Document:

Exhibit 10.5

 

INTARCIA
THERAPEUTICS, INC.

 

2005 Employee Stock Purchase Plan

 

Adopted:          ,
2005

Approved by Stockholders:              ,
2005

 

1.                                      General.

 

(a)                                  The
purpose of the Plan is to provide a means by which Employees of the Company and
certain designated Related Corporations may be given an opportunity to purchase
shares of the Common Stock of the Company.

 

(b)                                  The
Company, by means of the Plan, seeks to retain the services of such Employees,
to secure and retain the services of new Employees and to provide incentives
for such persons to exert maximum efforts for the success of the Company and
its Related Corporations.

 

(c)                                  The
Company intends that the Purchase Rights be considered options issued under an
Employee Stock Purchase Plan.

 

2.                                      Definitions.

 

As
used in the Plan, the following definitions shall apply to the capitalized
terms indicated below:

 

(a)                                  “Board” means the
Board of Directors of the Company.

 

(b)                                  “Capitalization Adjustment” has
the meaning ascribed to that term in Section 14(a).

 

(c)                                  “Code” means the
Internal Revenue Code of 1986, as amended.

 

(d)                                  “Committee” means a
committee of one (1) or more members of the Board to whom authority has been
delegated by the Board in accordance with Section 3(c).

 

(e)                                  “Common Stock” means the common stock of the Company.

 

(f)                                    “Company” means Intarcia Therapeutics, Inc., a Delaware
corporation.

 

(g)                                 “Contributions” means the payroll deductions and other
additional payments specifically provided for in the Offering, that a
Participant contributes to fund the exercise of a Purchase Right. A Participant
may make additional payments into his or her account, if specifically provided
for in the Offering, and then only if the Participant has not already had the
maximum permitted amount withheld during the Offering through payroll
deductions.

 

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(h)                                 “Corporate Transaction” means the occurrence, in a
single transaction or in a series of related transactions, of any one or more
of the following events:

 

(i)                                    a
sale or other disposition of all or
substantially all, as determined by the Board in its sole discretion, of the
consolidated assets of the Company and its Subsidiaries;

 

(ii)                                a
sale or other disposition of at least ninety
percent (90%) of the
outstanding securities of the Company;

 

(iii)                            the
consummation of a merger, consolidation or similar transaction following which
the Company is not the surviving corporation; or

 

(iv)                               the
consummation of a merger, consolidation or similar transaction following which
the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar
transaction are converted or exchanged by virtue of the merger, consolidation
or similar transaction into other property, whether in the form of securities,
cash or otherwise.

 

(i)                                    “Director” means a member
of the Board.

 

(j)                                    “Eligible Employee” means an
Employee who meets the requirements set forth in the Offering for eligibility
to participate in the Offering, provided that such Employee also meets the
requirements for eligibility to participate set forth in the Plan.

 

(k)                                “Employee” means any
person, including Officers and Directors, who is employed for purposes of
Section 423(b)(4) of the Code by the Company or a Related Corporation.  However, service solely as a Director, or
payment of a fee for such services, shall not cause a Director to be considered
an “Employee” for purposes of the Plan.

 

(l)                                    “Employee Stock Purchase Plan” means
a plan that grants Purchase Rights intended to be options issued under an “employee
stock purchase plan,” as that term is defined in Section 423(b) of the Code.

 

(m)                              “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

(n)                                 “Fair Market Value” means, as of any date, the value of
the Common Stock determined as follows:

 

(i)                                    If
the Common Stock is listed on any established stock exchange or traded on the
Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of
a share of Common Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or market
(or the exchange or market with the greatest volume of trading in the Common
Stock) on the date in question, as reported in The Wall
Street Journal or such other source
as the Board deems reliable.

 

(ii)                                In
the absence of such markets for the Common Stock, the Fair Market Value shall
be determined by the Board in good faith.

 

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(o)                                  “IPO Date” means the date
of the underwriting agreement between the Company and the underwriter(s)
managing the initial public offering of the Common Stock, pursuant to which the
Common Stock is priced for the initial public offering.

 

(p)                                  “Offering” means the
grant of Purchase Rights to purchase shares of Common Stock under the Plan to
Eligible Employees.

 

(q)                                  “Offering Date” means a date selected by the Board for
an Offering to commence.

 

(r)                                  “Officer” means a person who
is an officer of the Company within the meaning of Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder.

 

(s)                                  “Participant” means an
Eligible Employee who holds an outstanding Purchase Right granted pursuant to
the Plan.

 

(t)                                    “Plan” means this
Intarcia Therapeutics, Inc. 2005 Employee Stock Purchase Plan.

 

(u)                                 “Purchase Date” means one or
more dates during an Offering established by the Board on which Purchase Rights
shall be exercised and as of which purchases of shares of Common Stock shall be
carried out in accordance with such Offering.

 

(v)                                   “Purchase Period” means a period of time specified
within an Offering beginning on the Offering Date or on the next day following
a Purchase Date within an Offering and ending on a Purchase Date.  An Offering may consist of one or more
Purchase Periods.

 

(w)                                “Purchase Right” means an
option to purchase shares of Common Stock granted pursuant to the Plan.

 

(x)                                  “Related Corporation” means any “parent
corporation” or “subsidiary corporation” of the Company whether now or
subsequently established, as those terms are defined in Sections 424(e) and
(f), respectively, of the Code.

 

(y)                                  “Securities Act” means the
Securities Act of 1933, as amended.

 

(z)                                  “Trading Day” means any day on which the exchange(s) or
market(s) on which shares of Common Stock are listed, whether it be an
established stock exchange, the Nasdaq National Market, the Nasdaq SmallCap
Market or otherwise, is open for trading.

 

3.                                      Administration.

 

(a)                                  The
Board shall administer the Plan unless and until the Board delegates administration
of the Plan to a Committee, as provided in Section 3(c).

 

(b)                                  The
Board shall have the power, subject to, and within the limitations of, the
express provisions of the Plan:

 

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(i)                                    To
determine when and how Purchase Rights to purchase shares of Common Stock shall
be granted and the provisions of each Offering of such Purchase Rights (which
need not be identical).

 

(ii)                                To
designate from time to time which Related Corporations of the Company shall be
eligible to participate in the Plan.

 

(iii)                            To
construe and interpret the Plan and Purchase Rights, and to establish, amend
and revoke rules and regulations for its administration.  The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan, in a manner and to
the extent it shall deem necessary or expedient to make the Plan fully
effective.

 

(iv)                               To
adopt such procedures and sub-plans as are necessary or appropriate to permit
participation in the Plan by Employees who are foreign nationals or employed
outside the United States.

 

(v)                                   To
amend the Plan as provided in Section 15.

 

(vi)                               Generally,
to exercise such powers and to perform such acts as it deems necessary or
expedient to promote the best interests of the Company and its Related
Corporations and to carry out the intent that the Plan be treated as an
Employee Stock Purchase Plan.

 

(c)                                  The
Board may delegate some or all of the administration of the Plan to a Committee
or Committees.  If administration is delegated
to a Committee, the Committee shall have, in connection with the administration
of the Plan, the powers theretofore possessed by the Board that have been
delegated to the Committee, including the power to delegate to a subcommittee
any of the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board.  The Board may retain the authority to
concurrently administer the Plan with the Committee and may, at any time,
revest in the Board some or all of the powers previously delegated.

 

(d)                                  All
determinations, interpretations and constructions made by the Board in good
faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons.

 

4.                                      Shares of Common Stock Subject to the Plan.

 

(a)                                  Subject
to the provisions of Section 14(a) relating to Capitalization Adjustments, the
shares of Common Stock that may be sold pursuant to Purchase Rights shall not
exceed in the aggregate two hundred fifty thousand (250,000) shares of Common
Stock.  In addition, the number of shares
of Common Stock available for issuance under the Plan shall automatically
increase on January 1st of each year, commencing in 2006 and ending on (and
including) January 1, 2015, in an amount equal to the lesser of (i) [three
quarters of one percent (0.75%)] of the total number of shares of Common Stock
outstanding on December 31st of the preceding calendar year, or (ii) two
hundred fifty thousand (250,000) shares of Common Stock.  Notwithstanding the foregoing, the Board may
act prior to the first day of any calendar year, to

 

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provide that there
shall be no increase in the share reserve for such calendar year or that the number
of shares by which the share reserve for such calendar year is increased shall
be a number of shares that is equal to or less than the number of shares of
Common Stock that would otherwise be determined pursuant to the preceding
sentence.  In the event that the Board
does not act to establish the size of the share reserve increase for a calendar
year pursuant to the preceding sentence, the Board shall be deemed to have
provided for no increase in the share reserve for such year.

 

(b)                                  If
any Purchase Right granted under the Plan shall for any reason terminate
without having been exercised, the shares of Common Stock not purchased under
such Purchase Right shall again become available for issuance under the Plan.

 

(c)                                  The
stock purchasable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the Company on the
open market.

 

5.                                      Grant of Purchase Rights; Offering.

 

(a)                                  The
Board may from time to time grant or provide for the grant of Purchase Rights
to purchase shares of Common Stock under the Plan to Eligible Employees in an
Offering (consisting of one or more Purchase Periods) on an Offering Date or
Offering Dates selected by the Board. 
Each Offering shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate, which shall comply with the
requirement of Section 423(b)(5) of the Code that all Employees granted
Purchase Rights shall have the same rights and privileges.  The terms and conditions of an Offering shall
be incorporated by reference into the Plan and treated as part of the
Plan.  The provisions of separate
Offerings need not be identical, but each Offering shall include (through
incorporation of the provisions of this Plan by reference in the document
comprising the Offering or otherwise) the period during which the Offering
shall be effective, which period shall not exceed twenty-seven (27) months
beginning with the Offering Date, and the substance of the provisions contained
in Sections 6 through 9, inclusive.

 

(b)                                  If
a Participant has more than one Purchase Right outstanding under the Plan, unless
he or she otherwise indicates in agreements or notices delivered hereunder: (i)
each agreement or notice delivered by that Participant shall be deemed to apply
to all of his or her Purchase Rights under the Plan, and (ii) a Purchase Right
with a lower exercise price (or an earlier-granted Purchase Right, if different
Purchase Rights have identical exercise prices) shall be exercised to the
fullest possible extent before a Purchase Right with a higher exercise price
(or a later-granted Purchase Right if different Purchase Rights have identical
exercise prices) shall be exercised.

 

(c)                                  The
Board shall have the discretion to structure an Offering so that if the Fair
Market Value of the shares of Common Stock on the first day of a new Purchase
Period within that Offering is less than or equal to the Fair Market Value of
the shares of Common Stock on the Offering Date, then (i) that Offering shall
terminate immediately, and (ii) the Participants in such terminated Offering
shall be automatically enrolled in a new Offering beginning on the first day of
such new Purchase Period.

 

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6.                                      Eligibility.

 

(a)                                  Purchase
Rights may be granted only to Employees of the Company or, as the Board may
designate as provided in Section 3(b), to Employees of a Related
Corporation.  Except as provided in
Section 6(b), an Employee shall not be eligible to be granted Purchase Rights
under the Plan unless, on the Offering Date, such Employee has been in the
employ of the Company or the Related Corporation, as the case may be, for such
continuous period preceding such Offering Date as the Board may require, but in
no event shall the required period of continuous employment be greater than two
(2) years.  In addition, the Board may
provide that no Employee shall be eligible to be granted Purchase Rights under
the Plan unless, on the Offering Date, such Employee’s customary employment
with the Company or the Related Corporation is more than twenty (20) hours per
week and more than five (5) months per calendar year or such other criteria as
the Board may determine consistent with Section 423 of the Code.

 

(b)                                  The
Board may provide that each person who, during the course of an Offering, first
becomes an Eligible Employee shall, on a date or dates specified in the
Offering which coincides with the day on which such person becomes an Eligible
Employee or which occurs thereafter, receive a Purchase Right under that
Offering, which Purchase Right shall thereafter be deemed to be a part of that
Offering.  Such Purchase Right shall have
the same characteristics as any Purchase Rights originally granted under that
Offering, as described herein, except that:

 

(i)                                    the
date on which such Purchase Right is granted shall be the “Offering Date” of
such Purchase Right for all purposes, including determination of the exercise
price of such Purchase Right;

 

(ii)                                the
period of the Offering with respect to such Purchase Right shall begin on its
Offering Date and end coincident with the end of such Offering; and

 

(iii)                            the
Board may provide that if such person first becomes an Eligible Employee within
a specified period of time before the end of the Offering, he or she shall not
receive any Purchase Right under that Offering.

 

(c)                                  No
Employee shall be eligible for the grant of any Purchase Rights under the Plan
if, immediately after any such Purchase Rights are granted, such Employee owns
stock possessing five percent (5%) or more of the total combined voting power
or value of all classes of stock of the Company or of any Related
Corporation.  For purposes of this
Section 6(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any Employee, and stock which such Employee
may purchase under all outstanding Purchase Rights and options shall be treated
as stock owned by such Employee.

 

(d)                                  As
specified by Section 423(b)(8) of the Code, an Eligible Employee may be granted
Purchase Rights under the Plan only if such Purchase Rights, together with any
other rights granted under all Employee Stock Purchase Plans of the Company and
any Related Corporations, do not permit such Eligible Employee’s rights to
purchase stock of the Company or any Related Corporation to accrue at a rate
which exceeds twenty five thousand dollars ($25,000) of Fair Market Value of
such stock (determined at the time such rights are granted, and

 

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which, with
respect to the Plan, shall be determined as of their respective Offering Dates)
for each calendar year in which such rights are outstanding at any time.

 

(e)                                  Officers
of the Company and any designated Related Corporation, if they are otherwise
Eligible Employees, shall be eligible to participate in Offerings under the
Plan.  Notwithstanding the foregoing, the
Board may provide in an Offering that Employees who are highly compensated
Employees within the meaning of Section 423(b)(4)(D) of the Code shall not be
eligible to participate.

 

7.                                      Purchase Rights; Purchase Price.

 

(a)                                  On
each Offering Date, each Eligible Employee, pursuant to an Offering made under
the Plan, shall be granted a Purchase Right to purchase up to that number of
shares of Common Stock purchasable either with a percentage or with a maximum
dollar amount, as designated by the Board, but in either case not exceeding fifteen
percent (15%) of such Employee’s
earnings (as defined by the Board in each Offering) during the period that
begins on the Offering Date (or such later date as the Board determines for a
particular Offering) and ends on the date stated in the Offering, which date
shall be no later than the end of the Offering.

 

(b)                                  The
Board shall establish one (1) or more Purchase Dates during an Offering as of
which Purchase Rights granted pursuant to that Offering shall be exercised and
purchases of shares of Common Stock shall be carried out in accordance with
such Offering.

 

(c)                                  In
connection with each Offering made under the Plan, the Board may specify a
maximum number of shares of Common Stock that may be purchased by any
Participant on any Purchase Date during such Offering.  In connection with each Offering made under
the Plan, the Board may specify a maximum aggregate number of shares of Common
Stock that may be purchased by all Participants pursuant to such Offering.  In addition, in connection with each Offering
that contains more than one Purchase Date, the Board may specify a maximum
aggregate number of shares of Common Stock that may be purchased by all
Participants on any Purchase Date under the Offering.  If the aggregate purchase of shares of Common
Stock issuable upon exercise of Purchase Rights granted under the Offering
would exceed any such maximum aggregate number, then, in the absence of any
Board action otherwise, a pro rata allocation of the shares of Common Stock
available shall be made in as nearly a uniform manner as shall be practicable
and equitable.

 

(d)                                  The
purchase price of shares of Common Stock acquired pursuant to Purchase Rights
shall be not less than the lesser of:

 

(i)                                    an
amount equal to eighty-five percent (85%) of the Fair Market Value of the
shares of Common Stock on the Offering Date; or

 

(ii)                                an
amount equal to eighty-five percent (85%) of the Fair Market Value of the
shares of Common Stock on the applicable Purchase Date.

 

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8.                                      Participation; Withdrawal; Termination.

