law or
regulations prohibit both the transmittal and deposit of royalties on sales or any other payments due under this Agreement in such a country, royalty payments due by Elanco to Anacor in respect of
sales in such country will be suspended for as long as such prohibition is in effect, and as soon as such prohibition ceases to be in effect, all payments that Elanco would have been obligated to
transmit or deposit, but for the prohibition, will forthwith be deposited or transmitted promptly to the extent allowable, as the case may be. If the royalty rate specified in this Agreement should
exceed the permissible rate established in any country, the royalty rate for sales in such country will be adjusted to the highest legally permissible or government-approved rate. 

        5.15    Interest on Late Payments.    If either Party fails to pay any
payment due under this Agreement on or before the date such payment is due, as provided in this Agreement, such late payment shall bear interest, to the extent permitted by applicable law, at the
prime rate as of the date of U.S. Mail postmark of the relevant payment if sent by U.S. Mail, or otherwise on the date of receipt of payment, as published in The Wall Street Journal and found on the
wsj.com website at the following link or its successor site: 

http://interactive5.wsj.com/edition/resources/documents/mktindex.htm?
rates.htm plus three percentage points (3.0 p.p.), as calculated on the number of days the relevant payment is delinquent from and
including the date payment is due through and including the date upon which the owed Party has collected immediately available funds in its own account. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

21

 

  ARTICLE VI

INVENTIONS AND PATENT RIGHTS  

        6.1    Disclosure of Inventions.    Each Party will promptly disclose to the other Party the
patentable Inventions arising under this Agreement made by its employees, contractors or agents. 

        6.2    Anacor Inventions and Patent Rights.    All right, title and interest in all Anacor
Inventions, Anacor Technology and Anacor Patent Rights will be owned by Anacor. 

        6.3    Elanco Inventions and Patent Rights.    All right, title and interest in all Elanco
Inventions, Elanco IP and Elanco Patent Rights will be owned by Elanco. 

        6.4    Joint Inventions and Joint Patent Rights.    Subject to Section 6.8, all right,
title and interest in all Joint Inventions and Joint Patent Rights will be owned jointly by Elanco and Anacor in accordance with joint ownership interests of co-inventors under U.S. patent
laws (that is, each Party shall have full rights to license, assign and exploit such Joint Inventions (and any Joint Patent Rights) anywhere in the world, without any requirement of gaining the
consent of, or accounting to, the other Party), subject to the licenses granted herein and subject to any other intellectual property held by such other Party; provided however, responsibility for
patent filing with respect to Joint Inventions will be as set forth in Section 6.8; and provided further that, except in connection with a permitted assignment of this Agreement pursuant to
Section 11.5, neither Party may assign its interest in any Joint Invention or Joint Patent Right unless Notice of such assignment has been first given to the other Party and the assignee agrees
via Notice to be bound by the terms of this Agreement with respect to the interest so assigned, and the right of first refusal having been extended to the other Party. In the event either Party
decides
to commercially exploit or license to any Third Party any rights or interests in Joint Inventions or Joint Patent Rights inside the Field but outside the scope of the license granted in
Section 2.1, in any jurisdiction in which the consent of joint owners is required for such exploitation or grant of such license, the other Party agrees that it will not unreasonably withhold
its consent, nor require payment in connection with granting such consent. 

        Anacor
may develop, make, have made, use, sell, offer for sale, import, license, practice or commercially exploit (either by itself or to or with any Third Party) any rights in Joint
Inventions or Joint Patent Rights outside the Field in any jurisdiction. Elanco will not develop, make, have made, use, sell, offer for sale, import, license, practice or commercially exploit (either
by itself or with or to any Third Party) any rights in Joint Inventions or Joint Patent Rights outside the Field in any jurisdiction, nor prevent Anacor from so doing. To the extent that any law
requires the consent of Elanco for Anacor to develop, make, have made, use, sell, offer for sale, import, license, practice or commercially exploit (either by itself or to or with any Third Party) any
rights in Joint Inventions or Joint Patent Rights outside the Field in any jurisdiction, the execution of this Agreement is deemed to be the giving of such consent by Elanco. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

22

 

        Elanco
may (and only Elanco may) develop, make, have made, use, sell, offer for sale, import, license, practice or commercially exploit (either by itself or to or with any Third Party)
Products under Joint Inventions or Joint Patent Rights inside the Field in any jurisdiction. Anacor will not develop, make, have made, use, sell, offer for sale, import, license, practice or
commercially exploit (either by itself or with or to any Third Party) any Products under Joint Inventions or Joint Patent Rights inside the Field in any jurisdiction, nor prevent Elanco from so doing.
To the extent that any law requires the consent of Anacor for Elanco to develop, make, have made, use, sell, offer for sale, import, license, practice or commercially exploit (either by itself or to
or with any Third Party) any rights in Joint Inventions or Joint Patent Rights inside the Field in any jurisdiction, the execution of this Agreement is deemed to be the giving of such consent by
Anacor. 

        6.5    Cooperation of Employees.    Each Party represents and agrees that all its employee(s),
contractor(s) and agent(s) will be obligated under a binding written agreement to assign to such Party, or as such Party will direct, all Inventions made or conceived by such employee(s),
contractor(s) or other agent(s) in connection with this Agreement. 

        6.6    Anacor Patent Rights.    Anacor will have sole responsibility for and control over the
filing, prosecution, maintenance and enforcement of the Anacor Patent Rights, at Anacor's expense, subject to the remainder of this Section 6.6. Anacor will keep Elanco informed regarding the
status and prosecution of all patent applications and patents included in such Anacor Patent Rights that are licensed to Elanco pursuant to Section 2.1. To the extent that such Anacor Patent
Rights pertain to the Field, Elanco will be provided in a timely manner with copies of all correspondence with the U.S. Patent & Trademark Office (or the applicable foreign patent office) and
with the opportunity to review and comment upon any papers, responses or other filings prepared by Anacor for submission to the said offices in advance of their filing, and Anacor will reasonably
consider any reasonable comments that are provided by Elanco in a timely manner. 

        No
later than March 1st of each calendar year (or within ninety (90) days of the Effective Date, in the case of the first Program Year) during the term of this
Agreement, Anacor will provide Elanco with a report describing the status of the Anacor Patent Rights licensed to Elanco pursuant to Section 2.1. Such report will include, at a minimum, the
patent application and patent number, country(ies), filing date, issue date, expiration date and other relevant information. 