 

(a)                                  A
Participant may elect to authorize payroll deductions pursuant to an Offering
under the Plan by completing and delivering to the Company, within the time
specified in the Offering, an enrollment form (in such form as the Company may
provide). Each such enrollment form shall authorize an amount of Contributions
expressed as a percentage of the submitting Participant’s earnings (as defined
in each Offering) during the Offering (not to exceed the maximum percentage
specified by the Board). Each Participant’s Contributions shall be credited to
a bookkeeping account for such Participant under the Plan and shall be
deposited with the general funds of the Company except where applicable law
requires that Contributions be deposited with a third party. To the extent
provided in the Offering, a Participant may begin such Contributions after the
beginning of the Offering.  To the extent
provided in the Offering, a Participant may thereafter reduce (including to zero)
or increase his or her Contributions.  To
the extent specifically provided in the Offering, in addition to making
Contributions by payroll deductions, a Participant may make Contributions
through the payment by cash or check prior to each Purchase Date of the
Offering.

 

(b)                                  During
an Offering, a Participant may cease making Contributions and withdraw from the
Offering by delivering to the Company a notice of withdrawal in such form as
the Company may provide.  Such withdrawal
may be elected at any time prior to the end of the Offering, except as provided
otherwise in the Offering.  Upon such
withdrawal from the Offering by a Participant, the Company shall distribute to
such Participant all of his or her accumulated Contributions (reduced to the
extent, if any, such Contributions have been used to acquire shares of Common
Stock for the Participant) under the Offering, and such Participant’s Purchase
Right in that Offering shall thereupon terminate.  A Participant’s withdrawal from an Offering
shall have no effect upon such Participant’s eligibility to participate in any
other Offerings under the Plan, but such Participant shall be required to
deliver a new enrollment form in order to participate in subsequent Offerings.

 

(c)                                  Purchase
Rights granted pursuant to any Offering under the Plan shall terminate
immediately upon a Participant ceasing to be an Employee for any reason or for
no reason (subject to any post-employment participation period required by law)
or other lack of eligibility. The Company shall distribute to such terminated
or otherwise ineligible Employee all of his or her accumulated Contributions
(reduced to the extent, if any, such Contributions have been used to acquire
shares of Common Stock for the terminated or otherwise ineligible Employee)
under the Offering.

 

(d)                                  Purchase
Rights shall not be transferable by a Participant except by will, the laws of
descent and distribution, or by a beneficiary designation as provided in
Section 13.  During a Participant’s
lifetime, Purchase Rights shall be exercisable only by such Participant.

 

(e)                                  Unless
otherwise specified in an Offering, the Company shall have no obligation to pay
interest on Contributions.

 

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9.                                      Exercise.

 

(a)                                  On
each Purchase Date during an Offering, each Participant’s accumulated
Contributions shall be applied to the purchase of shares of Common Stock up to
the maximum number of shares of Common Stock permitted pursuant to the terms of
the Plan and the applicable Offering, at the purchase price specified in the
Offering.  No fractional shares shall be
issued upon the exercise of Purchase Rights unless specifically provided for in
the Offering.

 

(b)                                  If
any amount of accumulated Contributions remains in a Participant’s account
after the purchase of shares of Common Stock and such remaining amount is less
than the amount required to purchase one share of Common Stock on the final
Purchase Date of an Offering, then such remaining amount shall be held in such
Participant’s account for the purchase of shares of Common Stock under the next
Offering under the Plan, unless such Participant withdraws from such next
Offering, as provided in Section 8(b), or is not eligible to participate in
such Offering, as provided in Section 6, in which case such amount shall be
distributed to such Participant after the final Purchase Date, without
interest.  If the amount of Contributions
remaining in a Participant’s account after the purchase of shares of Common
Stock is at least equal to the amount required to purchase one (1) whole share
of Common Stock on the final Purchase Date of the Offering, then such remaining
amount shall be distributed in full to such Participant at the end of the
Offering without interest.

 

(c)                                  No
Purchase Rights may be exercised to any extent unless the shares of Common
Stock to be issued upon such exercise under the Plan are covered by an
effective registration statement pursuant to the Securities Act and the Plan is
in material compliance with all applicable federal, state, foreign and other
securities and other laws applicable to the Plan.  If on a Purchase Date during any Offering
hereunder the shares of Common Stock are not so registered or the Plan is not
in such compliance, no Purchase Rights or any Offering shall be exercised on
such Purchase Date, and the Purchase Date shall be delayed until the shares of
Common Stock are subject to such an effective registration statement and the
Plan is in such compliance, except that the Purchase Date shall not be delayed
more than twelve (12) months and the Purchase Date shall in no event be more
than twenty-seven (27) months from the Offering Date.  If, on the Purchase Date under any Offering
hereunder, as delayed to the maximum extent permissible, the shares of Common
Stock are not registered and the Plan is not in such compliance, no Purchase
Rights or any Offering shall be exercised and all Contributions accumulated
during the Offering (reduced to the extent, if any, such Contributions have
been used to acquire shares of Common Stock) shall be distributed to the
Participants without interest.

 

10.                               Covenants of the Company.

 

The
Company shall seek to obtain from each federal, state, foreign or other
regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of Common Stock upon
exercise of the Purchase Rights.  If,
after commercially reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority that counsel for the Company
deems necessary for the lawful issuance and sale of Common Stock under the
Plan, the Company shall be relieved from any liability for failure to issue and
sell Common Stock upon exercise of such Purchase Rights unless and until such
authority is obtained.

 

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11.                               Use of Proceeds from Sales of Common Stock.

 

Proceeds from the sale of
shares of Common Stock pursuant to Purchase Rights shall constitute general
funds of the Company.

 

12.                               Rights as a stockholder.

 

A Participant shall not
be deemed to be the holder of, or to have any of the rights of a holder with
respect to, shares of Common Stock subject to Purchase Rights unless and until
the Participant’s shares of Common Stock acquired upon exercise of Purchase Rights
are recorded in the books of the Company (or its transfer agent).

 

13.                               Designation of Beneficiary.

 

(a)                                  A
Participant may file a written designation of a beneficiary who is to receive
any shares of Common Stock and/or cash, if any, from the Participant’s account
under the Plan in the event of such Participant’s death subsequent to the end
of an Offering but prior to delivery to the Participant of such shares of
Common Stock or cash.  In addition, a
Participant may file a written designation of a beneficiary who is to receive
any cash from the Participant’s account under the Plan in the event of such
Participant’s death during an Offering. 
Any such designation shall be on a form provided by or otherwise
acceptable to the Company.

 

(b)                                  The
Participant may change such designation of beneficiary at any time by written
notice to the Company.  In the event of
the death of a Participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such Participant’s
death, the Company shall deliver such shares of Common Stock and/or cash to the
executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its sole discretion, may deliver such shares of Common Stock
and/or cash to the spouse or to any one or more dependents or relatives of the
Participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

 

14.                               Adjustments upon Changes in Common Stock;
Corporate Transactions.

 

(a)                                  If
any change is made in, or other events occur with respect to, the Common Stock
subject to the Plan or subject to any Purchase Right after the effective date
of the Plan set forth in Section 17 without the receipt of consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company (each a “Capitalization Adjustment”)), the Board shall
appropriately adjust: (i) the class(es) and maximum number of securities
subject to the Plan pursuant to Section 4(a), (ii) the class(es) and maximum
number of securities by which the share reserve is to increase automatically
each year pursuant to Section 4(a), (iii) the class(es) and number of
securities subject to outstanding Purchase Rights, and (iv) the class(es) and
number of securities imposed by purchase limits under each ongoing
Offering.  The Board shall make such
adjustments, and its determination shall be final, binding and conclusive.  (Notwithstanding the

 

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foregoing, the
conversion of any convertible securities of the Company shall not be treated as
a transaction “without receipt of consideration” by the Company.)

 

(b)                                  In
the event of a Corporate Transaction, then: (i) any surviving corporation or
acquiring corporation (or the surviving or acquiring corporation’s parent
company) may assume or continue Purchase Rights outstanding under the Plan or
may substitute similar rights (including a right to acquire the same
consideration paid to the stockholders in the Corporate Transaction) for those
outstanding under the Plan, or (ii) if any surviving or acquiring corporation
(or its parent company) does not assume or continue such Purchase Rights or
does not substitute similar rights for Purchase Rights outstanding under the
Plan, then the Participants’ accumulated Contributions shall be used to
purchase shares of Common Stock within ten (10) business days prior to the
Corporate Transaction under any ongoing Offerings, and the Participants’
Purchase Rights under the ongoing Offerings shall terminate immediately after
such purchase.

 

15.                               Amendment of the Plan.

 

(a)                                  The
Board at any time, and from time to time, may amend the Plan.  However, except as provided in Section 14(a)
relating to Capitalization Adjustments and except as to amendments solely to
benefit the administration of the Plan, to take account of a change in
legislation or to obtain or maintain favorable tax, exchange control or
regulatory treatment for Participants or the Company or any Related
Corporation, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary for
the Plan to satisfy the requirements of Section 423 of the Code or other
applicable laws or regulations.

 

(b)                                  It
is expressly contemplated that the Board may amend the Plan in any respect the
Board deems necessary or advisable to provide Employees with the maximum
benefits provided or to be provided under the provisions of the Code and the
regulations promulgated thereunder relating to Employee Stock Purchase Plans
and/or to bring the Plan and/or Purchase Rights into compliance therewith.

 

(c)                                  The
rights and obligations under any Purchase Rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan except: (i) with
the consent of the person to whom such Purchase Rights were granted, or (ii) as
necessary to comply with any laws or governmental regulations (including,
without limitation, the provisions of the Code and the regulations promulgated
thereunder relating to Employee Stock Purchase Plans).

 

16.                               Termination or Suspension of the Plan.

 

(a)                                  The
Board may suspend or terminate the Plan at any time.  Unless sooner terminated, the Plan shall
terminate at the time that all of the shares of Common Stock reserved for
issuance under the Plan, as increased and/or adjusted from time to time, have
been issued under the terms of the Plan. 
No Purchase Rights may be granted under the Plan while the Plan is
suspended or after it is terminated.

 

(b)                                  Any
benefits, privileges, entitlements and obligations under any Purchase Rights
while the Plan is in effect shall not be impaired by suspension or termination
of the Plan except

 

11

 

(i) as expressly
provided in the Plan or with the consent of the person to whom such Purchase
Rights were granted, (ii) as necessary to comply with any laws, regulations or
listing requirements, or (iii) as necessary to ensure that the Plan and/or
Purchase Rights comply with the requirements of Section 423 of the Code.  Notwithstanding the foregoing, if the Company’s
accountants advise the Company that the accounting treatment of purchases under
the Plan will change or has changed in a manner that the Company determines is
detrimental to its best interests, then the Company may, in its discretion,
take any or all of the following actions: (i) terminate each Offering hereunder
that is then ongoing as of the next Purchase Date (after the purchase of Common
Stock on such Purchase Date) under such Offering; (ii) set a new Purchase Date
for each ongoing Offering and terminate such Offerings after the purchase of
Common Stock on such Purchase Date; (iii) amend the Plan and the ongoing Offering
so that such Offering will no longer have an accounting treatment that is
detrimental to the Company’s best interests and (iv) terminate each ongoing
Offering and refund any Contributions (reduced to the extent, if any, such
Contributions have been used to acquire shares of Common Stock) without
interest to the participants.

 

17.                               Effective Date of Plan.

 

The Plan shall become
effective on the IPO Date, but no Purchase Rights shall be exercised unless and
until the Plan has been approved by the stockholders of the Company, which
approval shall be within twelve (12) months before or after the date the Plan
is adopted by the Board.

 

18.                               Miscellaneous Provisions.

 

(a)                                  The
Plan and Offering do not constitute an employment contract.  Nothing in the Plan or in the Offering shall
in any way alter the at will nature of a Participant’s employment or be deemed
to create in any way whatsoever any obligation on the part of any Participant
to continue in the employ of the Company or a Related Corporation, or on the part
of the Company or a Related Corporation to continue the employment of a
Participant.

 

(b)                                  The
provisions of the Plan shall be governed by the laws of the State of Delaware without resort to that state’s
conflicts of laws rules.

 

12

 

Intarcia Therapeutics, Inc.

 

2005 Employee Stock Purchase Plan

Offering Document

 

Adopted by the Board of Directors:              ,
2005

 

In this document,
capitalized terms not otherwise defined shall have the same definitions of such
terms as in the Intarcia Therapeutics,
Inc. 2005 Employee Stock Purchase Plan.

 

19.                               Grant; Offering Date.

 

(a)                                  The
Board hereby authorizes a series of Offerings pursuant to the terms of this
Offering document.

 

(b)                                  The
first Offering hereunder (the “Initial Offering”) shall begin on the date the Common
Stock is first offered to the public under a registration statement declared
effective under the Securities Act and shall end on [                   ],
unless terminated earlier as provided below. 
The Initial Offering shall consist of [       ]
([    ]) Purchase Periods, with the first Purchase Period
ending on [                   ],
the second Purchase Period ending on [                   ],
the third Purchase Period ending on [                   ],
and the fourth Purchase Period ending on [                   ].

 

(c)                                  After
the Initial Offering commences, a [concurrent] Offering shall begin on [                   ]
and [                   ]
and [                   ]
each year after [          ]
over the term of the Plan and shall be approximately [      ]
([    ]) years in duration. 
Each Offering shall consist of [       ]
([    ]) Purchase Periods each of which shall be
approximately [         ] ([    ])
months in length ending on or about [                   ]
and [                   ]
each year.  Except as provided below, a
Purchase Date is the last day of a Purchase Period or of an Offering, as the
case may be.

 

(d)                                  Notwithstanding
the foregoing: (i) if any Offering Date falls on a day that is not a Trading
Day, then such Offering Date shall instead fall on the next subsequent Trading
Day, and (ii) if any Purchase Date falls on a day that is not a Trading Day,
then such Purchase Date shall instead fall on the immediately preceding Trading
Day.

 

(e)                                  Prior
to the commencement of any Offering, the Board may change any or all terms of
such Offering and any subsequent Offerings. 
The granting of Purchase Rights pursuant to each Offering hereunder
shall occur on each respective Offering Date unless prior to such date
(i) the Board determines that such Offering shall not occur, or
(ii) no shares of Common Stock remain available for issuance under the
Plan in connection with the Offering.

 

(f)                                    If
the Company’s accountants advise the Company that the accounting treatment of
purchases under the Plan is such that the Company determines is detrimental to
its best interests, then the Board may, in its sole discretion, terminate each
Offering hereunder that is

 

13

 

then ongoing as of
the next Purchase Date (after the purchase of stock on such Purchase Date)
under such Offering.

 

(g)                                 [Notwithstanding
anything in this Section 1 to the contrary, if on the first day of a new
Purchase Period during the Offering the Fair Market Value of a share of Common
Stock is less than or equal to the Fair Market Value of a share of Common Stock
on the Offering Date for that Offering, then that Offering shall immediately
terminate. Participants in the terminated Offering shall automatically be
enrolled in the new Offering that starts on or about such day.]

 

20.                               Eligible Employees.

 

(a)                                  Each
Eligible Employee, who has been an Employee for a continuous period of at least
[ten] ([10]) [days] ending on the Offering Date of an Offering hereunder and is
either (i) an employee of the Company; (ii) an employee of a Related
Corporation incorporated in the United States; or (iii) an employee of a
Related Corporation that is not incorporated in the United States, provided
that the Board has designated the employees of such Related Corporation as
eligible to participate in the Offering, shall be granted a Purchase Right on
the Offering Date of such Offering.

 

(b)                                  Each
person who first becomes an Eligible Employee during an Offering shall not be
able to participate in such Offering.

 

(c)                                  Notwithstanding
the foregoing, the following Employees shall not be Eligible Employees
or be granted Purchase Rights under an Offering:

 

(i)                                    Employees
whose customary employment is twenty (20) hours per week or less or five (5)
months per calendar year or less;

 

(ii)                                five
percent (5%) stockholders (including ownership through unexercised and/or
unvested stock options) as described in Section 6(c) of the Plan; or

 

(iii)                            Employees
in jurisdictions outside of the United States if, as of the Offering Date of
the Offering, the grant of such Purchase Rights would not be in compliance with
the applicable laws of any jurisdiction in which the Employee resides or is
employed.

 

21.                               Purchase Rights.

 

(a)                                  Subject
to the limitations herein and in the Plan, a Participant’s Purchase Right shall
permit the purchase of the number of shares of Common Stock purchasable with up
to [                ] percent ([    ]%) of
such Participant’s Earnings paid during the period of such Offering beginning
immediately after such Participant first commences participation; provided, however, that no Participant may have more than [             ]
percent ([   ]%) of such Participant’s Earnings applied
to purchase shares of Common Stock under all ongoing Offerings under the Plan
and all other plans of the Company and Related Corporations that are intended
to qualify as Employee Stock Purchase Plans.

 

(b)                                  For
Offerings hereunder, “Earnings”
means the base compensation paid to a Participant, including all salary, wages
(including amounts elected to be deferred by such

 

14

 

Participant, that
would have been paid, under any cash or deferred arrangement or other deferred
compensation program established by the Company or a Related Corporation), but
excluding all overtime pay, commissions, bonuses, and other remuneration paid
directly to such Participant, profit sharing, the cost of employee benefits
paid for by the Company or a Related Corporation, education or tuition reimbursements,
imputed income arising under any Company or Related Corporation group insurance
or benefit program, traveling expenses, business and moving expense
reimbursements, income received in connection with stock options, contributions
made by the Company or a Related Corporation under any employee benefit plan,
and similar items of compensation.

 

(c)                                  Notwithstanding
the foregoing, the maximum number of shares of Common Stock that a Participant
may purchase on any Purchase Date in an Offering shall be such number of shares
as has a Fair Market Value (determined as of the Offering Date for such
Offering) equal to (x) $25,000 multiplied by the number of calendar years in
which the Purchase Right under such Offering has been outstanding at any time,
minus (y) the Fair Market Value of any other shares of Common Stock (determined
as of the relevant Offering Date with respect to such shares) that, for
purposes of the limitation of Section 423(b)(8) of the Code, are attributed to
any of such calendar years in which the Purchase Right is outstanding. The
amount in clause (y) of the previous sentence shall be determined in accordance
with regulations applicable under Section 423(b)(8) of the Code based on (i)
the number of shares previously purchased with respect to such calendar years
pursuant to such Offering or any other Offering under the Plan, or pursuant to
any other Company or Related Corporation plans intended to qualify as Employee
Stock Purchase Plans, and (ii) the number of shares subject to other Purchase
Rights outstanding on the Offering Date for such Offering pursuant to the Plan
or any other such Company or Related Corporation Employee Stock Purchase Plan.

 

(d)                                  The
maximum aggregate number of shares of Common Stock available to be purchased by
all Participants under an Offering shall be the number of shares of Common
Stock remaining available under the Plan on the Offering Date.  If the aggregate purchase of shares of Common
Stock upon exercise of Purchase Rights granted under all concurrent Offerings
would exceed the maximum aggregate number of shares available, the Board shall
make a uniform and equitable allocation of the shares available.

 

(e)                                  Notwithstanding
the foregoing, the maximum number of shares of Common Stock that an Eligible
Employee may purchase on any Purchase Date during any Offering shall not exceed
[                   ]
([             ])
shares.

 

22.                               Purchase Price.

 

The
purchase price of shares of Common Stock under the Offering shall be the lesser
of: (i) eighty-five percent (85%) of the Fair Market Value of such shares of
Common Stock on the Offering Date, or (ii) eighty-five percent (85%) of the
Fair Market Value of such shares of Common Stock on the applicable Purchase
Date.  For the Initial Offering, the Fair
Market Value of the shares of Common Stock at the time when the Offering
commences shall be the price per share at which shares are first sold to the
public in the Company’s initial public offering as specified in the final
prospectus for that initial public offering.

 

15

 

23.                               Participation.

 

(a)                                  An
Eligible Employee may elect to participate in an Offering on the Offering Date.
An Eligible Employee may enroll in only one Offering at a time.  An Eligible Employee shall elect his or her
payroll deduction percentage on such enrollment form as the Company provides.
The completed enrollment form must be delivered to the Company prior to the
date participation is to be effective, unless a later time for filing the
enrollment form is set by the Company for all Eligible Employees with respect
to a given Offering. Payroll deduction percentages must be expressed in whole
percentages of Earnings, with a minimum percentage of one percent (1%) and a
maximum percentage of [                   ] percent ([      ]%).
 Except as provided in Section
5(e), a Participant may participate only by way of payroll deductions.

 

(b)                                  A
Participant may not increase his or her participation level during a Purchase
Period but may increase his or her
participation level for a subsequent Purchase Period.  In addition, a Participant may
decrease (including a decrease to zero percent (0%)) his or her participation
level no more than twice during a
Purchase Period (and the second decrease in participation level must be
to zero percent (0%)). Any such change in participation level shall be made by
delivering a notice to the Company or a designated Related Corporation in such
form as the Company provides prior to the ten (10) day period (or such shorter
period of time as determined by the Company and communicated to Participants)
immediately preceding the payroll date for which it is to be effective.

 

(c)                                  A
Participant may withdraw from an Offering and receive a refund of his or her
Contributions (reduced to the extent, if any, such Contributions have been used
to acquire shares of Common Stock for the Participant on any prior Purchase
Date) without interest, at any time prior to the end of the Offering, excluding
only each ten (10) day period immediately preceding a Purchase Date (or such
shorter period of time determined by the Company and communicated to
Participants), by delivering a withdrawal notice to the Company or a designated
Related Corporation in such form as the Company provides.  A Participant who has withdrawn from an
Offering shall not again participate in such Offering, but may participate in
subsequent Offerings under the Plan in accordance with the terms of the Plan
and the terms of such subsequent Offerings.

 

(d)                                  
Notwithstanding the foregoing or any other provision of this Offering document
or of the Plan to the contrary, neither the enrollment of any Eligible Employee
in the Plan nor any forms relating to participation in the Plan shall be given
effect until such time as a registration statement covering the registration of
the shares under the Plan that are subject to the Offering has been filed by
the Company and has become effective.

 

(e)                                  If
the provisions of Section 5(d) are applicable, the Company shall establish such
procedures as will enable the purposes of the Plan to be satisfied while
complying with applicable securities laws. 
Such procedures may include, for example, allowing Participants to
participate other than by means of payroll deduction and/or allowing
Participants to increase their level of participation during a Purchase
Period.  Except as otherwise provided by
the Company pursuant to the preceding sentence, for the initial Purchase Period
ending [January 31, 2006], no payroll deductions shall be required from the
Eligible Employee until such time as the Eligible Employee affirmatively elects
to commence such payroll deductions following the

 

16

 

Eligible Employee’s
receipt of the Securities Act prospectus for the Plan.  To the extent that the Eligible Employee’s
payroll deductions for such initial Purchase Period are less than [                   ]
percent ([    ]%) of Earnings paid to the Eligible Employee
during such initial Purchase Period, the Eligible Employee may make an
additional cash payment at any time on or prior to [                   ]
in order to fund the purchase of shares of Common Stock purchased on behalf of
the Eligible Employee on such initial Purchase Date.

 

24.                               Purchases.

 

Subject
to the limitations contained herein, on each Purchase Date, each Participant’s
Contributions (without any increase for interest) shall be applied to the
purchase of whole shares, up to the maximum number of shares permitted under
the Plan and the Offering.

 

25.                               Notices and Agreements.

 

Any
notices or agreements provided for in an Offering or the Plan shall be given in
writing, in a form provided by the Company, and unless specifically provided
for in the Plan or this Offering, shall be deemed effectively given upon
receipt or, in the case of notices and agreements delivered by the Company,
five (5) days after deposit in the United States mail, postage prepaid.

 

I.                                         Exercise Contingent on Stockholder Approval.

 

(a)                                  The
Purchase Rights granted under an Offering are subject to the approval of the
Plan by the stockholders of the Company as required for the Plan to obtain
treatment as an Employee Stock Purchase Plan.

 

26.                               Offering Subject to Plan.

 

(a)                                  Each
Offering is subject to all the provisions of the Plan, and the provisions of
the Plan are hereby made a part of the Offering.  The Offering is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan.  In the event of any conflict between the
provisions of an Offering and those of the Plan (including interpretations,
amendments, rules and regulations which may from time to time be promulgated
and adopted pursuant to the Plan), the provisions of the Plan shall control.

 

*  * 
*  *

 

17EXHIBIT 10.7

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

 

OMEGA INTERFERON

 

LICENSE AGREEMENT

 

EXECUTED

 

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

 

LICENSE AGREEMENT

 

This
agreement (“Agreement”) is made and entered into this July 17, 1998
by and between BOEHRINGER INGELHEIM INTERNATIONAL GMBH, a
corporation with offices at D 55216 Ingelheim/Rhein, Germany (“BII”), and BIOMEDICINES, INC., a Delaware corporation, with an address
for purposes of the Agreement at 909 Marina Village Parkway #583 Alameda,
California, United States of America (U.S.A.) 94501 (“BMI”).

 

WHEREAS, BII
is the owner of certain Patent Rights, Know-How, and the Manufacturing Process
(each as hereinafter defined) and has the right to grant the license (“License”)
set forth herein and, moreover, BII has developed certain pharmaceutical
formulations containing Omega Interferon (“Licensed Product” as defined below)
and has conducted Phase I clinical trials; and

 

WHEREAS, BMI
desires to establish whether the Licensed Product is useful in treating
patients with various diseases and, if so, to complete the development of
Licensed Product in order to commercialise Licensed Product; and

 

WHEREAS, BMI
desires to obtain an exclusive License in the Territory (as hereinafter
defined) under the Patent Rights and Know-How;

 

NOW,
THEREFORE, in consideration of the promises and mutual
covenants contained herein, and other good and valuable consideration, BII and
BMI agree as follows:

 

1.                                      DEFINITIONS

 

1.1                               Affiliate
shall mean any corporation or business entity controlled by, controlling
or under common control with either BII or BMI, as the case may be. For this
purpose, control shall mean any of the following:

 

(a)                                  direct
or indirect beneficial ownership of more than fifty percent (50%) of the voting
stock of such entity;

 

(b)                                  fifty
percent (50%) or greater interest in the income of such entity;

 

(c)                                  a
fifty percent (50%) or greater management control over a joint venture; or

 

(d)                                  any
other relationship that, in fact, constitutes actual control.

 

1.2                               Effective
Date shall mean the date of execution of the Agreement as shown
above.

 

1.3                               Field
shall mean the treatment of humans for diseases, disorders, conditions, and the
like by the administration of Licensed Product.

 

1.4                               Non-Manufacturing
Know-How shall mean any and all technical data or non-technical
information, expertise, knowledge and the like which relates to the Licensed Product
or to the Patent Rights but excluding Manufacturing Know-How. Such data or
information shall

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

1

 

include, without limitation, all pharmacological, toxicological,
clinical, and marketing or sales-related information as well as any other data,
information or designs used or specifically useful for the development or
commercialisation of the Licensed Product. Furthermore, Non-Manufacturing
Know-How includes similar data or information as described herein that may now
be known to, or is now in the possession of BII or its Affiliate(s) or which
may become known to or may come into the possession of BII or its Affiliate(s)
after the Effective Date provided that, in the event such data or information
is received from a third party, BII shall be entitled to pass on such data and
information to BMI.

 

1.5                               Manufacturing
Know-How shall mean any and all assay, chemical, control, and
manufacturing information or data useful or necessary for the successful
development, registration, and commercialisation of the Licensed Product.

 

1.6                               Licensed
Product(s) shall mean one or more pharmaceutical products initially
developed by BII and containing Omega Interferon (which is described more fully
in Appendix A) and for use in the Field including new formulations, if any,
developed by BII or BMI after the Effective Date.

 

1.7                               Manufacturing
Process shall mean:

 

(a)                                  any
process for manufacturing Licensed Product which is covered in whole or in part
by any claim contained in the Patent Rights or by Manufacturing Know-How;

 

(b)                                  any
information or description of any process for manufacturing the Licensed
Product contained in a Drug Master File or similar document; or

 

(c)                                  any
modification or improvement thereto suggested, developed or introduced by BII,
BMI or Affiliates thereof during the course of either development or
commercialisation of the Licensed Product, provided, however, that any
modifications by BMI necessary to permit administration of Omega Interferon by
other than subcutaneous injection shall not necessarily become a part of the
Manufacturing Process as defined herein but shall be the subject of good faith
negotiations between BII and BMI.

 

1.8                               Net
Sales shall mean the actual gross amount invoiced by BMI, or by its
Affiliates or Sublicensees as the case may be, for sales of the Licensed
Product in the Territory to a third party during a calendar year after
deduction of:

 

(a)                                  direct
transportation charges, including insurance therefor;

 

(b)                                  any
sales, use, value-added taxes, excise taxes and/or other similar duties or
allowances based on the selling price of the Licensed Product which become due
and are paid by BMI or paid by its Affiliates or Sublicensees as a consequence
of such sales;

 

(c)                                  trade,
quantity or cash discounts or rebates actually allowed or taken to the extent
customary in the trade, including (without limitation) governmental rebates;
and

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

2

 

(d)                                  allowances
or credits, including but not limited to, allowances or credits to customers on
account of rejection or return of the Licensed Product.

 

The
sale or transfer by BMI to an Affiliate or Sublicensee for ultimate re-sale by
such Affiliate or Sublicensee shall not be considered a sale by BMI for the
purpose of this provision. (However, the actual resale by such Affiliate or
Sublicensee shall be a sale for purposes of calculating Net Sales.)

 

Any
transfers or dispositions of Licensed Product by BMI or its Affiliate(s) or its
Sublicensee(s) solely for pre-clinical, clinical, regulatory, or governmental
purposes, whether prior to or after a marketing approval may be granted in any
country, shall not be considered a sale by BMI for the purposes of this
provision.

 

1.9                               Patent
Rights shall mean all of the following intellectual property of BII:

 

(a)                                  the
patents and patent applications listed in Appendix B;

 

(b)                                  the
patents issued from the applications listed in Appendix B and from divisionals
and continuations of these applications;

 

(c)                                  any
reissue or extension of patents in Appendix B; and

 

(d)                                  any
improvement patent dominated by the claims of the Patent Rights.

 

1.10                        Phase
II shall mean

 

(a)                                  those
clinical studies performed in patients rather than normal volunteers; and

 

(b)                                  utilizing
drug supplies manufactured by the BII’s Affiliate Bender + Co., GmbH and/or BII’s
Affiliate Boehringer Ingelheim Pharma KG.

 

1.11                        Phase
III shall mean

 

(a)                                  those
clinical studies performed in patients rather than normal volunteers where the
purpose of said studies is specifically to obtain clinical data in support of
registration and subsequent commercialisation; and

 

(b)                                  utilizing
drug supplies manufactured by BII’s Affiliate Boehringer Ingelheim Pharma KG.

 

1.12                        R&D Agreement shall mean an agreement between BMI and
Boehringer Ingelheim Pharma KG of even date with the Agreement for the
manufacture of Licensed Product.

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

3

 

1.13                        Settlement
Agreement between BII and Genentech
shall mean the agreement between BII and the United States corporation
Genentech, Inc. dated [*] (the
Settlement Agreement).

 

1.14                        Sublicensee
shall mean a person or legal entity to which BMI grants a sublicense of some or
all of the rights granted to BMI under Section 2.1.

 

1.15                        Territory  The territory (“Territory) shall be worldwide
with the exception of the United States of America. Asia (“Asia”) shall mean
those countries of the Territory shown in Appendix C. The European Union (“European
Union”) shall be those countries of the Territory officially recognised as
members by the European Parliament as of the Effective Date. In addition, BMI
territorial rights as described in the Agreement shall not be abridged because
of a change in the official country name or a change in geographic boundaries.