        If
Anacor determines it will not seek Patent Rights with respect to any potentially patentable Anacor Invention, or if Anacor files Anacor Patent Rights in one or more countries but
subsequently determines, on a country-by-country basis, that it will not file, prosecute or maintain any patent or patent application within the Anacor Patent Rights licensed
to Elanco pursuant to Section 2.1 (except for abandonment of a patent application in favor of a patent application subsequently filed for purposes of continuing the prosecution of Anacor Patent
Rights claiming the inventions included in the abandoned patent application), then Anacor will give Elanco the timely opportunity to direct Anacor to continue to prosecute or maintain the patent
application or patent in Anacor's name and at Elanco's expense. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

23

 

        6.7    Elanco Patent Rights.    Elanco will have sole responsibility for and control over the
filing, prosecution, maintenance and enforcement of the Elanco Patent Rights, at Elanco's expense, subject to the remainder of this Section 6.7. Elanco will keep Anacor informed regarding the
status and prosecution of all patent applications and patents included in such Elanco Patent Rights that are licensed to Anacor pursuant to Section 2.3. To the extent that such Elanco Patent
Rights pertain to outside the Field,
Anacor will be provided in a timely manner with copies of all correspondence with the U.S. Patent & Trademark Office (or the applicable foreign patent office) and with the opportunity to review
and comment upon any papers, responses or other filings prepared by Elanco for submission to the said offices in advance of their filing, and Elanco will reasonably consider any reasonable comments
that are provided by Anacor in a timely manner. 

        No
later than March 1st of each calendar year during the term of this Agreement, Elanco will provide Anacor with a report describing the status of the Elanco Patent Rights
licensed to Anacor pursuant to Section 2.3. Such report will include, at a minimum, the patent application and patent number, country(ies), filing date, issue date, expiration date and other
relevant information. 

        If
Elanco determines it will not seek Patent Rights with respect to any potentially patentable Elanco Invention, or if Elanco files Elanco Patent Rights in one or more countries but
subsequently determines, on a country-by-country basis, that it will not file, prosecute or maintain any patent or patent application within the Elanco Patent Rights licensed
to Anacor pursuant to Section 2.3 (except for abandonment of a patent application in favor of a patent application subsequently filed for purposes of continuing the prosecution of Elanco Patent
Rights claiming the inventions included in the abandoned patent application), then Elanco will give Anacor the timely opportunity to direct Elanco to continue to prosecute or maintain the patent
application or patent in Elanco's name and at Anacor's expense. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

24

 

        6.8    Joint Patent Rights.    Anacor will have the first right to assume responsibility for
the preparation, filing, prosecution and maintenance of any Joint Patent Rights in each country or region of the Territory where the Parties mutually determine that it is commercially reasonable to do
so, using outside patent counsel reasonably acceptable to Elanco, and will keep Elanco reasonably informed of, and consult with Elanco with respect to, the status and prosecution of all patent
applications and patents included in such Joint Patent Rights and Anacor will reasonably consider any reasonable comments that are provided by Elanco in a timely manner. Anacor will share equally with
Elanco the reasonable out-of-pocket expenses incurred in connection with such preparation, filing, prosecution and maintenance of Joint Patent Rights. Elanco will reimburse
Anacor for Elanco's share of such expenses within thirty (30) days after receipt of invoice from Anacor (including supporting documentation, upon written request of Elanco). If Anacor elects
not to assume such responsibility, Elanco will have the right but not the obligation to do so, and will keep Anacor
reasonably informed of, and consult with Anacor with respect to, the status and prosecution of all patent applications and patents included in such Joint Patent Rights; and in such event, Anacor will
bear one-half the reasonable out-of-pocket expenses of preparation, filing, prosecution and maintenance thereof. If Elanco assumes such responsibility but Anacor
fails or declines to pay its one-half share of expenses within the thirty (30) day period, Elanco may add to amounts due and owing to Elanco such share of unpaid expense.
Notwithstanding the foregoing, either Party may determine that it is no longer interested in supporting the continued prosecution or maintenance of a particular Joint Patent Right in a country or
jurisdiction, in which case: (a) the disclaiming Party shall, if requested in writing by the other Party, assign its ownership interest in such Joint Patent Right in such country or
jurisdiction to the other Party for no additional consideration, and shall no longer be responsible for any expenses in connection with the prosecution and maintenance thereof; and (b) if such
assignment is effected, any such Joint Patent Right would thereafter be deemed an Anacor Patent Right in the case of assignment to Anacor, or an Elanco Patent Right in the case of assignment to
Elanco; provided, however, that the disclaiming party would have an immunity from suit under such Patent Right in the applicable country or jurisdiction. In addition, any Joint Patent Right that
becomes an Anacor Patent Right pursuant to the preceding sentence shall be excluded from the license granted to Elanco in Section 2.1 but shall continue to be an Anacor Patent Right for
purposes of Sections 5.7 through 5.10. 

        6.9    Patent Term Extension.    Anacor will cooperate with Elanco in obtaining patent term
extension or supplemental protection certificates and the like with respect to the Anacor Patent Rights and Joint Patent Rights for Products in the Field as to which Elanco is licensed under this
Agreement, in each country and region where it is possible to do so; provided, however, that Elanco shall not apply for any such extension, certificates or the like without the prior written consent
of Anacor, such consent not to be unreasonably withheld, and Anacor shall have final decision-making authority with respect to the Anacor Patent Rights. Elanco shall be solely responsible for all
expenses incurred in connection with such activities with respect to Products. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