 

2.                                      GRANT

 

2.1                               Grant.  Subject to the terms and conditions of the
Agreement, BII hereby grants to BMI, and BMI hereby accepts from BII, under the
Patent Rights and Non-Manufacturing Know-How an exclusive royalty-bearing right
and license (the “License”), even as to BII, to use, develop, market, and sell
Licensed Product in the Territory for uses within the Field and to use the
Manufacturing Know-How to the extent necessary to develop, register and
commercialise Licensed Product under the Agreement. BMI shall have no rights to
use the Manufacturing Know-How to manufacture Licensed Product or to have it
manufactured except by BII or by a BII Affiliate, as provided herein and in the
R&D Agreement, or unless otherwise approved by BII.

 

2.2                               Sublicense.  BII also grants to BMI the right to
sublicense Licensed Product as provided for in this and in other Sections of
the Agreement.

 

2.3                               BII
Obligations for the United States.  BII will utilise its best reasonable efforts
pursuant to Clause 11.3 to grant BMI a sublicense under the Settlement
Agreement.

 

3.                                      DUE
DILIGENCE BY BMI

 

3.1                               Development
Planning.  Prior to initiating
clinical testing with the Licensed Product, BMI has provided BII a copy of the
first clinical protocol for a Phase II clinical trial for the indication of
treating viral hepatitis. Such protocol is attached to this Agreement as
Appendix D. Both BII and BMI acknowledge that such protocol is subject to
regulatory approval and to agreement with clinical investigators.

 

Prior
to initiating additional clinical trials for viral hepatitis or clinical
testing for any other indication, BMI will also provide to BII a suitably
detailed protocol or protocol outline for any other said clinical trial. BII
will have the right but not the obligation to provide comments on each protocol
or protocol outline to BMI. BMI may, at BMI’s discretion, modify any protocol
in response to the comments or suggestions made by BII.

 

3.2                               Exercise
of Diligence.  BMI agrees to
exercise due diligence, consistent with good business judgment, to develop
Licensed Product in the Territory, in particular in the

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

4

 

European Union and in Japan. In this regard, BMI shall use its good
faith efforts to further develop, obtain regulatory approvals and commercialise
the Licensed Product in the Territory. It is understood, however, that not all
of the countries in the Territory outside the European Union and Japan will
necessarily be subject to initial development or commercialisation.

 

BMI
shall bear the responsibility for ensuring regulatory compliance, development,
and commercialisation when such activities are undertaken by BMI, BMI’s
Affiliates or Sublicensees.

 

3.3                               Commercialisation
Plans in Certain Countries. 
Within twelve (12) months after the first filing for marketing approval
of Licensed Product for the European Union or Japan, whichever is earlier, BMI
must disclose in writing to BII its plans to develop, register and
commercialise Licensed Product in countries outside the European Union and
Japan. Within sixty (60) days after receipt of said plans by BII, BMI and BII
agree to discuss said plans and to discuss in good faith any reasonable
modification thereof.

 

3.4                               Potential
Abandonment of Rights by BMI. 
In the event that registration and commercialisation of Licensed Product
under Section 3.2 is not consistent with good business judgment in any country
of the Territory, then such country shall be deleted from the Territory and BII
shall be entitled to make use in such country of any data generated by BMI
under such terms as are agreed by BII and BMI taking into account the costs
incurred by BMI generating such data and the sales potential in such country.

 

3.5                               Periodic
Reporting.  BMI will provide
periodic reports to BII during the course of development in sufficient detail
for BII to assess whether BMI is in compliance with the diligence obligations
in Section 3.2. BII may make reasonable requests for additional
information and BMI will make reasonable efforts to comply with said requests
for additional information consistent with good business judgment.

 

3.6                               Need
for Approval of Regulatory Authorities.  BII acknowledges that approval by regulatory
authorities may be necessary prior to the commencement of any clinical
development activities by BMI or BMI Sublicensees. No guarantee can be provided
that such regulatory approval will be obtained. Accordingly, while development
plans, protocols, protocol outlines, and the like will be provided in good
faith to BII by BMI, such plans or proposals must be viewed as tentative and
subject to regulatory approval.

 

4.                                      SUBLICENSING

 

4.1                               Characteristics
of Potential Sublicensees.  In
granting a sublicense, BMI agrees to consider whether past or present
activities by the potential Sublicensee would substantially prejudice the
relationship of either BMI or BII with recognised health authorities in the
United States, Europe, or Japan and to determine whether the potential
Sublicensee is engaged in substantive litigation involving BII.

 

4.2                               BMI
Duty to Inform.  If BMI
intends to grant a sublicense, BMI must inform BII in writing as soon as
commercial terms have been substantively agreed but in any event at least
thirty (30) days in advance of the granting of each sublicense in order that
BMI can consider possible objections by BII under Section 4.1.

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

5

 

5.                                      BII
REVIEW RIGHTS AND TERRITORIAL REVERSION RIGHTS

 

5.1                               BII
Clinical Data Review Rights.  Within thirty (30) days of the availability
within or to BMI of a clinical trial report for any completed trial, BMI shall
provide a copy of the report to BII.

 

5.2                               BII
Reversion Rights

 

5.2.1                     Interests
of the parties.  BII has a possible interest in the
reversion of some or all of the rights granted under this Agreement in the
event BMI can demonstrate to BII’s satisfaction clinical benefits of Licensed
Product. BMI has a possible interest in granting a sublicense in Asia before
such clinical benefits have been demonstrated.

 

5.2.2                     For
Asia.  Notwithstanding
Section 5.2.3, BII agrees that BMI shall be free to conclude a
sublicensing agreement with a third party for Japan and/or other countries in
Asia at any time after the Effective Date and on any terms acceptable to BMI
provided, however, that such terms must also be in compliance with the terms of
the Agreement.

 

In the
event, BMI sends to a prospective Asian Sublicensee any preclinical or clinical
data concerning Licensed Product that did not originate from or within BII or a
BII Affiliate (“New Data”), then BMI will send such New Data to BII on or
before the date such New Data is sent to such prospective Sublicensee and BII
shall have the opportunity to negotiate for the reversion of the rights granted
under this Agreement.

 

5.2.3                     Rights
of First Refusal.  Within thirty (30) days after
receiving from BMI the final clinical trial report for the clinical study
described in Appendix D, BII shall inform BMI in writing whether it wishes to
negotiate the reversion of some or all of the rights granted to BMI under this
Agreement in the countries of the Territory except for countries where BMI has
granted a Sublicense under Clause 5.2.2. If BII does so wish, then both BMI and
BII agree to negotiate in good faith for no more than an additional sixty (60)
days the potential terms of such reversion (“Reversion Terms”). Until the
expiration of this sixty (60) day period, BMI may not conclude a Sublicense
agreement with any third party except for countries in Asia pursuant to Section 3.2.

 

In the
event that BMI rejects said Reversion Terms, then BMI shall be free thereafter
to conclude one or more new sublicensing agreements with a third party for any
country provided that the sublicense terms agreed with the third party for any
such country must be on terms no more favorable to the third party than were
the Reversion Terms previously offered by BII to BMI.

 

If
both BII and BMI agree to Reversion Terms, however, then BII and BMI shall
conclude a new agreement embodying said Reversion Terms as soon as practicable.
Due diligence by BII will be determined by the terms of the new agreement
embodying said Reversion Terms.

 

BII
may decline, however, to review such clinical trial report. If BII declines,
then BII waives its rights under this Section 5.2.3.

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

6

 

5.3                               One-Time
Rights.  Both BII and BMI
agree that the reversion rights described in this Section 5 shall be “one-time”
rights only and shall expire following the earliest of the following
independent and mutually exclusive events:

 

(a)                                  the
decision by BII to decline to review the report regarding the clinical study of
Appendix D; or

 

(b)                                  the
end of the thirty(30)-day review period referred to in Section 5.2.3 but
then if, and only if, BII has not yet informed BMI in writing of BII’s wish to
negotiate Reversion Terms; or

 

(c)                                  the
end of sixty-day negotiation period referred to in Section 5.2.3 but then
if, and only if, BII and BMI have not yet agreed on said Reversion Terms.

 

6.                                      DATA

 

6.1                               Preclinical
and Clinical Data, Non-Manufacturing Know-How.  BII shall make available to BMI, in English
where available in English, and in German where unavailable in English,
Non-Manufacturing Know-How, any and all preclinical and clinical data, or other
data or information generated by BII or its Affiliate(s) from preclinical or
clinical research with regard to the development of the Licensed Product.

 

BII
shall deliver to BMI such Non-Manufacturing Know-How, data, information or
documents reasonably requested by BMI from time to time during the term of the
Agreement. Such delivery will occur within sixty (60) days of such request by
BMI.

 

BMI
acknowledges, however, that BII shall be obliged to make available only those
data or documents already in the possession of BII or an Affiliate as of the
Effective Date or which come into the possession of BII or an Affiliate as a
result of BII’s own development activities or those of said BII Affiliate.

 

6.2                               Additional
Reports

 

In
addition to reports provided by BMI pursuant to Section 3.5, BMI shall
during the term of the Agreement provide BII with such written reports and
analyses as BII shall reasonably request regarding the development, regulatory
approval and/or commercialisation of Licensed Product. BI acknowledges,
however, that BMI shall be obliged to make available only those data or
documents already in the possession of BMI or a BMI Affiliate or Sublicensee.

 

7.                                      MANUFACTURING:
PHASE II

 

7.1                               Responsibility
for Phase II Manufacturing. 
Bender + Co. GmbH (an Affiliate of BII located in Vienna, Austria) will
be responsible for manufacturing Licensed Product for the Phase II clinical
trial described in Appendix D and possibly for additional Phase II clinical
trials. Such manufacturing will be performed according to the currently
established Manufacturing Process. Bender + Co. will manufacture Licensed
Product exclusively for BMI in the Territory.

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

7

 

7.2                               Manufacturing
Standards for Phase II Manufacturing.  Manufacturing of Licensed Product for the
Phase II clinical trial described in Appendix D will be performed according to
manufacturing standards set by the currently applicable regulations,
directives, or decisions of the European Union (as now published in the
Official Journal of the European Community or its successor publication).

 

7.3                               Supplies
for Phase II Clinical Trial described in Appendix D.  Utilising the services of BII’s Affiliate
Bender + Co. GmbH, BII shall, upon BMI’s reasonable request, deliver to BMI
(and otherwise free of charge to BMI) [*] of Licensed
Product and [*] of placebo. The Licensed
Product shall be [*] in bulk unlabelled [*], without final packaging, having undergone successful
release testing, ex works.  Each [*] shall contain a withdrawable amount of [*] of Omega Interferon in addition to the standard
excipients. The placebo [*] will be
identical except that there shall be no Omega Interferon contained therein.

 

Temporary
storage of undelivered [*] for up to [*] months will be provided for BMI as reasonably required
by BMI, also without additional charge. Costs for labeling, final packaging,
insurance, and shipping, however, will be the responsibility of BMI. The shelf
life, or time until expiry, of such [*] will be
sufficient to permit reasonable completion of the clinical trial described in
Appendix D.

 

These
supplies will be available for delivery at a time reasonably agreed by both BII
(or its Affiliate, as appropriate) and BMI.

 

7.4                               Additional
Phase II Clinical Supplies. 
While it is understood that BMI intends to perform the study described
in Appendix D, additional studies may be required in one or more indications
before Phase III studies can commence. BII, again through its Affiliate Bender
+ Co. GmbH, agrees to supply to BMI at mutually agreed intervals additional [*] of Licensed Product or matching placebo. The actual
supply price for up to [*]
manufactured by Bender and Co. will be:

 

	
  Quantity* (μg/[*])

  	
   

  	
  0 (Placebo)

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  Price**

  DM/[*]

  	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
											

 

* The
Quantity (mg/[*]) will be such that the withdrawable quantity of drug per
[*] will be at least [*] μg.

** The
price shown in DM will be converted to Euro at such time as the Euro replaces
the DM.

 

7.5                               Cooperation
During Manufacturing.  It is
understood by both BII and BMI that manufacturing activities require time and
appropriate planning and that, therefore, reasonable requests with regard to
timing, the number of [*], and the
quantity per [*] will be essential. BMI
specifically acknowledges this need for reasonableness. Similarly, BII
acknowledges that good faith efforts are essential in promoting efficient
development and commercialisation. BII agrees to obligate its Affiliate to
cooperate with BMI in managing all aspects of the Manufacturing Process.  Such cooperation will be based on the
principles of good faith negotiations and reasonableness in all matters.

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

8

 

8.                                      MANUFACTURING:
PHASE III AND COMMERCIAL SUPPLY

 

8.1                               Responsibility
for Phase Ill Manufacturing and for Commercial Supply.  BMI shall be responsible for supply of
Licensed Product in support of Phase III clinical testing and subsequent
commercialisation. For this purpose, BMI has concluded the R & D
Agreement with BI Pharma KG, which addresses the basic issues of an intended
supply agreement.

 

8.2                               Price
for Commercial Supplies/Minimum Order.  BMI shall purchase its requirements of
Licensed Product at a price which will be the higher of

 

(i)                                    a
percentage of the [*] by BMI, BMI’s
Affiliate or Sublicensee in the Territory as laid down in Art. 9 below; or

 

(ii)                                the
floor price per [*] according to Section 8.3
below.  The minimum quantity per order
will be [*].

 

8.3                               Floor
Price.  Notwithstanding the
above Section 8.2, under no circumstances will BII be obliged to sell
commercial quantities of Licensed Product at a price below the following prices
in Deutsche Mark per [*] dependent
on the number of [*] ordered and bought and the
withdrawable quantity of drug per [*]:

 

	
   

  	
   

  	
  Quantity (μg/[*])

  	
   

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]
  ordered

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  

 

The
above floor prices per [*] shall
remain valid for a period up until [*] years after
first introduction of Licensed Product in the Territory. BII will be entitled
to increase the floor prices to apply after such period in the event BII’s
manufacturing costs specific to Licensed Product increase by more than [*] between the date of first supply under this Section 8
and the end of such period. Such increase in floor price will be equal to the [*] in BII’s manufacturing costs specific to Licensed
Product from the date of first supply to the end of such period. BMI shall be
entitled to have such increase verified by an independent accountant according
to international generally accepted accounting principles.

 

8.4                               Payment
Schedule and Cost Verification. 
BMI will pay to BII within 30 days of delivery of each batch of Licensed
Product the floor price as defined in Section 8.3 above. In the event such
price is calculated according to Section 8.3 i)
above (based on BII’s manufacturing cost), BII will at the request of BMI
permit an independent accountant to verify such manufacturing costs according
to generally accepted good accounting practices.

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

9

 

8.5                               Supply
Agreement and Duration.  Approximately one (1) year
prior to launch of Licensed Product BMI and BII or a BII Affiliate will
conclude a detailed supply agreement based on the terms of the above Sections
8.1 to 8.4.

 

8.6                               Payments
for Supply in Deutsche Mark.  Payment for supplies of Licensed Product will
be in Deutsche Mark or Euro at such time as the Euro replaces the Deutsche
Mark. Any currency conversions shall be made using the average quarterly
exchange rates published regularly by Citibank, New York, or its successor. The
average will be calculated by summing the exchange rates for the final business
day of each of the three (3) months in the applicable calendar quarter and
dividing by three (3). All currency conversions will be calculated to an
accuracy of three (3) digits after the decimal point.

 

9.                                      PAYMENTS/ROYALTIES
AND RELATED MATTERS.

 

9.1                               All
Payments.  All payments under the following Sections 9.2
and 9.3 shall be made in United States (U.S.) dollars ($.)

 

9.2                               Initial
Fee. 
Within thirty (30) days of signing the Agreement, BMI shall pay to BII
the sum of [*]. This sum shall include
payment to BII for the drug supplies for the first Phase II clinical trial as
described in Section 7.3.

 

9.3                               Milestones.  BMI shall pay to
BII each of the following sums within forty-five (45) days of:

 

(a)                                  filing
an application to the health authorities for marketing approval:

 

	
  Location

  	
   

  	
  Amount ($U.S.)