25

 
 ARTICLE VII

INFRINGEMENT; ENFORCEMENT  

        7.1    Infringement Claims.    If the manufacture, sale or use of a Product pursuant to this
Agreement results in, or may result in, any claim, suit or proceeding by a Third Party alleging patent infringement by Anacor or Elanco (or its licensees or sublicensees), or by an Affiliate of Anacor
or Elanco, such Party will promptly notify the other Party hereto via Notice. The Party subject to such Third Party claim will have the exclusive right to defend and control the defense of any such
claim, suit or proceeding, at its own expense, using counsel of its own choice; provided, however, that (a) neither Party will enter into any settlement which admits or concedes that any aspect
of the Patent Rights (including Joint Patent Rights) of the other Party is invalid or unenforceable without the prior written consent of said other Party, (b) Anacor shall have the right to
participate in any defense by Elanco related to infringement of Third Party patents by Anacor Patent Rights, Anacor Technology or Anacor Inventions utilized in Products in the Field, at Anacor's
expense, and (c) Elanco shall not settle any such claim, suit or proceeding related to infringement of Third Party patents by Anacor Patent Rights, Anacor Technology or Anacor Inventions
utilized in Products in the Field without the prior written consent of Anacor, such consent not to be unreasonably withheld. The Party subject to the Third Party claim will keep the other Party hereto
reasonably informed of all material developments in connection with any such claim, suit or proceeding. Should Elanco decide not to actively defend or fail within a reasonable time period after Notice
to defend any such claim, suit, or proceedings by a Third Party relating to Anacor Patent Rights, then Anacor will be entitled to take over, at its option, the right to defend such infringement
proceedings and the control of any such defense, at its cost. 

        As
a result of an infringement claim [***]. 

        7.2    Enforcement of Joint Patent Rights.    Anacor and Elanco will each promptly notify the
other via Notice of any alleged or threatened infringement of the Joint Patent Rights of which they become aware. Anacor and Elanco will then confer and may agree jointly to prosecute any such
infringement in the Field. If the Parties do not agree on whether or how to proceed with enforcement activity within the Field (a) within ninety (90) days following the Notice of alleged
infringement or (b) ten (10) business days before the time limit, if any, set forth in the appropriate laws and regulations for the filing of such actions, whichever comes first, then
Elanco may commence litigation with respect to the alleged or threatened infringement in the Field at its own expense. In the event that Elanco does not commence litigation within five
(5) business days of the above-specified date, Anacor may do so, at Anacor's expense. In the event a Party brings an infringement action against a Third Party, the other Party will cooperate
fully, including, if required to bring such action, the furnishing of a power of attorney. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

26

 

        Except
as otherwise agreed to by the Parties as part of a cost-sharing arrangement, any recovery realized as a result of such litigation (whether by way of settlement or
otherwise) will be first allocated to reimbursement of unreimbursed legal fees and expenses incurred by the Party initiating the proceeding, then toward reimbursement of any unreimbursed legal fees
and expenses of the other Party, and then the remainder will be divided between the Parties as follows: (y) if the award is based on lost profits in the Field and Elanco brought the action,
Elanco will receive an amount equal to the damages the court determines Elanco has suffered as a result of the infringement less the amount of any royalties that would have been due to Anacor on sales
of Products lost by Elanco or any Affiliate or sublicensee of Elanco as a result of the infringement had Elanco or any Affiliate or sublicensee of Elanco made such sales, and Anacor will receive an
amount equal to the royalties and other payments it would have received under Article V if such sales had been made by Elanco or any Affiliate or sublicensee of Elanco; and (z) for any
actions brought by Anacor, and as to awards other than those based on lost profits in any action brought by Elanco, [***] to the Party initiating such proceedings and
[***] to the other Party. 

        7.3    Enforcement of Anacor Patent Rights in the Field.    Anacor shall have the sole right,
but not the obligation, to commence and control any legal action or proceeding, or the filing of any counterclaim, related to any alleged infringement of the Anacor Patent Rights
("Action") in the Field in the Territory. In the event that Anacor elects, in its sole discretion, to undertake such an Action, Elanco agrees to
reasonably cooperate with Anacor, including providing access to all necessary documents, executing all papers and performing such other acts as may be reasonably required for such Action, including
consenting to be joined as a Party plaintiff in such Action. Anacor shall control such Action, and Anacor may enter into settlements, stipulated judgments or other arrangements respecting such
infringement; provided, however, Anacor shall not settle or make any agreement that would have a material adverse effect on Elanco's rights under this Agreement, without the prior written consent of
Elanco. Anacor shall keep Elanco reasonably apprised of the progress of any such Action. Elanco may, at its option and sole expense, be represented by counsel of its choice, but all other costs
associated with any such Action shall be at the sole expense of Anacor. In any Action, any damages or other recovery, including compensatory and other non-compensatory damages or recovery
actually received from a Third Party, shall first be used first to reimburse Anacor for its unreimbursed costs and expenses incurred in connection with such Action, and then to reimburse Elanco for
its unreimbursed costs and expenses incurred in connection with such Action. Any remaining damages or other recovery shall be retained [***] by Anacor and
[***] by Elanco; provided, to the extent that any portion of such remaining damages or other recovery are identified as lost sales suffered by Elanco as a result of such Third
Party infringement, such portion shall be treated as Net Sales and Elanco shall pay Anacor the applicable royalty on such Net Sales and retain the balance. 

        7.4    Enforcement of Elanco Patent Rights in the Field.    Elanco shall have the sole right,
but not the obligation, to commence and control any legal action or proceeding, or the filing of any counterclaim, related to any alleged infringement of the Elanco Patent Rights in the Territory.
Elanco shall keep Anacor reasonably apprised of the progress of any such action. Any damages or other recovery from any such action, including compensatory and other non-compensatory
damages or recovery actually received from a Third Party, shall first be used to reimburse Elanco for its costs and expenses incurred in connection with such action. To the extent that such damages
relate to loss suffered by Elanco as a result of such Third Party infringement in the Field, the remaining damages or other recovery shall be treated as Net Sales and Elanco shall pay Anacor the
applicable royalty on such Net Sales and retain the balance. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

27

 
 ARTICLE VIII

CONFIDENTIALITY  

        8.1    [***].    As of the Effective Date, the Parties are bound by a
[***] (collectively, the "Evaluation Agreements"). The Parties agree that all activities under the Evaluation Agreements that
are not completed as of the Effective Date shall be conducted under this Agreement and shall be subject to the terms and conditions of this Agreement. Should there be any conflict between the
Evaluation Agreements and this Agreement, the provisions of this Agreement shall prevail. 

        8.2    Nondisclosure; Non-Use; Exceptions.    Neither Anacor nor Elanco shall
publish or disclose to any Third Party, including its independent contractors, any or all Confidential Information of the other Party without the advance execution of a binding confidentiality
agreement between the Third Party and the disclosing Party and advance approval of the other Party. Neither Anacor nor Elanco shall disclose to any Third Party or use for any purpose other than as
provided in this Agreement (which includes the exercise of any rights or the performance of any obligations hereunder) any Confidential Information of the other Party, unless such Party can
demonstrate that such information:  

	(a)
	Was
known to the receiving Party or to the public prior to disclosure by the disclosing Party under this Agreement, as shown by written records;

	(b)
	Becomes
known to the public from a source other than the receiving Party;

	(c)
	Is
disclosed to the receiving Party on a non-confidential basis by a Third Party having a legal right to make such disclosure;

	(d)
	Is
required to be disclosed by law or judicial order; provided, however, the receiving Party shall promptly notify the disclosing Party and shall not
disclose any information without the disclosing Party's prior written consent or until the disclosing Party has exhausted any legal actions it may take to prevent or limit the requested disclosure; or

	(e)
	Is
independently developed by the receiving Party not having access to the disclosing Party's Confidential Information. 

        8.3    Survival of Confidentiality and Non-Use Obligations.    Such obligations of
confidentiality and non-use shall survive expiration or termination of this Agreement for a period of [***] years from the effective date of such termination or
expiration. Notwithstanding the foregoing, Elanco's confidentiality period shall be extended such that Elanco's obligations of confidentiality, non-disclosure and non-use under
this Agreement shall remain in full force and effect indefinitely with respect to the GSK Agreement and related documents (together, "GSK Information"),
except to the extent that the obligations of confidentiality, non-disclosure and non-use under the GSK Agreement no longer apply to the applicable GSK Information. Anacor shall
promptly notify Elanco upon the termination of its obligations of confidentiality, non-disclosure and non-use under the GSK Agreement. 

        8.4    Authorized Disclosure.    Each Party may disclose Confidential Information belonging to
the other Party to the extent such disclosure is reasonably necessary in the following instances:  

	(a)
	filing
or prosecuting patents relating to Joint Patent Rights;

	(b)
	filings
submitted to a Regulatory Agency to the extent necessary for obtaining marketing approvals for Products in the Field;

	(c)
	prosecuting
or defending litigation;

	(d)
	complying
with applicable governmental regulations; 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

28

 

	(e)
	as
necessary in order for Elanco or Anacor to exercise its rights including subcontracting under this Agreement;

	(f)
	conducting
pre-clinical or clinical trials of Products;

	(g)
	disclosure
on a "need to know" basis to Affiliates, sublicensees, employees, consultants or agents who agree to be bound by similar terms of confidentiality
and non-use at least equivalent in scope to those set forth in this Article VIII; and

	(h)
	disclosure
to any bona fide potential or actual investor or collaborator, investment banker, acquirer, merger partner, or other potential or actual
financial partner; provided that each such disclosee must be bound by similar terms of confidentiality and non-use at least equivalent in scope to those set forth in this
Article VIII. 

 ARTICLE IX

INDEMNIFICATION; REPRESENTATIONS & WARRANTIES  

        9.1    Liabilities; Indemnification by Elanco.    Except to the extent such liability is
caused by the negligence or willful misconduct of any Anacor Indemnitee, Elanco will bear all liabilities arising from Elanco's (and its Affiliates' and sublicensees') development, regulatory
approval, manufacture, marketing and sales of Products in the Field. Except to the extent such liability is caused by the negligence or willful misconduct of any Anacor Indemnitee or Anacor's breach
of this Agreement, Elanco will at all times during and after the term of this Agreement be responsible for, and will defend, indemnify and hold Anacor and its Affiliates and their respective
directors, officers, employees and contractors (collectively, the "Anacor Indemnitees") harmless from and against any and all losses, claims, suits,
proceedings, expenses, recoveries and damages, including reasonable legal expenses and costs including reasonable attorneys' fees, arising out of any claim by any Third Party to the extent resulting
or arising from (a) Elanco's breach of its obligations under this Agreement; (b) the negligence or willful misconduct of any Elanco Indemnitees in their performance hereunder;
(c) the development, manufacture, use or sale of Products by Elanco or its Affiliates or sublicensees; (d) any breach by Elanco of any of its covenants, representations or warranties set
forth in this Agreement; or (e) [***]. Anacor will give Elanco prompt Notice of any such claim or lawsuit and, without limiting the foregoing indemnity, Elanco will have
the right to compromise, settle or defend such claim or lawsuit (to the extent subject to indemnity by Elanco as set forth herein); provided that (i) no offer of settlement, settlement or
compromise by Elanco shall be binding on Anacor without its prior written consent (which consent shall not be unreasonably withheld or delayed), unless such settlement fully releases Anacor without
any liability, loss, cost or obligation incurred by Anacor and (ii) Elanco shall not have authority to admit any wrongdoing or misconduct on the part of Anacor or its Affiliate except with
Anacor's prior written consent. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

29

 

        9.2    Liabilities; Indemnification by Anacor.    Except to the extent such liability is
caused by the negligence or willful misconduct of any Elanco Indemnitee, Anacor will bear all liabilities arising from Anacor's (and its Affiliates' and licensees') development, regulatory approval,
manufacture, marketing and sales of products outside the Field, and Products that have reverted to Anacor. Except to the extent such
liability is caused by the negligence or willful misconduct of any Elanco Indemnitee or Elanco's breach of this Agreement, Anacor will at all times during and after the term of this Agreement be
responsible for, and will indemnify, defend and hold Elanco and its Affiliates and their respective directors, officers, employees and contractors (collectively, the "Elanco
Indemnitees") harmless from and against any and all losses, claims, suits, proceedings, expenses, recoveries and damages, including reasonable legal expenses and costs
including reasonable attorneys' fees, arising out of any claim by any Third Party to the extent resulting or arising from (a) Anacor's uncured breach of its obligations under this Agreement;
(b) the negligence or willful misconduct of any Anacor Indemnitees in their performance hereunder; (c) the development, manufacture, use or sale of products outside the Field or of
Products that have reverted to Anacor by Anacor or its Affiliate(s) or licensee(s); (d) any breach by Anacor of any of its covenants, representations or warranties set forth in this Agreement;
or (e) [***]. Elanco will give Anacor prompt Notice of any such claim or lawsuit and, without limiting the foregoing indemnity, Anacor will have the right to compromise,
settle or defend any such claim or lawsuit (to the extent subject to indemnity by Anacor as set forth herein); provided that (i) no offer of settlement, settlement or compromise by Anacor shall
be binding on Elanco without its prior written consent (which consent shall not be unreasonably withheld or delayed), unless such settlement fully releases Elanco without any liability, loss, cost or
obligation incurred by Elanco and (ii) Anacor shall not have authority to admit any wrongdoing or misconduct on the part of Elanco or its Affiliate except with Elanco's prior written consent. 