  	
   

  
	
  European Union*

  	
   

  	
  [*]

  	
   

  
	
  Japan

  	
   

  	
  [*]

  	
   

  

 

* to
be adjusted pro rata on the basis of population in the event of national
filing(s)

 

(b)                                  receiving
the first approval for marketing from the health authorities in:

 

	
  Location

  	
   

  	
  Amount ($U.S.)

  	
   

  
	
  European Union*

  	
   

  	
  [*]

  	
   

  
	
  Japan

  	
   

  	
  [*]

  	
   

  

 

* to
be adjusted pro rata on the basis of population in the event of national
approval(s)

 

No milestone payments will be due in the event of
filing a marketing application or for the receipt of a regulatory approval
elsewhere in the Territory. The milestone amounts identified in a) and b) above
shall be payable to BII after the occurrence of the stated event(s) regardless
of whether BMI has signed a sublicensing agreement for the country in question.

 

9.4                               Royalty
Payments.  BMI shall pay to BII royalties on aggregate
Net Sales by BMI, BMI’s Affiliate or Sublicensee in the Territory as follows:

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

10

 

	
  Net Sales

  ($ millions U.S.)

  	
   

  	
  Royalty Rate

  (%)

  	
   

  
	
  [*]

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
  [*]

  	
   

  

 

Such royalty shall be payable until the last to expire
of the Patent Rights in each country or for a period of twelve (12) years from
the date of market introduction of Licensed Product in such country, whichever
period is longer.

 

9.5                               When
Royalty Payments Are Not Due and Limitations Thereon.  Notwithstanding the
foregoing provisions of Section 9.4, royalty payments shall not be due to
BII for the sale of any [*] of Licensed
Product purchased and paid for by BMI under the R & D Agreement:

 

(a)                                  manufactured,
of necessity, as a condition of obtaining regulatory approval to market
Licensed Product (so-called “Qualifying Batches”); and

 

(b)                                  not
used in clinical testing.

 

In no event, however, will the total number of
royalty-free [*] exceed one and one-half (1.5)
times the number of [*] in any one
standard, commercial-sized batch manufactured at any time after the manufacture
of the Qualifying Batches.

 

It is
currently anticipated that the standard commercial-sized batch will be [*]. Therefore, it is anticipated that the maximal number of
royalty-free [*] may not exceed [*] in number.

 

9.6                               Not
Due Royalty Payments on Supplies for Clinical Trials.  In addition,
royalty payments shall not be due on supplies manufactured to support clinical
trials by BMI or by BMI Affiliates or Sublicensees including Phase IV clinical
trials carried out after market introduction. The Floor Price per [*] will be due to BII in lieu of the payments described in Section 9.5
for all of Licensed Product used in clinical trials.

 

9.7                               Other
Payments for Sales Within the United States.  In the event, BII grants BMI a sublicense in
the United States, BMI will pay BII the following:

 

(a)                                  any
royalty or other payment due according to the terms of Sections 8.2, 8.3, 9.4,
9.5, and 9.6 of the Agreement; and

 

(b)                                  plus
[*] of any similarly calculated
compensation, royalty or other similar payment due from BII to Genentech, Inc.,
if any, and according to the terms of the Bll-Genentech Settlement Agreement (“Supplemental
U.S. Royalty”). Because the current royalty rate due to Genentech, Inc.
from BII is now [*] of Net Sales, the Supplemental
U.S. Royalty would be [*] of Net
Sales, provided, however, that the payment by BMI to BII in any calendar year
shall be no less than the compensation due from BII to Genentech.

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

11

 

9.8                               Sales
Reporting.  BMI will oblige any party marketing Licensed
Product in the Territory to deliver to BII periodic financial reports. These
reports will be consistent with generally accepted accounting principles and in
a format consistent with BII’s internal accounting policies. The reports will
be delivered to BII within sixty (60) days after the close of each calendar
quarter and will show separately for each Licensed Product:

 

(a)                                  gross
sales, categorised by units sold and by total revenue;

 

(b)                                  Net
Sales, detailing the deductions allowed under Section 1.8;

 

(c)                                  details
of the quantities sold in each country;

 

(d)                                  royalties
or other like compensation due pursuant to the Agreement; and

 

(e)                                  the
respective Floor Price already paid for the [*]
bought from BII or its Affiliates.

 

BII agrees to make available sufficient information
regarding its internal accounting policies to facilitate preparation of the
required reports.

 

9.9                               Timelines
of Payments.  Concurrently with the making of any such
financial reports as described above (i. e. within sixty (60) days of the
end of such calendar quarter), BMI shall pay the amount of royalties due on Net
Sales during the preceding calendar quarter. BMI shall be allowed to deduct all
payments already made in the respective quarter for the supply of Licensed
Product according to Section 8.3 above.

 

If BMI
shall fail to make said payment when due, such party shall have an additional
five (5) business days from the date such payment was due to cure such
non-payment.

 

9.10                        Financial
Records and Verification.  BMI, or its Affiliates or Sublicensees as
appropriate (each a “Selling Party” for purposes of this Section), shall keep
sufficiently complete and accurate records

 

a)                                      to
properly reflect all gross sales and deductions from Net Sales; and

 

b)                                      to
enable the amounts payable hereunder to be determined.

 

Upon
the written request of BII, the Selling Party shall permit an independent
certified public accounting firm to verify the accuracy of reports and amounts
paid to BII. This process of verification may apply to either or both of the
two most recent fiscal years of the Selling Party. The accounting firm will be
selected by BII, will be of international standing, and will be otherwise
reasonably acceptable to the Selling Party. The activities of the accounting
firm will be paid for solely by BII except as provided below.

 

Representatives
of the accounting firm will be permitted to have reasonable access, for
reasonable periods of time, to certain financial records of the Selling Party.
Such access will be limited to that reasonably necessary for the accounting
firm to verify the appropriateness of the payments made previously to BII. The
accounting firm shall disclose in writing all information

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

12

 

gathered to the Selling Party. In the form of a written report, the
accounting firm shall disclose to BII only whether or not payments made to BII
were reasonably correct and the specific details concerning any purported
discrepancies. No other information shall be shared with BII. The accounting
firm will provide its report simultaneously to BII and to BMI and to the BMI
Affiliate or Sublicensee as appropriate.

 

If,
and only if, the accounting firm concludes that additional royalties or other
compensation are definitely owed for the audited period, and the additional
amount owed exceeds, in aggregate, five percent (5%) of amount actually paid,
then the Selling Party shall take additional actions to remedy this
underpayment. BMI will then:

 

(a)                                  pay
all reasonable costs associated with the audit that demonstrated the
underpayment (or repay BII for said audit costs, as appropriate);

 

(b)                                  pay
the underpaid amount within thirty (30) days of the date the accounting firm
delivered the report to BII and BMI; and

 

(c)                                  pay
interest on the underpaid amount only 
(The interest rate will be the average prime rate of interest calculated
from end-of-quarter data reported by the Deutsche Bank, Frankfurt am Main,
utilising data from all quarters since the end of the audited period.)

 

Should, however, the accounting firm conclude that the
Selling Party has overpaid royalties or other compensation to BII, then BII
shall credit any such overpayment to BMI (or otherwise to a Selling Party as
appropriate). This credit will be applied during the next complete calendar
quarter for which payments are due to BII.

 

9.11                        Taxes.  BMI shall be
entitled to deduct any withholding taxes from the payments due under this
Agreement. BMI will then pay the withheld amount to the proper tax authorities
as required by the laws of the country in the Territory applicable at the date
of payment. BMI shall use reasonable best efforts to ensure that any
withholding taxes imposed and paid are reduced or eliminated as far as possible
under the terms of the current or any future “double-taxation” agreement
between the United States of America and Germany.

 

10.                               INTELLECTUAL
PROPERTY MATTERS.

 

10.1                        Maintenance

 

(a)                                  BII
shall, subject to good business judgment, at its sole cost and expense maintain
the Patent Rights in Appendix A.

 

(b)                                  If
BII shall elect not to maintain Patent Rights in any country within the
Territory, BMI shall have the right to assume, at BMI’s sole cost and expense,
the maintenance of any such Patent Rights and BMI shall be entitled to deduct
its expenses in maintaining such Patent Rights from any milestone or other
payments to BII for sales of Licensed Product in said country.

 

(c)                                  Maintenance
shall include the continuing effort, on the basis of good business judgment, to
obtain issued patents where patent applications are now pending.

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

13

 

(d)                                  BI
will provide BMI with annual reports regarding the status and maintenance of
Patent Rights and probable or actual changes thereto.

 

10.2                        Patent
Term Extension or Equivalent.

 

(a)                                  In
the event an extension of a patent is available, BII shall have the right to
designate the patent or patents for which such extension will be applied.

 

(b)                                  If
BII shall elect not to extend Patent Rights in any country within the
Territory, BMI shall have the right to extend, at BMI’s sole cost and expense,
any Patent Rights not otherwise extended by BII and BMI shall be entitled to
deduct such costs and expenses from any milestone or royalty payments due to
BII by BMI, its Affiliates or Sublicensees for sales of Licensed Product in
said country.

 

10.3                        Notification
Regarding Infringement.  Each of the Parties shall notify the other
promptly in the event that it becomes aware of any alleged infringement of the
Patent Rights by a third party and of any available evidence thereof.

 

10.4                        Litigation.

 

(a)                                  BII
agrees, subject to good business judgment, to prosecute and/or defend Patent
Rights against challenge or infringement by any third party or parties.

 

(b)                                  In
the event that BII shall elect not to defend Patent Rights against challenge or
infringement, BMI, its Affiliates or Sublicensees, may prosecute and/or defend
any infringement and/or challenge to the Patent Rights.

 

(c)                                  In
any infringement suit BMI, its Affiliates or Sublicensees may institute to
enforce the Patent Rights pursuant to the Agreement, or in any suit brought by
a third party in which BMI, its Affiliates or Sublicensees is defending the
Patent Rights, BII shall cooperate in all reasonable respects and, to the
extent practicable, have its employees and, if practicable, former employees,
testify when requested. BII will also make available relevant records, papers,
information, samples, specimens and the like. BII will obligate its own
Affiliates to cooperate in a similar manner.

 

(d)                                  If,
as a result of any such suit, the Patent Rights are held in any country to be
not enforceable or invalid pursuant to a judgment rendered by a court of final
determination and not subject to appeal, then, from and after the date of the
filing of the action which resulted in such judgment, the royalties or other
payments computed on the basis of Net Sales in that country, and payable
pursuant to the Agreement hereunder, shall be reduced by fifty percent (50%).
Notwithstanding the possible reduction of fifty percent, however, the royalties
or ether payments are still subject to the Floor Price of Section 8.3.

 

10.5                        Payments
and Patent Litigation.  If BMI, its Affiliates or Sublicensees, shall
undertake the enforcement or defense by litigation of the Patent Rights in any
country in the Territory, any royalties or other payments due to BII on Net
Sales in such country may be withheld. Such withholding may be applied only
toward the reimbursement of expenses, including attorney’s fees, related to
said litigation. Such withholding shall not, however, exceed

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

 

14

 

fifty percent (50%) of the amount that would otherwise have been due to
BII. If such withheld sums are specifically recovered, however, from an
offending third party, then the recovered sum will be remitted to BII. The
remission will occur within sixty days of the recovery. No interest shall be
paid on the sums withheld. Notwithstanding the foregoing in this Section 10.5,
however, the royalties or other payments are still subject to the Floor Price
of Section 8.3.

 

10.6                        Other
Intellectual Property.  Trademarks, service marks, and tradenames, or
any applications pertaining thereto, as shall be selected, chosen, created or
developed by BMI, its Affiliates or Sublicensees, pursuant to any effort to
develop and commercialise the Licensed Product shall be the exclusive property
of BMI, its Affiliates or Sublicensees, as appropriate.

 

10.7                        Improvements
to the Manufacturing Process.  Any improvements to the Manufacturing Process
proposed by BMI, paid for by BMI, whether in whole or in part, and implemented
by BII or a BII Affiliate to manufacture Licensed Product shall be licensed
exclusively but for BII or its Affiliates or Licensees to BMI for the duration
of this Agreement. However, such improvements may not be utilised to
manufacture any other product containing Omega Interferon without the written
consent of BMI.

 

11.                               REPRESENTATIONS
AND WARRANTIES.

 

11.1                        Freedom
to Execute Agreement. Each of BII
and BMI represent and warrant to the other party that:

 

(a)                                  it
is free to enter into the Agreement and has the full right and authority to do
so;

 

(b)                                  it
has taken all corporate action necessary to authorise the execution and
delivery of the Agreement and the performance of its obligations under the
Agreement;

 

(c)                                  it
is not aware of any impediment that would inhibit its ability to perform in all
material respects its obligations under the Agreement; and

 

(d)                                  the
execution, delivery and performance of the Agreement will not violate any
provision of, conflict with or result in any breach of any of the terms of, or
constitute a default under either party’s respective certificate of
incorporation, by-laws, or any material indenture, lease, any other agreement
(including specifically the Settlement Agreement) or other material instrument
to which it is a party, or any decree, judgment or order applicable to such
party or any law, statute, rule or regulation applicable to such party.

 

11.2                        Patent
Rights. 
BII hereby represents and warrants to BMI that:

 

(a)                                  it
is the legal assignee of the Patent Rights covered by the Agreement;

 

(b)                                  it
has the full legal power to convey the rights granted to BMI in the Agreement;

 

(c)                                  it
has no knowledge of any facts which would rebut the presumption of validity
accorded any issued patents within the Patent Rights;

 

[  * ] =
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

15

 

(d)                                  it
has disclosed to the United States Patent and Trademark Office, or to other
similar offices in other countries, all information “material to patentability,”
as such is defined in 37 C.F.R. §1.56;

 

(e)                                  it
has no knowledge of any adverse claims to the Patent Rights;

 

(f)                                    all
patent applications included in the Patent Rights are pending and have not been
abandoned and are enforceable as of the Effective Date pursuant to a valid
assignment;

 

(g)                                 to
its best knowledge and belief, as of the Effective Date, there is no asserted
or unasserted claim or demand which may be enforced against any of the Patent
Rights;

 

(h)                                 to
its best knowledge and belief, on the Effective Date the practice of any processes
and/or products disclosed in the Patent Rights do not infringe upon any third
party patents; and, in addition, that

 

(i)                                    BII
has not entered into any agreement with any other party which is in conflict
with the rights granted to BMI pursuant to the Agreement.

 

11.3                        Genentech, Inc.  BII further hereby
represents that it will work diligently and in good faith with BMI in a
continuing effort to reduce, relieve, or (if possible) eliminate the [*] regarding [*] of Licensed
Product in the United States as set by the Settlement Agreement. If BII
concludes that such good faith efforts have failed or are not likely to
succeed, BII and BMI agree to discuss possible alternatives, and to implement
at the sole risk of BMI any mutually agreeable alternative, that will:

 

(a)                                  permit
BII to keep its prior binding commitments to Genentech, Inc.; and

 

(b)                                  notwithstanding
(a), will nonetheless permit the timely [*] by BMI or
its Affiliates or Sublicensees, of the Licensed Product in the United States.

 

11.4                        BII
Affiliate(s).  BII represents and warrants that it will
contractually obligate its Affiliate(s) to adhere substantially to the terms of
the Agreement regarding any responsibilities transferred by BII to said
Affiliate pursuant to the Agreement, if any. BII further warrants and
represents that it will indemnify BMI against financial losses, direct or
indirect, incurred by BMI because of breach of any contractual obligations of
any BII Affiliate to BMI or because of gross negligence by a BII Affiliate with
regard to its duties to BMI within the limitations in the R&D Agreement and
subsequent supply agreements.

 

11.5                        BMI
Sublicensee(s).  BMI represents and warrants that it will
contractually obligate its Affiliate(s) and Sublicensee(s) to adhere
substantially to the terms of the Agreement regarding any responsibilities
transferred by BMI to said Affiliate(s) or Sublicensee(s) pursuant to the
Agreement. BMI further warrants and represents that it will indemnify BII
against financial losses, direct or indirect, incurred by BII because of breach
of any contractual obligations of BMI to BII or because of gross negligence by
a BMI Affiliate or sublicensee with regard to duties to BII BMI has transferred
to its Affiliate or sublicensee.

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

16

 

12.                               ASSIGNMENT,
CHANGE IN CONTROL

 

12.1                        Ability of
BMI to Assign Agreement.  The Agreement shall be assignable by BMI with
the prior written consent of BII, which consent shall not be unreasonably
withheld.

 

12.2                        Waiver
of Consent.  BII agrees to waive its rights to withhold
consent for assignment by BMI if a sublicense has been granted for each country
and only in such country or if the Licensed Product has been approved for
marketing (whether or not Licensed Product has actually been sold) in the
European Union or Japan.

 

12.3                        Change
in Control.  A change in control in BMI (as evidenced by
the acquisition by one person or entity of more than fifty percent {50%} of
voting stock), except for that occasioned by the bankruptcy of BMI, shall not
affect the right of BMI to assign the Agreement. BMI agrees, however, to inform
BII promptly upon any such change in control. In addition, acquisition of
voting control of BMI by any or all of current BMI shareowners shall not, for
purposes of the Agreement, constitute a change in control.

 

13.                               TERM
AND TERMINATION

 

13.1                        Duration
of Agreement.  Except as otherwise specifically provided
herein, or unless sooner terminated pursuant to other provisions within the
Agreement, the Agreement and the licenses and rights granted to BMI hereunder
shall remain in full force and effect for as long royalties are payable on
sales in any country of the Territory pursuant to Section 9.4.

 

13.2                        Paid-Up
License.  Following expiration of the Agreement
pursuant to Section 13.1 hereof, BMI and/or its Sublicensee(s) as
applicable, shall have a perpetual, fully paid up non-exclusive license under
the rights granted.

 

13.3                        Termination
Because of Unremedied Breach.  Either BII or BMI shall have the right to
terminate the Agreement with thirty (30) days’ notice in written form to BMI or
BII, respectively, in the event that:

 

(a)                                  BMI
or BII, respectively, fails to remedy any material failure to fulfill its
obligations under the Agreement; or

 

(b)                                  a
material breach of the terms or conditions hereof is not cured within sixty
(60) days after receipt of notice in written form specifying the circumstances
giving rise to failure or breach.

 

13.4                        Termination
Because of Insolvency.  Either BII or BMI may terminate
the Agreement with immediate effect by notice in written form in the event that
BMI or BII, respectively, becomes insolvent, is declared bankrupt or adopts a
plan of liquidation and dissolution.

 

13.5                        Court-Awarded
Damages.  Any court-awarded damages granted to BMI
arising from material breach or bankruptcy, respectively, may be deducted from
milestone, royalty, or other like payments which may be subsequently due to
BII, respectively.

 

[  * ] =
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

17

 

13.6                        Continuation
of Obligations.  Upon termination of the Agreement pursuant to
provisions contained herein, nothing herein shall be construed to release
either BII or BMI from any obligation that matured prior to the termination.

 

13.7                        Duties
of BMI After Breach.  Upon termination of the Agreement by BII
pursuant to Section 13.3 herein, BMI will transfer or have transferred to
BII any approvals for clinical trials or sale of Licensed Product granted to
and/or owned by BMI or its Affiliates or Sublicensees and will do so free of
charge to BII. BII may use such authorisations freely in its sole discretion.

 

13.8                        Duties of
BMI After Bankruptcy.  Upon termination of the Agreement by BII
pursuant to Section 13.4 herein, BMI will transfer or have transferred to
BII any authorisations for clinical trials or sale of Licensed Product granted
to and/or owned by BMI or by its Affiliates, but not by its Sublicensees, upon
payment to BMI by BII of an amount representing the fair market value of the
assets to be transferred. Following such transfer, BII may use such
authorisations freely in its sole discretion.

 

14.                               CONFIDENTIALITY

 

14.1                        Transmittal
of Information.  Any information which is transmitted by one
party to the other party in connection with the entering into or the
performance of the Agreement, shall be kept confidential by the receiving party
and its Affiliates and/or Sublicensees prior to the expiration or termination
of the Agreement and for a period of five (5) years thereafter its
expiration. The foregoing obligation shall not apply to:

 

(a)                                  any
information which at the time of disclosure or acquisition is part of the
public knowledge or literature, or thereafter becomes part of the public
knowledge or literature otherwise than by unauthorised disclosure by the
recipient;

 

(b)                                  any
disclosure of information to the United States Food and Drug Administration (“FDA”)
or other similar governmental authority for the purpose of complying with
regulatory requirements regarding Licensed Product;

 

(c)                                  any
information which at the time of disclosure or acquisition was in the recipient’s
possession as evidenced by its written records;

 

(d)                                  any
information which became available to the recipient from another source not
bound to secrecy to the disclosing party with respect to such information;

 

(e)                                  disclosure
by the recipient to third parties under provisions of confidentiality similar
to those contained in the Agreement for the purposes of development or
marketing of the Licensed Product or financing thereof; and

 

(f)                                    any
disclosure of information required by law; provided; however, that BII shall
have the right to review any press releases relating to the Agreement prior to
dissemination by BMI.

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

18

 

14.2                        Approval
of Public Disclosure.  Notwithstanding the provisions of Section 14.1
herein, in the event that either BII or BMI, its Affiliates and/or
Sublicensees, shall determine that it wishes to disclose publicly any
information regarding the Agreement, such party shall present to BMI or BII, as
appropriate, a written request for such disclosure. The recipient of the
request to permit disclosure shall have a period often (10) calendar days
to approve the requested disclosure. The requested approval shall not be
unreasonably withheld.

 

14.3                        Acknowledgment
of Private Disclosure.  Notwithstanding the provisions of Sections
14.1 and 14.2 herein, BMI may disclose to a third party or parties confidential
or nonconfidential information regarding the Licensed Product or the Agreement
in the pursuit of commercialisation of the Licensed Product.

 

15.                               COMMUNICATIONS

 

15.1                        Instructions
for Communications.  Any payment, notice or other communication
pursuant to the Agreement shall be sufficiently made or given on the date of
mailing if sent to such party by certified or registered first class mail,
postage prepaid, or by recognised public courier (for example,  “Federal Express”) addressed to it at its
address below or as it shall otherwise subsequently designate by written
notice:

 

In the
case of BII:

 

Boehringer
Ingelheim International GmbH

D-55216
Ingelheim/Rhein, Germany

Attention:
Corporate Licensing

with a
copy to: Legal Department

 

In the
case of BMI:

 

BioMedicines, Inc.

909
Marina Village Parkway #583

Alameda,
CA 94501

with a
copy to: Legal Department

 

16.                               MISCELLANEOUS
PROVISIONS

 

16.1                        Governance
of Agreement.  The Agreement shall be construed,
governed, interpreted and applied in accordance with the laws of Germany,
except that questions affecting the construction and effect of any patent shall
be determined by the law of the country in which the patent was granted; and
disputes arising out of the Agreement which cannot be settled between the
Parties will be brought before the courts of Germany.

 

16.2                        Entire
Agreement.  Both BII and BMI acknowledge that the
Agreement sets forth the entire agreement and understanding of both BII and BMI
as to the subject matter hereof. No other previous oral or previous written
communications between BII and BMI with respect to the License granted
hereunder shall be of any force or effect. In addition, the

 

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EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

19

 

Agreement may be modified only by the execution of a subsequent written
amendment approved by both BII and BMI.

 

16.3                        Severability.  The provisions of
the Agreement are severable, and in the event that any provision(s) of the
Agreement shall be determined to be invalid or unenforceable under any
controlling body of the law, such invalidity or unenforceability shall not in
any way affect the validity or enforceability of the remaining provisions
hereof.

 

16.4                        Original
Agreement and Counterparts.  The Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

16.5                        No
Waiver of Rights.  The failure of either BII or BMI to assert a
right hereunder or to insist upon compliance with any term or condition of the
Agreement shall not constitute a waiver of that right or excuse a subsequent
failure to perform any term or condition by BMI or BII, respectively.

 

16.6                        Section Titles.  The titles or
headings of various numbered or unnumbered Sections in the Agreement are for
reference only and do not limit or modify the substance of the Agreement in any
way.

 

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EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

20

 

IN
WITNESS WHEREOF, the BII and BMI have hereunto duly executed
the Agreement as of the day and year set forth above.

 

Boehringer Ingelheim International GmbH

 

 

	
  By:

  	
  /s/ C. Hauke       /a/ D. A. Mitchard

  
	
  Name:

  	
  Dr. C.
  Hauke       Dr. D. Mitchard

  
	
   

  	
  (Authorised Signatories)

  
	
   

  	
  28.6.1998

  
			

 

 

BioMedicines, Inc,

 

	
  By:

  	
  /s/ S. M. Moran

  
	
  Name:

  	
  S. M. Moran, M.D.

  
	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
  23 July, 1998

  
			

 

 

Appendices

 

A                                      Structure
of Omega Interferon

B                                        Patents
and Patent Applications

C                                        Countries
of Asia

D                                       Clinical
Trial Protocol

 

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21

 

Appendix A

 

Structure of Omega Interferon

 

The following figure shows the amino acid sequence of
human [*] (underlined).

 

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AMENDED.

 

1

 

Appendix B

Patents and Patent Applications

 

[*]

 

The legal status of the patents or patent applications corresponding to
[*] in other countries is as follows:

 

[*]

 

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1

 

Appendix C

Countries of Asia

 

Afghanistan

Armenia

Azerbaijan

Bahrain

Bangladesh

Belorussia

Brunei

Cambodia

China

Georgia

Hong Kong

India

Indonesia

Iran

Iraq

Israel

Japan

Jordan

Kazakhstan

Kirghizia

Korea (North and South)

Kuwait

Laos

Lebanon

Malaysia

Mongolia

Myanmar

Nepal

Oman

Pakistan

Philippines

Qatar

Russia

Saudi Arabia

Singapore

Sri Lanka

Syria

Tadzhikistan

Taiwan

Thailand

Turkey

Turkmenistan

Ukraine

United Arab Emirates

 

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AMENDED.

 

1

 

Uzbekistan

Viet Nam

Yemen

 

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AMENDED.

 

2

 

Appendix D

Clinical Trial Description

 

(rest of page blank)

 

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1

 

BioMedicines, Inc.

909 Marina Village Parkway #583

Alameda, CA 94501 U.S.A.

 

Tel:    [*]

Fax:    [*]

 

CLINICAL PROTOCOL

 

Open-Label Phase II Study of

Omega Interferon in Patients with
Hepatitis C

 

Document No. [*]

 

Contract Research Organization:

to be named later

 

Confidential

 

22 June 1998

 

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AMENDED.

 

1

 

SIGNATURES OF AGREEMENT FOR PROTOCOL

 

Investigator:

 

	
  signature

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  date

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
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  telephone/fax

  	
   

  	
  tel:

  	
  fax:

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  BioMedicines, Inc.

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  signature

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  date

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  name/title

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  mailing address

  	
   

  	
  BioMedicines, Inc.

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  909 Marina Village Parkway #583

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  Alameda, California

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  U.S.A. 94501

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  telephone/fax

  	
   

  	
  tel: [*]

  	
  fax: [*]

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

								

 

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1

 

ABSTRACT

 

Rationale: Alpha interferon is
useful in the treatment of hepatitis C. Omega interferon binds to the same
receptors and produces similar changes in plasma markers as does as does
interferon Alpha. Therefore, omega interferon may be useful in treating
patients with disorders that respond to alpha interferon.

 

Objectives: To determine the
preliminary safety and efficacy of omega interferon [*]
of [*] in patients with chronic hepatitis
C.

 

Design: Open-label, rising-dose

 

Setting: Outpatient

 

Population: [*] of [*], 18 years of age or older, [*]
patients per group with chronic hepatitis C.

 

Dosing Regimens: Subcutaneous
injections of [*]

 

Duration of Therapy: [*] weeks

 

Duration of Followup after Discontinuation of
Therapy: [*] weeks

 

Safety Assessments: Adverse
events, physical examinations, routine laboratory testing, liver function
testing

 

Efficacy Assessments: [*]

 

Unique
Aspects of This Study: This is the [*]
of omega interferon in patients with hepatitis C.

 

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AMENDED.

 

1

 

Table of Contents

 

	
  1.

  	
  Introduction

  	
   

  
	
   

  	
  1.1 Hepatitis
  C

  	
   

  
	
   

  	
  1.2 The Role of Interferons in
  Treating Chronic Hepatitis C

  	
   

  
	
   

  	
  1.3 Omega Interferon

  	
   

  
	
  2.

  	
  Objectives

  	
   

  
	
   

  	
  2.1 Primary Objectives

  	
   

  
	
  3.

  	
  Investigator(s) and
  Study Site

  	
   

  
	
  4.

  	
  Ethics

  	
   

  
	
   

  	
  4.1
  Institutional Review Board Approval/Ethics Committee

  	
   

  
	
   

  	
  4.2 Informed Consent

  	
   

  
	
  5.

  	
  Study Design

  	
   

  
	
   

  	
  5.1 Characteristics

  	
   

  
	
   

  	
  5.2
  Enrollment, Inclusion and Exclusion Criteria

  	
   

  
	
   

  	
  5.3 Randomization
  Procedures

  	
   

  
	
   

  	
  5.4
  Investigational Drug Packaging and Labeling

  	
   

  
	
  6.

  	
  Procedures and
  Observations

  	
   

  
	
   

  	
  6.1
  Schedule of Procedures and Observations

  	
   

  
	
   

  	
  6.2 Pretreatment Period

  	
   

  
	
   

  	
  6.3 Treatment Period

  	
   

  
	
   

  	
  6.4 Withdrawal of Subjects

  	
   

  
	
   

  	
  6.5 Breaking the Code (or
  “Blind”)

  	
   

  
	
   

  	
  6.6 Post-Treatment Period

  	
   

  
	
  7.

  	
  Reporting and
  Documentation

  	
   

  
	
   

  	
  7.1 Adverse Events

  	
   

  
	
   

  	
  7.2
  Clinical Laboratory Tests and Normal
  Laboratory Vakues (NLV)

  	
   

  
	
   

  	
  7.3 Case Report Forms (CRFs)

  	
   

  
	
   

  	
  7.4 Handling and
  Documentation of Clinical Supplies

  	
   

  
	
   

  	
  7.5 Changes in the Protocol

  	
   

  
	
   

  	
  7.6 Monitoring

  	
   

  
	
   

  	
  7.7 Study Documentation

  	
   

  
	
  8.

  	
  Evaluation of Results

  	
   

  
	
   

  	
  8.1 Determination of
  Sample Size(s)

  	
   

  
	
   

  	
  8.2 Description of
  Statistical Methods

  	
   

  
	
   

  	
  8.3 Evaluation of Efficacy

  	
   

  
	
   

  	
  8.4 Evaluation of Safety

  	
   

  
	
   

  	
  8.5 Final Report

  	
   

  
	
  9.

  	
  References

  	
   

  

 

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AMENDED.

 

1

 

List of Appendices

 

	
  Appendix 1. Ethical Issues

  	
   

  
	
  Appendix 2. Medical Guidelines for the
  Treatment of an Overdose

  	
   

  
	
  Appendix 3.
  instructions for the Handling and Shipping of Specimens

  	
   

  

 

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2

 

1.                                      INTRODUCTION

 

1.1                               Hepatitis C.  Chronic
hepatitis C may affect three hundred million persons worldwide.1 Of
these a significant number will progress to cirrhosis and thereafter to
hepatocellular carcinoma.2 No vaccine currently exists for hepatitis
C. Moreover, many individuals who become infected are not aware that they are
infected. As a result, some do not seek treatment until irreversible liver
damage has occurred. Accordingly, effective treatment remains essential.

 

1.2                               The
Role of Interferons in Treating
Chronic Hepatitis C.  Some
patients with either chronic hepatitis B or chronic hepatitis C are responsive
to the effects of recombinant alpha interferon.3 The dose required
to treat C, however, may be somewhat less than that needed to treat B. More
recently, recombinant consensus Interferon has also been shown to be active in
patients with hepatitis C.4 Among responsive patients, liver enzyme
concentrations typically decline by some 50%, and may even normalize, within 4
weeks. Liver histopathology improves more gradually, over a period of months.
Whether improvement is sustained after treatment ends is more variable.