        9.3    Anacor Representations & Warranties to Elanco.    As of the Effective Date,
Anacor represents and warrants that it owns all right and title to, or owns the exclusive rights to, the Anacor Patent Rights, the Anacor Research IP and the Anacor Technology licensed by Elanco
hereunder, and that it has the right to enter into this Agreement. Anacor represents and warrants that, as of the Effective Date, [***]. Anacor represents and warrants that
Anacor will accurately verify whether a development opportunity being considered by Elanco under this Agreement conflicts with the GSK Agreement. 

        9.4    Representations & Warranties of the Parties to Each Other.    Anacor and Elanco
each represent and warrant that, as of the Effective Date, execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of such Party, its
officers and directors and does not conflict with, violate, or breach any agreement to which either Elanco or Anacor is a party, or either Party's articles of incorporation or bylaws. 

        9.5    Warranty and Disclaimer Concerning Intellectual Property.    

        (a)   As
of the Effective Date, each Party represents and warrants to the other that it has not been notified of any patent rights of any Third Party, other than patent rights
of Third Parties that are licensed to such Party, that would prevent either Party from exercising the licenses granted herein, or would prevent either Party from carrying out the Product Development
Plan as contemplated as of the Effective Date. 

        (b)   Further,
as of the Effective Date, each Party represents and warrants to the other that it does not have any actual knowledge of any patent rights of any Third Party,
other than patent rights of Third
Parties that are licensed to such Party, that would prevent either Party from carrying out the Product Development Plan as contemplated as of the Effective Date. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

30

 

        (c)   Without
limiting the generality of the foregoing, each Party expressly does not warrant (i) the success of any research or development activities commenced under
the Product Development Plan or (ii) the safety or usefulness for any purpose of the technology it provides hereunder. 

        9.6    No Other Representations or Warranties.    EXCEPT AS EXPRESSLY
STATED IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT, OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS, IS MADE OR GIVEN BY OR ON BEHALF OF A PARTY. EXCEPT AS EXPRESSLY STATED IN THIS
AGREEMENT, ALL REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED. 

        9.7    No Consequential Damages.    NEITHER PARTY HERETO WILL BE
LIABLE TO THE OTHER PARTY FOR PUNITIVE, SPECIAL, INCIDENTAL 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 THIS SECTION 9.7 IS INTENDED TO LIMIT OR RESTRICT THE DAMAGES AVAILABLE FOR BREACHES OF
CONFIDENTIALITY OBLIGATIONS IN ARTICLE VIII. FOR CLARITY, THIS SECTION 9.7 DOES NOT APPLY TO THE PARTIES' INDEMNIFICATION RIGHTS AND OBLIGATIONS UNDER SECTIONS 9.1 AND 9.2. 

 ARTICLE X

TERM & TERMINATION  

        10.1    Term.    Except as otherwise provided in this Agreement, the term of this Agreement
will commence on the Effective Date and will end on the expiration or termination of the royalty payment obligations under this Agreement. 

        10.2    Expiration of License.    The license for the Territory and Field granted by Anacor to
Elanco pursuant to Section 2.1 and all other rights granted to Elanco (other than those expressly stated to continue after expiration or termination of this Agreement), will cease upon the
earlier of: 

        (a)   expiry
of the term of this Agreement pursuant to Section 10.1; or 

        (b)   termination
of this Agreement pursuant to Section 10.8 or Section 11.4; or 

        (c)   termination
of this Agreement by Anacor or by Elanco pursuant to Section 10.10. 

Subject
to the foregoing, expiration of all Anacor Patent Rights and Joint Patent Rights covering a particular Product will not preclude Elanco from continuing to market and sell such Product or to
use such Product after the term. 

The
license granted by Elanco to Anacor in Section 2.3 will cease upon termination of this Agreement by Elanco for Anacor's uncured breach, and will survive expiration of this Agreement
pursuant to Section 10.1 and any other termination of this Agreement. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

31

 

        10.3    Effects of Termination.    Upon termination of this Agreement by Anacor pursuant to
Section 10.10 or by Elanco pursuant to Section 10.8, the following will apply: 

        (a)    Trademarks.    Elanco will assign to Anacor all right, title and interest in and to the
trademarks owned by Elanco under Section 2.6 and used in connection with Products. 

        (b)    Regulatory Materials.    Elanco will assign to Anacor those regulatory materials as
provided in Section 4.14. 

        (c)    Transition Assistance.    Except upon termination of this Agreement by Elanco for
Anacor's breach, Elanco will, at no cost to Anacor, provide reasonable consultation and assistance for a period of no more than [***] days for the purpose of transferring or
transitioning to Anacor, all Elanco Inventions not already in Anacor's possession and, at Anacor's request, all then-existing commercial arrangements relating specifically to Elanco
Compounds and Products that Elanco is able, using reasonable commercial efforts, to transfer or transition to Anacor, in each case, to the extent reasonably necessary or useful for Anacor to commence
or continue developing, manufacturing, or commercializing Products. The foregoing shall include transferring, upon request of Anacor, any agreements with Third Party suppliers or vendors that
specifically cover the supply or sale of Elanco Compounds or Products. If any such contract between Elanco and a Third Party is not assignable to Anacor (whether by such contract's terms or because
such contract does not relate specifically to Elanco Compounds or Products) but is otherwise reasonably necessary or useful for Anacor to commence or continue developing, manufacturing, or
commercializing Products or if Elanco manufactures Products itself (and thus there is no contract to assign), then Elanco shall reasonably cooperate with Anacor to negotiate for the continuation of
such license and/or supply from such entity, and Elanco shall supply such bulk Elanco Compound or finished Product, as applicable, to Anacor, for a reasonable period (not to exceed
[***] months) until Anacor establishes an alternate, validated source of supply for the Products. The cost to Anacor for such supply shall be at the cost to Elanco for such
supply. 