 

Many patients
who initially respond to treatment relapse after discontinuing therapy. Some
relapse during treatment after an initial improvement although this pattern is
less common. The occurrence of “interferon resistance” in some patients has
been associated with the appearance of antibodies that neutralize the
interferon. This association, however, is not observed in all relapsing
patients, and some patients with detectable neutralizing antibodies are not
affected adversely.5,6,7

 

Perhaps
because of the genetic heterogeneity, among both patients and viruses, certain
patients may respond differently to the different forms of recombinant or
natural interferons. Resistance to one form (a recombinant alpha, for example)
may not herald resistance to another (leukocyte-derived “natural” interferon).8
Sensitivity to the “original” treatment may be restored during a treatment “holiday.”
Those patients who fail to respond to one interferon may respond to another,
whether during the primary treatment or during a relapse. Accordingly,
increasing the number and variety of effective interferons may be beneficial in
patients with chronic hepatitis.

 

1.3                               Omega
Interferon  Omega interferon
is a new recombinant interferon which is found to constitute some 15% of a
typical mixture of natural human leukocyte interferons.9 Moreover,
alpha and beta interferons bind to the same receptor10 and omega
interferon has significant structural homology with the other type I
interferons. Despite the homology, however, omega interferon is clearly
structurally distinct.

 

Omega
interferon is produced in Chinese Hamster Ovary Cells and appears to be fully
glycosylated. Omega interferon has been shown to produce greater antiviral
effects in the Sendai-virus transformed A549 cell line than does “alfa-2b
interferon.” Antibodies against alpha interferon produced by multiple species
do not cross-react with omega interferon. Since beta and gamma interferons are
not useful in treating hepatitis, the utility of the natural interferon mixture
in alpha-resistant patients may depend upon the presence of omega interferon.

 

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1

 

Most
importantly, omega interferon administered by injection to normal human
volunteers is well tolerated although it produces the characteristic physical and
biochemical responses of a biologically active interferon.

 

Taken
together, the relative potency of omega interferon, its potentially favorable
pharmacokinetic profile, and its lack of cross-reactivity with anti-alpha
antibodies suggest that further clinical evaluation of omega interferon is
warranted.11

 

Prior
to initiation of this study, the Investigator must become thoroughly familiar
with the information contained within the Investigational Brochure for omega
interferon.

 

2.                                      OBJECTIVES

 

2.1                               Primary
Objectives.  The primary objectives of this study are:

 

(a)                                  to
evaluate the safety and tolerability of omega interferon in patients with
chronic hepatitis C as judged by physical examination, adverse events, and
serial laboratory testing

 

(b)                                  to
evaluate the effect of different dosing regimens of omega interferon on [*] in patients with chronic hepatitis C.

 

3.                                      INVESTIGATOR(S)
AND STUDY SITE

 

The
Investigator responsible for the conduct of this study, identified by
name and ad-dress, appear(s) on page i (Signatures of Agreement).

 

4.                                      ETHICS

 

4.1                               Institutional
Review Board Approval/Ethics Committee.  Prior to initiating this study, the
Investigator must obtain either the approval of a valid Institutional Review
Board (IRB) or an acceptance by a valid Ethics Committee for both the clinical
protocol and the Informed Consent. (Please refer also to Appendix I for further
guidance.)

 

4.2                               Informed
Consent.  The Investigator must obtain informed consent
from the subject or from a guardian or legal representative before any other
action is taken pursuant to this study. The Investigator must comply with
either:

 

(1)                                 the
current version of the Declaration of Helsinki and the laws and regulations of [*] or;

 

(2)                                 the
U.S. Food and Drug Administration (FDA) regulations 21 CFR Parts 50.20 - 50.27;
or, for studies outside the United States, as appropriate.

 

The
IRB must approve or the Ethics Committee must accept the Informed Consent
document to be used by the Investigator. The process by which the Investigator
actually obtains informed consent, however, is a matter solely within the realm
of the Investigator-subject relationship.

 

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2

 

5.                                      STUDY
DESIGN

 

5.1                               Characteristics.  The study will be
open label and rising dose in design.

 

5.2                               Enrollment,
Inclusion and Exclusion Criteria.

 

5.2.1                     Enrollment of
Subjects.  An adequate number of
subjects will be enrolled to ensure that [*] evaluable
subjects complete the study, including at least [*]
in each of the [*] different treatment groups.

 

5.2.2                     Criteria for
Inclusion.

 

(a)                                  [*]

 

(b)                                  Age
18 years or older

 

(c)                                  Positive
enzyme-linked immunoassay for hepatitis C

 

(d)                                  A
liver biopsy within 18 months consistent with chronic hepatitis

 

(e)                                  Elevated
alanine aminotransferase levels for at least three months

 

(f)                                    Alanine
aminotransferase levels at least twice the upper limit of normal during the
four weeks prior to admission

 

(g)                                 Informed
consent obtained

 

5.2.3                     Criteria for
Exclusion.

 

(a)                                  Any
[*] for [*]

 

(b)                                  [*]
or other current evidence of [*]

 

(c)                                  Clinically
[*] or a [*]
exceeding [*]

 

(d)                                  [*]
more than [*] times [*]

 

(e)                                  A
[*] of less than [*]

 

(f)                                    A
[*] of less than [*]

 

(g)                                 A
history of [*] within the past [*] months

 

(h)                                 Prior
usage of [*]

 

(i)                                    Planned
or concurrent usage of any [*]

 

(j)                                    Any
concurrent [*] disease [*]

 

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3

 

(k)                                Positive
test for [*]

 

(l)                                    A
history of [*]

 

(m)                              Known
[*] to [*]

 

(n)                                 A
concurrent diagnosis of [*]

 

(o)                                  Usage
of an [*] within the [*]
prior to enrollment; or the planned usage of an [*]
other than [*] during the course of the
current study.

 

(p)                                  [*]

 

5.3                               Randomization
Procedures.  Not applicable. See enrollment
directions below in Section 6.2.3, Admission of Subjects.

 

5.4                               Investigational
Drug Packaging and Labeling.

 

Investigational drug name or number:
Omega interferon recombinant

Dosage form: Lyophilized powder
for injection

Route of administration: Subcutaneous
injection [*]

Container: [*]

Instructions for storage: [*]

Labeling:

 

All labels on the vials will contain the following
phrase taken from 21 CFR 312.60: “Caution: New Drug - Limited by Federal (or
U.S.) Law to Investigational Use.” In addition, all carton labels will also
contain the following information:  the
study number, the subject number, the storage conditions.

 

6.                                      PROCEDURES
AND OBSERVATIONS

 

6.1                               Schedule of
Procedures and Observations

 

6.2                               Pretreatment
Period

 

6.2.1                     Medical
History and Physical Examinations.  Four
(4) weeks +- one (1) week prior to the initiation of dosing, subjects
will provide a complete medical history and undergo physical examination and
laboratory screening.

 

6.2.2                     Clinical
Laboratory Tests and Other Specialized Tests and Procedures Laboratory Testing:

 

(a)                                  hematology:
complete blood count, platelet count

 

(b)                                  coagulation:
prothrombin time, activated partial thromboplastin time

 

(c)                                  chemistry:
sodium, potassium, chloride, bicarbonate, glucose, creatinine, calcium,
inorganic phosphorus, albumin, total protein, total cholesterol, triglycerides

 

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4

 

(d)                                  liver function tests: alanine
aminotransferase (ALT or “SPGT”) and aspartate amino-transferase (AST or “SGOT”);
total, direct and indirect bilirubin; alkaline phosphatase; 5’ nucleotidase

 

(e)                                  [*]
sample for [*]

 

(f)                                    liver biopsy: only if clinically
indicated for a reason other than participation in the current trial; to be
scored using the system of Knodell et al.12

 

6.2.3                     Admission of
Subjects.  After completion of
screening, each eligible subject will be assigned an enrollment number (subject
number) in the order of enrollment. Each subject will be identified by first,
middle and last initials only.  If the subject has no middle initial, a dash
is to be used instead. {To preserve confidentiality, the subject’s name should
not be recorded on the case report forms or in any other correspondence sent to
BioMedicines or to an affiliated BioMedicines Contract Research Organization.}

 

Subjects
will be admitted to the study [*] and
associated [*]:

 

[*]

 

At
least [*] subjects will be enrolled in each
group, and at least [*] subjects
will successfully complete [*] weeks of
dosing before [*]. Investigators are requested
to provide a telephone report to BioMedicines at the end of the four-week
evaluation time point for each subject.

 

6.3                               Treatment
Period

 

6.3.1                     Status of
Subjects

 

Inpatient  o  Outpatient  ý  Either  o

 

6.3.2                     Administration
of the investigational drug

 

(a)                                  Administration
of study drug should be performed by qualified study personnel at the study
site.

 

(b)                                  The
solution of omega interferon for injection will be prepared by [*] the [*] by the [*] of [*] of [*]. [*]

 

(c)                                  For
a dose of [*], withdraw [*]
of the final solution into a sterile syringe.

 

(d)                                  For
a dose of [*], withdraw [*]
of the final solution into a sterile syringe.

 

(e)                                  For
a dose of [*], withdraw [*]
of the final solution into a sterile syringe.

 

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5

 

(f)                                    Inject
the dose subcutaneously into an upper extremity. The site for each injections
should be recorded.

 

(g)                                 Extremities
should be alternated, if possible, and different injection sites on the upper
extremity should be selected for each subsequent administration.

 

6.3.3                     [*] in [*] at
the Same [*].  Principal
Investigators are [*], to [*] the [*]. Principal
Investigators may [*] the [*] and only once if it is medically prudent to do so as
follows:

 

(a)                                  If
the patient is initially in [*], adopt the [*] regimen.

 

(b)                                  If
the patient is initially in [*], adopt the [*] regimen.

 

(c)                                  If
the patient is initially in [*], adopt the [*] regimen.

 

(d)                                  If
the patient is initially in [*].

 

(e)                                  Once
the [*], a subject should continue to
receive the [*] until that subject has
completed the study. The [*] should not
be [*] once it has been [*] to achieve tolerability or to mitigate adverse events.

 

(f)                                    If
there is a need to [*] a [*], the subject should be discontinued from the study.

 

6.3.4                     No [*].  No [*] in
individual patients is permitted.

 

6.3.5                     Interval
Visits and Laboratory Testing.  At
the end of [*] weeks after dosing has begun,
the subject will return for a normal follow up visit. Information regarding
internal adverse events, if any, will be recorded. The Investigator is [*] to [*], if any,
and to perform chemistry, hematology, and liver function testing.

 

6.3.6                     Usage of
Concurrent Medications.  If other
medications are required, the Investigator will record the generic name of the
medication, the dates that the medication is started and is stopped, whether
use of the medication continues at the end of the study, and the reason the
medication was prescribed.

 

6.3.7                     Diet  Subjects should refrain from the use of
alcohol if possible.

 

6.4                               Withdrawal
of Subjects

 

6.4.1                     Reasons to
Withdraw a Subject  The Investigator
should withdraw a subject whenever continued participation is no longer in the
subject’s best interests. Reasons for withdrawing a subject include, but aren’t
limited to, the occurrence of an adverse event or an intercurrent illness, a
subject’s request to end participation, or simply significant uncertainty on
the part of the Investigator that continued participation is prudent. There may
also be [*] to terminate participation, such as
[*] about a [*]
with the [*].

 

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AMENDED.

 

6

 

In
addition, treatment with the investigational drug will cease if any of the
following treatments are initiated or procedures occur: initiation of therapy
with another interferon.

 

6.4.2                     Stopping
Rules.  [*]
in this study. However, because the study is open-label by design, [*] can be [*]. A decision
to [*] in any [*]
will be made by the [*]. A decision
to [*] will be made [*]
by the [*].

 

6.4.3                     Documentation
of Withdrawal.  If a [*] for any reason, or is determined after [*] to be [*] (based upon
the requirements of this protocol), that [*] will be [*] unless that [*] has already
[*]. In this event, the [*] need not be [*].

 

It is
requested that [*] be discussed with BioMedicines
(or an affiliated CRO) prior to [*]. If a [*], the Investigator will enter the [*]
on the [*] and will complete all other
required CRFs.

 

6.5                               Breaking
the Code (or “Blind”).  Not applicable: The study is open-label in
design.

 

6.6                               Post-Treatment
Period.

 

6.6.1                     Medical
History and Physical Examination.  As
soon as possible after the completion of dosing, subjects will undergo a
routine physical examination.

 

6.6.2                     Clinical
Laboratory Tests and Other Specialized Tests and Procedures.  Laboratory Testing: All tests will be
repeated [*] weeks after [*]
or [*], whichever is longer.

 

7.                                      REPORTING
AND DOCUMENTATION

 

7.1                               Adverse
Events.  The
Investigator must provide information to BioMedicines (or to an affiliated CRO)
concerning findings that suggest a significant hazard, contraindication, side
effect, or precaution pertinent to usage of the drug under investigation.

 

7.1.1                     Types of
Adverse Events.  The term “adverse
event” could refer to any of the following events which either develop,
increase in severity, or increase in frequency during the course of the study:

 

(a)                                  any
sign observed by the Investigator;

 

(b)                                  any
symptom reported by or elicited from the subject;

 

(c)                                  any
abnormality detected during physical examination;

 

(d)                                  any
clinically significant laboratory abnormality.

 

Data
about these events will be recorded on the appropriate CRFs, whether or not the
event is believed to be associated with use of the investigational drug.
BioMedicines will ask that the Investigator give an opinion about the possible
association of the event with usage of the investigational drug. (In this
regard, the phrase “associated with the use of the drug” means that

 

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7

 

there
is a reasonable possibility that the event may have been caused by the
investigational drug. In other words, association means that it seems likely
that the drug contributed meaningfully to the occurrence of the event. Because
the Investigator cannot rule out a contribution by the drug, however, does
not imply that the adverse event is associated.)

 

Signs or
Symptoms will be graded and recorded by the Investigator as
mild, moderate or severe according to the following grades and definitions:

 

(e)                                  Mild:
Causing no limitation of usual activities.

 

(f)                                    Moderate:
Causing some limitation of usual activities.

 

(g)                                 Severe:
Causing inability to carry out usual activities.

 

7.1.2                     Serious
Adverse Drug Experiences.  A “serious”
adverse drug experience, as defined in the Code of Federal Regulations, is any
adverse drug experience occurring at
any dose that results in any of the following out-comes:

 

(a)                                  death;

 

(b)                                  a
life-threatening adverse drug experience (i.e., in the
view of the Investigator, the subject was at immediate risk of death from the
reaction as it occurred);

 

(c)                                  a
persistent or significant disability or incapacity;

 

(d)                                  inpatient
hospitalization or prolongation of existing hospitalization;

 

(e)                                  a
congenital anomaly or birth defect.

 

By way
of contrast, an “unexpected event” is any adverse event that is not identified
explicitly in nature, severity or frequency in the Investigational Brochure.

 

7.1.3                     Reporting
Obligations to BioMedicines.  Serious
events, whether or not unexpected and whether or not considered to be
associated with the use of the drug, must be communicated immediately by
telephone, fax, or telex to BioMedicines (or to an affiliated CRO). {If the
event is first reported to a CRO the CRO will then become responsible for first
communicating the event to BioMedicines.} An appropriate monitor (BioMedicines
or CRO) will then advise the Investigator regarding the nature of any further
information or documentation that may be required.

 

Please
note that an event qualifying as “serious” may occur quite commonly in certain
populations of patients, e.g., rehospitalization for treatment of an underlying
disease. Nevertheless, if the event satisfies any one of the listed criteria
for seriousness, the event must be reported as a serious event. There are no
exceptions to this rule.

 

Also
note that the Investigator must inform the IRB or Ethics Committee in writing
no later than [*]
after the discovery of any serious adverse event.