        (d)    Remaining Inventories.    Elanco shall have the right for a period of
[***] from the date of termination, and subject to any payments due to Anacor under Article V, to sell any or all of the inventory of Elanco Compounds and Products held
by Elanco as of the date of termination (that are not committed to be supplied to any Third Party or sublicensee, in the ordinary course of business, as of the date of termination). 

        (e)    License Upon Breach.    [***] 

        10.4    Anacor Termination For Cause and Consideration.    If Anacor terminates this Agreement
pursuant to Section 10.10 for an Elanco Event of Default, Anacor will retain all sums paid to it by Elanco, and Elanco will promptly pay all sums accrued which are then due and payable to
Anacor. If such termination is effective prior to [***]. If such termination is effective prior to [***]. 

        10.5    Elanco Termination For Cause and Consideration.    If Elanco terminates this Agreement
pursuant to Section 10.10, Anacor will return all sums paid to it by Elanco under Section 4.10 less the sum of all amounts incurred or irrevocably committed by Anacor in connection with
its activities under the Product Development Plan through the effective date of termination. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

32

 

        10.6    Surviving Obligations.    Upon expiration or termination of this Agreement, the
obligations which by their nature are intended to survive expiration or termination of this Agreement, will survive. In addition and without limiting the generality of the foregoing,
Sections 2.3(a), 2.4, 5.11, 5.15, 6.2, 6.3, 6.4, 6.8, 7.2 and 10.2-10.11 and Articles VIII, IX, XI and XII shall survive any expiration or termination of this Agreement. 

        10.7    Existing Obligations.    Expiration pursuant to Sections 10.1 or 10.2 above, or
termination pursuant to Sections 10.8, 10.10 or 11.4 of this Agreement for any reason, will not relieve the Parties of any obligation that accrued prior to such expiration or termination. 

        10.8    Termination At Will.    Subject to the provisions of this Agreement, Elanco may
terminate this Agreement prior to the first Regulatory Agency approval of an NADA for a Product, upon (a) [***] days' written Notice to Anacor if delivered
[***] and (b) [***] days' written Notice to Anacor if delivered thereafter, and promptly pay all sums accrued which are then due and payable to
Anacor, which shall include, if such termination Notice is delivered prior to
[***], or if such termination Notice is delivered after [***]. Promptly following effectiveness of such termination, Elanco shall pay Anacor for all
sums accrued during the [***]-day notice period. If such termination is effective prior to the [***]. 

        10.9    Accrued Obligations.    The expiration or termination of this Agreement or the
Design & Development Program will not relieve the Parties of any obligation that accrued prior to such expiration or termination. 

        10.10    Events of Default.    An event of default ("Event of
Default") will have occurred and this Agreement may be terminated by the Party first named in each paragraph below in the following circumstances: 

        (a)    Material Breach.    Subject to Section 10.10, by the non-breaching
Party, if the breaching Party fails to remedy a material breach of this Agreement within [***] days after Notice thereof detailing the breach has been given to the breaching
Party by the non-breaching Party. 

        (b)    Failure of Elanco to Pay.    By Anacor, if Elanco fails to make any payment as required
under this Agreement within the period(s) identified in this Agreement after such payment becomes payable, and such failure is not remedied within [***] days after Notice
thereof from Anacor. Should there be a dispute between the Parties regarding payment, such dispute shall be referred to appropriate management for resolution within [***] days
after such dispute is referred and if unresolved shall then be referred to the Chief Executive Officer of Anacor and the President of Elanco for attempted resolution within
[***] days after such dispute is so referred, for those disputes where the disputed amount is less than [***]. For those disputes where the disputed
amount is equal to or greater than [***], such major disputes, and any minor disputes not resolved pursuant to the preceding sentence, shall be resolved according to
Article XII below. Should amounts be owed following the end of such [***]day period or the completion of the dispute resolution process, as applicable, any late amounts
shall be subject to interest under Section 5.15. 

        (c)    Bankruptcy.    By either Party, upon a proceeding in bankruptcy that is not dismissed
within [***] days, insolvency, dissolution or winding up of the other Party. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

33

 

        10.11    Default Remedies.    

        (a)    Default Remedies Available to Elanco.    In the event that an Event of Default occurs
that is caused by Anacor, and Anacor fails to cure such default within the applicable cure period under Section 10.10, Elanco may elect to either (i) terminate this Agreement and/or
(ii) continue this Agreement in full force and effect, in accordance with its terms, in each case (i) and (ii) without limiting any other legal or equitable remedies that Elanco
may have. 

        (b)    Default Remedies Available to Anacor.    In the event that an Event of Default occurs
that is caused by Elanco, and Elanco fails to cure such default within the applicable cure period under Section 10.10, Anacor may elect to either (i) terminate this Agreement and/or
(ii) continue this Agreement in full force and effect, in accordance with its terms, in each case (i) and (ii) without limiting any other legal or equitable remedies that Anacor
may have. 

        10.12    Termination Not Sole Remedy.    Termination is not the sole remedy under this
Agreement, and, whether or not termination is effected, all other remedies will remain available except as the Parties have expressly agreed to otherwise herein. 

 ARTICLE XI

MISCELLANEOUS  

        11.1    Separate Entities / Disclaimer of Agency.    Anacor and Elanco are and will remain
separate independent entities. This Agreement will not constitute, create or otherwise imply a joint venture, partnership or formal business organization of any kind. Each Party to this Agreement will
act as an independent contractor and not as an agent or legal representative of the other. Neither Party will have the right or authority to assume, create or incur any Third Party liability or
obligation of any kind, express or implied, against or in the name of or on behalf of the other Party except as expressly set forth in this Agreement. 

        11.2    Press Releases & Disclosures.    Neither Party will submit for written or oral
publication any document, data, or other information generated and provided by the other Party during the term of this Agreement without first obtaining the prior written consent of the other Party,
which consent will not be unreasonably withheld and which decision regarding consent will be communicated no later than [***] days from the date of receipt of the request,
especially as it relates to releases required by local fiscal reporting laws, filing regulations, stock rules or other applicable laws relating to the Party or any Affiliate of the Party. The
contributions of each Party will be noted in all publications, presentations, and press releases. 

        11.3    Publicity.    Until the later of First Commercial Sale by Elanco of the first Product,
or public announcement by a Regulatory Agency of its approval of such Product for commercial sale, neither Party will disclose to the public, any information about this Agreement, including its
existence, without the prior written consent of the other Party, which decision regarding consent will be communicated no later than [***] days from the date of receipt of the
request, except that if such disclosure is required for local fiscal reporting laws, filing regulations or stock exchange rules relating to the Party or any Affiliate of the Party, comments and
consent shall be delivered upon the earlier of: (a) the opening of business on the morning for the Party for whom such disclosure is required; or (b) [***] days.
Furthermore, neither Party shall use in advertising, publicity or otherwise the name or any trademark of the other Party without prior written consent. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

34

 

        11.4    Force Majeure.    If either Party is affected by any extraordinary, unexpected and
unavoidable event, including acts of God, floods, fires, riots, terrorism, war, accidents, labor disturbances, breakdown of plant or equipment, lack or failure of transportation facilities,
unavailability of equipment, sources of supply or labor, raw materials, power or supplies, infectious diseases of animals, or by the reason of any law, order, proclamation, regulation, ordinance,
demand or requirement of the relevant government or any sub-division, authority or representative thereof (provided that in all such cases the Party claiming relief on account of such
event can demonstrate that such event was extraordinary, unexpected and unavoidable by the exercise of reasonable care) ("Force
Majeure"), it will as soon as reasonably practicable notify the other Party of the nature and extent thereof and take all reasonable steps to overcome
the Force Majeure and to minimize the loss occasioned to that other Party. Neither Party will be deemed to be in breach of this Agreement or otherwise
be liable to the other Party by reason of any delay in performance or nonperformance of any of its obligations hereunder to the extent that such delay and nonperformance is due to any  Force Majeure of
which it has notified the other Party and the time for performance of that obligation will be extended accordingly. Notwithstanding the
foregoing sentence, should the Force Majeure continue for more than three (3) months, then the other Party shall have the right to terminate this
Agreement immediately upon Notice of termination delivered to the affected Party. 

        11.5    Assignment.    This Agreement may not be assigned or otherwise transferred by either
Party without the prior written consent of the other Party, which consent will not be unreasonably withheld or delayed; provided, however, that each of the Parties may, without such consent, assign
this Agreement and its rights and obligations hereunder to its Affiliates or in connection with the transfer or sale of all or substantially all of the portion of its business to which this Agreement
relates, or in the event of its merger or consolidation or change in control or similar transaction or, in the case of Anacor, the creation of a special purpose corporation or design and development
limited partnership. Any permitted assignee will assume all obligations of its assignor under this Agreement in writing prior to the assignment. Any purported assignment in violation of the preceding
sentences will be void. 

        11.6    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 Party (a "Notice") will be delivered in writing by one of the following means: delivered
personally; by facsimile (and promptly confirmed by personal delivery or courier); by a reputable, commercial courier; or by U.S. mail postage prepaid (where applicable), and addressed to such other
Party at its address indicated below, or to such other address as the addressee will have last furnished in writing to the addressor by Notice. Such Notices will be effective within three
(3) business days of the postmark or transmittal date or when delivered to the addressee, whichever is earlier. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

35

 
 

 

					
	        If to Anacor:	 	 
	

                Anacor Pharmaceuticals, Inc.

                1020 East Meadow Circle

                Palo Alto, CA 94303-4230	
 	

 
	
                Attention:	
 	
Chief Executive Officer	
 	
                                        
                                
	                Fax:	 	650-543-7660	 	                                        
                                
	
        If to Elanco:	
 	

 	
 	

 
	

                Elanco Animal Health

                Greenfield Laboratories

                2500 Innovative Way

                Greenfield, IN 46140	
 	

 
	
                Attention:	
 	
Legal Department	
 	
                                        
                                
	                Fax:	 	317-276-9434	 	                                        
                                

 

         11.7    Execution of Agreement.    This Agreement may be executed by original or facsimile
signature in several counterparts, all of which shall be deemed to be originals, and all of which shall constitute one and the same Agreement. Notwithstanding the foregoing, the Parties shall deliver
original execution copies of this Agreement to one another as soon as practicable following execution thereof. 

        11.8    Waiver.    The waiver by a Party of a breach or a default of any provision of this
Agreement by the other Party shall not be construed as a waiver of any succeeding breach of the same or any other provision, nor shall any delay or omission on the part of a Party to exercise or avail
itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any right, power or privilege by such Party. 

        11.9    Entire Agreement.    This Agreement and the Exhibits hereto (which Exhibits are deemed
to be a part of this Agreement for all purposes) contain the full understanding of the Parties with respect to the subject matter hereof and supersede all prior understandings and writings relating
thereto, including the Existing Agreements, which are hereby terminated in accordance with their terms. No waiver, alteration or modification of any of the provisions hereof shall be binding unless
made in writing and signed by the Parties. 

        11.10    Headings.    The headings contained in this Agreement are for convenience of
reference only and shall not be considered in construing this Agreement. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

36

 

  
        11.11    Severability.    In the event that any provision of this Agreement is held by a court
of competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of any relevant jurisdiction, the validity of the remaining provisions shall not be affected, and the
Parties shall negotiate a substitute provision that, to the extent possible, accomplishes the original business purpose. During the period of such negotiation, and thereafter if no substituted
provision is agreed upon, any such provision which is enforceable in part but not in whole shall be enforced to the maximum extent permitted by law. 

        11.12    Successors and Assigns.    Except as otherwise provided herein, this Agreement shall
be binding upon and inure to the benefit of the Parties hereto and their successors and permitted assigns under this Agreement. 

        11.13    No Third Party Beneficiaries.    No person or entity other than Anacor, Elanco 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. 

        11.14    Governing Law; Jurisdiction.    This Agreement shall be governed by and construed in
accordance with the laws of the state of Delaware applicable therein, without regard to any conflict of law principles. In the event that either Party files suit against the other Party, such suit
shall be brought in the United States District Court in the state of New York. 

        11.15    Performance by Affiliates.    Each Party may discharge any obligations and exercise
any right hereunder through any of its Affiliates. Each Party hereby guarantees the performance by its Affiliates of such Party's obligations under this Agreement, and shall cause its Affiliates to
comply with the provisions of this Agreement in connection with such performance. Any breach by a Party's Affiliate of any of such Party's obligations under this Agreement shall be deemed a breach by
such Party, and the other Party may proceed directly against such Party without any obligation to first proceed against such Party's Affiliate. 

 ARTICLE XII

DISPUTE RESOLUTION  

        12.1    Dispute Resolution.    Subject to Section 10.10(b), in the event of a dispute,
controversy or claim under or relating to this Agreement (a "Dispute"), the Parties shall refer such dispute to the Chief Executive Officer of Anacor
and the President of Elanco for attempted resolution by good faith negotiations within [***] days after such referral is made. In the event such executives are unable to
resolve such Dispute within such [***]-day period, the Parties agree to submit the Dispute for non-binding mediation (with the understanding that the
role of the mediator shall not be to render a decision but to assist the Parties in reaching a mutually acceptable resolution), for a period of not more than thirty (30) business days. In the
event such Dispute remains unresolved following mediation, either Party may invoke any legal remedies in a court or judicial body of competent jurisdiction to resolve such dispute. Any such legal
remedies in a court or judicial body of competent jurisdiction shall be conducted in the English language. 

        12.2    No Delay in Unrelated Payments.    In the event of a Dispute, a Party shall have no
right to toll or delay any payment or other obligation in this Agreement unrelated to the Dispute as a result of the Dispute. 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

37

 
 ARTICLE XIII

COMPLIANCE WITH LAWS  

        13.1    Mutual Covenant.    Each Party shall ensure that it and its activities under this
Agreement shall at all times comply with all applicable laws, regulations and industry codes. Each party represents that any funds paid to the other pursuant to this Agreement are not proceeds of any
illegal activity. 

        13.2    Notice of Inspections.    Anacor shall provide Elanco with immediate notice of any
governmental or regulatory review, audit or inspection of its facility, processes, or products that might relate to the goods, software, or services furnished Elanco under this Agreement. Anacor shall
provide Elanco with the results of any such review, audit or inspection. Elanco shall be given the opportunity to provide assistance to Anacor in responding to any such review, audit or inspection. 

        13.3    Books and Records.    During the term of this Agreement and for a period of three
(3) years thereafter, the records of each Party relating to the performance of its duties and obligations under this Agreement shall be open to inspection and subject to audit and reproduction
by the other Party or other Party's agent or representative, subject to the applicable terms of this Agreement. 

        13.4    Anti-Corruption Laws.    In carrying out their responsibilities under this
Agreement, the Parties shall comply with all applicable anti-corruption laws in the countries where the Parties have their principal places of business and where they conduct activities
under this Agreement. Additionally, the Parties understand and agree to comply with the U.S. Foreign Corrupt Practices Act, as revised, which generally prohibits the promise, payment or giving of
anything of value either directly or indirectly to any government official for the purpose of obtaining or retaining business or any improper advantage. For purposes of this section, "government
official" means any official, officer, representative, or employee of, including any doctor employed by, any non-U.S. government department, agency or instrumentality (including any
government-owned or controlled commercial enterprise), or any official of a public international organization or political party or candidate for political office. Additionally, each Party represents
and warrants to the other Party that neither it nor any of its owners, directors, employees, agents, consultants (1) is a government official, or (2) will directly or indirectly pay or
give or promise to pay or give anything of value to any government official for purposes of (A) influencing any act or decision of such government official in his official capacity;
(B) inducing such government official to do or omit to do any act in violation of the lawful duty of such official; (C) securing any improper advantage; or (D) inducing such
government official to use his influence with the government or instrumentality thereof to affect or influence any act or decision of the government or such instrumentality with respect to any
activities undertaken relating to this Agreement. Additionally, the Parties will make reasonable efforts to comply with requests for information, including answering questionnaires and narrowly
tailored audit inquiries, to unable the other Party to ensure compliance with applicable anti-corruption laws. 

        13.5    Early Termination.    The Parties agree that a breach of the
anti-corruption commitments in Section 13.4 shall be considered a material breach of this Agreement and that either Party may immediately seek all remedies available under law and
equity including termination of this Agreement if it believes, in good faith, that the warranties under the anti-corruption commitments in Section 13.4 have been breached by the
other Party without owing to the other any damages or indemnification resulting solely from such termination. 

[Signature page follows]

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

38

 
 

 

					
	EXECUTED	 	 	 	 
	
 Signed on behalf of	
 	
)	
 	

 
	Eli Lilly and Company, operating through	 	)	 	 
	its Elanco Animal Health division	 	)	 	 
	by an authorized officer in the presence	 	)	 	 
	of:	 	 	 	 
	
 [***]

  Signature of Witness	
 	
 	
 	
 [***]

  Signature of Authorized Officer
	
 [***]

  Name of Witness (please print)	
 	
 	
 	
 [***]

  Name of Authorized Officer (please print)
	
 August 25, 2010

  Date Signed	
 	

 	
 	

 
	
 Signed on behalf of	
 	
)	
 	

 
	Anacor Pharmaceuticals, Inc.	 	)	 	 
	by an authorized officer in the presence	 	)	 	 
	of:	 	 	 	 
	
 /s/ Geoffrey Parker

  Signature of Witness	
 	
 	
 	
 /s/ David P. Perry

  Signature of Authorized Officer
	
 Geoffrey Parker

  Name of Witness (please print)	
 	
 	
 	
 David Perry, CEO

  Name of Authorized Officer (please print)
	
 8/24/10

  Date Signed	
 	

 	
 	

 

 

 [***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

39

 
 EXHIBIT A

PRODUCT DEVELOPMENT PLAN  

 High level Product Development Plan [***]  

[***]

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

40

 
 EXHIBIT B

CRITERIA TO ESTABLISH A POC STUDY  

[To
be attached within thirty (30) days after the Effective Date] 

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

41

 
 EXHIBIT C

DEVELOPMENT DECISION CRITERIA  

[***] 

[***]
THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

42

 
 EXHIBIT D

DEVELOPMENT COMMITTEE MEMBERS AND PRIMARY CONTACT PERSONS  

For
Elanco:

          [***] 

[***]
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TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

43

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