 

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8

 

7.1.4                     Follow-up of
Adverse Events.  All adverse events
must be followed with appropriate medical management until resolved. For
selected adverse events, a [*] of the [*] with the [*] may be conducted if considered both [*]. Any [*], however, will be approved in advance by BioMedicines.

 

7.2                               Clinical
Laboratory Tests and Normal Laboratory Values
(NLV).  Throughout the study,
clinical laboratory tests should be performed in a single laboratory selected
jointly by the Investigator and BioMedicines (or CRO). The normal ranges for
required clinical laboratory tests will be transmitted to BioMedicines (or
CRO). The Investigator, a Sub-investigator, the study coordinator, the Clinical
Laboratory Supervisor, or the BioMedicines Monitor must verify in writing the
correctness of the NLV values.
Any change in normal laboratory values during this study will also be
transmitted to BioMedicines.

 

7.3                               Case
Report Forms (CRFs).  Examples of CRFs to be used in this study
will be provided under separate cover.

 

The
information collected on CRFs must be identical to that appearing in original
source documents.  There
are also no exceptions to this rule.

 

In
general, source documents will be found in a chart maintained by personnel in a
hospital or in a physician’s office. It is possible that a portion of the
source documents for a given subject may actually be the CRFs themselves. If
so, then copies (at least) of these CRFs should become a formal part of the
subject’s chart(s) and medical records.

 

As a
matter of regulations, the Investigator is responsible for the accuracy and
authenticity of all clinical and laboratory data entered onto CRFs. Each CRF
must be reviewed for accuracy by the investigator, corrected as necessary, and
then approved. [*] may
be used to [*] or
[*]. {The purpose
of this [*] is to [*] rather than
in [*] as such.}
Alternatively, [*] may
be [*] by the [*]. These [*] serve to
attest that the information contained on the CRFs is true and accurate.

 

If
certain data are not available, not done, or not applicable: “NAV,” “ND,” or “NAP,”
respectively, will be entered in the appropriate space. The Investigator, or
delegate (e,g., Sub-Investigator or study coordinator), may enter corrections
on original CRFs. The monitoring team may make changes to original CRFs based
on information supplied by the Investigator and documented in the study file.
Changes and/or additions to data entered on original CRFs must be made in the
following manner: The original entry will be lined out with a single line drawn
through the error (not erased or “whited out”). The original entry should
remain legible through the single line drawn through it. The correction will be
entered then initialed and dated by the person making the correction who should
use a ball-point pen containing black ink.

 

The
procedure for submitting the CRFs to BioMedicines (or CRO) will be described to
the study site personnel by the BioMedicines Monitor or a delegate.

 

The
CRFs should be completed by the Investigator as soon as possible after the data
are actually available. Case report forms may be returned by mail to
BioMedicines (or to the CRO) in “batches,” the nature of which will be
identified in advance. By prior agreement, however, CRFs may be collected from
the Investigator by an appropriate monitor at the next site visit.

 

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9

 

Military
time (24-hour clock) should be used for all time entries.

 

All
data should be entered legibly using a ballpoint pen containing black ink.

 

If
CRFs are printed on NCR (“no carbon required”) paper, the bottom copy is to be
retained at the site for the Investigator’s study file. Alternatively, a
photocopy of the completed CRF’s should be retained at the site.

 

7.4                               Handling
and Documentation of Clinical Supplies.  The Investigator will maintain complete
records showing the receipt, dispensation, return, or other disposition of the
investigational drug. The date, quantity and batch or code number of the drug,
and the identification of subjects (subject number and initials) will be
included.

 

When
the investigation is discontinued or completed, unused supplies of drug will be
re-turned or disposed of at the site, as directed by BioMedicines.

 

Without
prior authorization from BioMedicines, the Investigator will not make available
the investigational drug to any other individuals. Furthermore, the
Investigator will not allow the investigational drug to be used in any manner
other than that specified in this protocol.

 

7.5                               Changes
in the Protocol.  Once the protocol has been formally approved
by both BioMedicines and the Investigator, any change that might affect the
subsequent approval of the IRB or Ethics Committee must be documented in the
form of an amendment. (For example, an amendment would be appropriate if the
proposed change would increase risk for participating subjects or would affect
the scientific validity of the study.) An amendment must be signed by the appropriate
BioMedicines personnel and the Investigator and then approved by the IRB or
Ethics Committee before implementation. If the amendment is minor, or clearly
reduces the risk to the subject without altering scientific validity, the
chairperson or vice-chairperson of the IRB or Ethics Committee may approve it.
Approval is unnecessary for corrections of typo-graphical errors, revisions
simply to improve clarity, notifications of changes in monitoring personnel, or
for other changes that do not materially affect the conduct of the study. These
minor changes will be documented, however.

 

If it
becomes necessary to alter the protocol to [*], an
amendment may be implemented [*]. In this
circumstance, however, the Investigator must then notify [*]
in writing within [*] working
days after implementation.

 

7.6                               Monitoring.  BioMedicines (or
CRO) monitors will conduct site visits to the investigational facilities for
the purpose of monitoring the study. The Investigator will arrange for access
to the area where the investigational drug is stored and dispensed and will
likewise provide access to all study documentation. To these ends, the
Investigator agrees as part of conducting this study: 1) to make source
documents available upon request; 2) to meet with the monitors during the site
visit to discuss the findings; and 3) to aid in making corrections to the CRFs
or other documents if needed.

 

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AMENDED.

 

10

 

Regulatory
agencies may also request to inspect study sites. The Investigator will allow
these inspectors to review records and is encouraged to assist them in their
duties if requested to do so.

 

7.7                               Study
Documentation.  The Investigator will retain a copy of all
study documents in accordance with local or FDA regulations, whichever are the
more stringent. For information, the regulations of the FDA state that the
Investigator will retain study documents:

 

(a)                                  for
a minimum of two years following the date a marketing application (New Drug
Application or NDA) is actually approved for the drug for the proposed clinical
indication; or

 

(b)                                  if
the FDA has been notified that no marketing application is to be filed by
BioMedicines, or if the marketing application has been filed but is not
approved by the FDA, then for a minimum of two years following the release date
of the final report; or

 

(c)                                  if
neither a) nor b) applies, then for a minimum of fifteen (15) years after the
completion or discontinuation of the study.

 

(d)                                  The
Investigator must obtain BioMedicines’s written permission before disposing of
any records.

 

If the
Investigator relocates, retires or for any reason withdraws from the study,
then the study records may be transferred to an acceptable person or
institution with the written approval of BioMedicines.

 

The
Investigator agrees to maintain a complete and current record of all
documentation associated with the study. All of the documents should be kept
together. Each should be available for ready review. These study documents
will include the:

 

(e)                                  protocol,
including the case report forms

 

(f)                                    protocol
approval page with all required signatures

 

(g)                                 protocol
amendments and approval pages

 

(h)                                 signed
FDA Form 1572 or similar local form as appropriate

 

(i)                                    Investigator’s
current curriculum vitae

 

(j)                                    documentation
of IRB or Ethics Committee approvals for the protocol, amendments, informed
consent, and advertisements used by the investigator to recruit patients

 

(k)                                current
clinical laboratory certification

 

(l)                                    range
of normal laboratory values

 

(m)                              Investigational
Brochure

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

11

 

(n)                                 site
visit log

 

(o)                                  correspondence
(all “to” and “from” of relevance)

 

(p)                                  drug
accountability records, drug shipment forms, and drug disposal records

 

(q)                                  case
report forms and informed consent documents for individual subjects

 

(r)                                  final
report for the study if available.

 

8.                                      EVALUATION
OF RESULTS

 

8.1                               Determination
of Sample Size(s).  The proportion of patients [*] will provide the initial estimate of drug efficacy to be
used in planning future [*] studies. No
[*] will be performed in the current
study. A sample size of [*] will give
95% confidence intervals of approximately [*] for
observed proportions of responders between [*].

 

8.2                               Description
of Statistical Methods.  All efficacy analyses will be performed both
with only those data available at a given time point and on an intention to
treat basis with the data carried forward from the last available data point.
Data will be summarized using descriptive statistics. Means and variances and
related parameters (standard deviations, standard errors of the mean) will be
calculated for continuous data. Categorical data will be summarized using
frequency and incidence rates. Confidence intervals will be calculated as
appropriate.

 

8.3                               Evaluation
of Efficacy.  The effect of each treatment on [*] will be evaluated by considering:

 

1.                                       the
proportion of subjects having normal [*] after [*] weeks of treatment; and

 

2.                                       the
mean in change from baseline of [*] where the [*] will be calculated as the [*].

 

The
proportion of subjects that normalize [*] in each
treatment group will be re-ported with 95% confidence intervals (normal
approximation). To assess dose-response for the proportion of patients who [*], a chi-square test on trend in bino-mial proportions
will be performed (Cochran-Armitage test) grouping patients by total weekly
dose. Multiple logistic regression analysis will be performed to assess the
relation-ship of [*] to probability of response.
For each pair of dosing regimens, the difference between groups in proportions
who [*], with two-sided 95% confidence
intervals (normal approximation), will be reported.

 

A test
for dose-response in change from baseline to end-of-dosing [*]
will be done by determining whether the linear contrast

 

L = -4/3 ·Y1 -1/3
·Y2 + 5/3 ·Y3

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

12

 

is significantly different from 0, where Y1,
Y2 and Y3 are the mean change from baseline in [*] in the groups of patients who receive [*] of [*] omega
interferon, respectively.

 

For
each group, the mean change from baseline to end-of-study [*]
will be reported with a two-sided 95% confidence interval. Changes in [*] from baseline to end of treatment will be compared using
a multivariate analysis of covariance, controlling for base-line values. For
each pair of dosing regimens, the difference between groups in mean change from
baseline [*], with two-sided 95% confidence
intervals, will be reported.

 

To
evaluate the time-course of effects for each dosing regimen, the mean value and
the mean change from baseline, with 95% confidence intervals will be reported
for 1, 2, 4, and 8 weeks after the start of dosing. These results will also be
plotted such that all [*] dosing
groups are shown in one figure.

 

8.4                               Evaluation
of Safety.  All changes in physical examinations, all
adverse events and any significant changes in laboratory parameters will be
compared between treatment groups. If patterns of change are evident by
inspection, further analysis within and between groups will also be per-formed.
All efficacy data will also be reviewed from the view point of judging safety.

 

8.5                               Final
Report. 
Following analysis of the data and upon request by the Investigator,
BioMedicines (or the CRO) will supply a [*], as
appropriate. A copy of the [*] will be
provided to each Investigator following [*]. The
Investigator will acknowledge receipt of the [*].
{Guidelines concerning publication of the results of this clinical study are
contained within the formal Letter of Agreement associated with the protocol.}

 

9.                                      REFERENCES

 

1.                                       World
Health Organization Web Site: http://www.who.org (statistics)

2.                                       Shedock
S. Chronic hepatitis C. Dis Mon 1994;40:122-96

3.                                       U.S.
Food and Drug Administration Web Site: http://www.fda.gov {Current U.S. product
labeling for INTRON® A (interferon alfa-2b)}

4.                                       Tong
M J, et al. Treatment of chronic Hepatitis C with consensus interferon.
Hepatology 1997;26:747-54

5.                                       Milella
M, et al. Neutralizing antibodies to recombinant alpha-interferon and response
to therapy in chronic hepatitis C infection. Liver 1993;13:146-50

6.                                       Giannelli
G, et al. Biological and clinical significance of neutralizing and binding
antibodies to interferon-alpha (IFN-a,) during therapy
for hepatitis C. Clin Exp Immunol 1994;94:4-9

7.                                       Antonelli
G. Antibodies to interferon in patients undergoing IFN therapy: an update. J
Biol Regul Homeost Agents 1995;9:123-31

8.                                       Milella
M, et al. Treatment with natural IFN of hepatitis C patients with or without
antibodies to re-combinant IFN. Hepatogastroentero11995;42:201-4

9.                                       Adolf
G. Monoclonal Antibodies and Enzyme Immunoassays Specific for Human Interferon
(IFN) m: Evidence that IFN-m1
is a component of Human Leukocyte IFN. Virology; 1990:175:410-17

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

13

 

10.                                 Uze
G, et al. Genetic Transfer of a Functional Human Interferon  a Receptor into
Mouse Cells. Cell 1990;60:225-34.

11.                                 Investigator’s
Brochure for Omega Interferon 1998.

12.                                 Knodell
RG et al. Formulation and Application of a Numerical Scoring System for
Assessing Histological Activity in Asmptomatic Chronic Active Hepatitis.
Hepatology 1981;5:431-5

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

14

 

Appendix 1. Ethical Issues

 

A
validly constituted Ethical Committee or Institutional Review Board (IRB) must
review and approve in writing this protocol. The Investigator will submit the
notification of approval to the BioMedicines (or to an affiliated clinical
research organization). The approval must include the identification of the
protocol, the date of the approval and the chairperson’s signature. The
Investigator must obtain and submit documentation of approval before involving
subjects in any manner in this study. The Ethical Committee or IRB or its
Chairman/Vice-Chairman, as appropriate, must also review and approve in writing
all amendments to the protocol. The Investigator must submit the approval to
BioMedicines (or to an affiliated CRO) prior to implementation of the
amendment.

 

Additional information regarding ethical requirements
can be obtained from BioMedicines at any time.

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

1

 

Appendix
2. Medical Guidelines for
the Treatment of an Overdose

 

Stop administering the investigational drug.
Hospitalize the subject if it is medically indicated to do so. Monitor vital
signs carefully and follow laboratory tests appropriately, especially
hematological parameters. Inform BioMedicines immediately.

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

1

 

Appendix
3. Instructions for the
Handling and Shipping of Specimens

 

1.                                       Instructions
for Collection and Storage of Samples - No plasma samples wilt be obtained in
this study.

 

2.                                       Instructions
for Handling and Shipping Samples- not applicable.

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

1

 

TABLE OF CONTENTS

 

	
  1.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Affiliate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Effective Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  Field

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.4

  	
  Non-Manufacturing
  Know-How

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.5

  	
  Manufacturing Know-How

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.6

  	
  Licensed Product(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.7

  	
  Manufacturing Process

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.8

  	
  Net Sales

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.9

  	
  Patent Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.10

  	
  Phase II

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.11

  	
  Phase III

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.12

  	
  R&D Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.13

  	
  Settlement
  Agreement between BII and Genentech

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.14

  	
  Sublicensee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.15

  	
  Territory

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  GRANT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Grant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Sublicense

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  BII Obligations
  for the United States

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  DUE DILIGENCE BY BMI

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Development Planning

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Exercise of Diligence

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Commercialisation
  Plans in Certain Countries

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4

  	
  Potential
  Abandonment of Rights by BMI

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.5

  	
  Periodic Reporting

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.6

  	
  Need
  for Approval of Regulatory Authorities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  SUBLICENSING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Characteristics
  of Potential Sublicensees

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  BMI Duty to Inform

  	
   

  

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

i

 

	
  5.

  	
  BII
  REVIEW RIGHTS AND TERRITORIAL REVERSION RIGHTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  BII Clinical Data
  Review Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  BII Reversion Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  One-Time Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  DATA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Preclinical
  and Clinical Data, Non-Manufacturing Know-How

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Additional Reports

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  MANUFACTURING: PHASE II

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Responsibility
  for Phase II Manufacturing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Manufacturing
  Standards for Phase II Manufacturing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  Supplies
  for Phase II Clinical Trial described in Appendix D

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.4

  	
  Additional
  Phase II Clinical Supplies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.5

  	
  Cooperation During
  Manufacturing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  MANUFACTURING:
  PHASE III AND COMMERCIAL SUPPLY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Responsibility
  for Phase Ill Manufacturing and for Commercial Supply

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Price
  for Commercial Supplies/Minimum Order

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Floor Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  Payment
  Schedule and Cost Verification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5

  	
  Supply Agreement and
  Duration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.6

  	
  Payments for
  Supply in Deutsche Mark

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  PAYMENTS/ROYALTIES
  AND RELATED MATTERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  All Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Initial Fee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3

  	
  Milestones

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.4

  	
  Royalty
  Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5

  	
  When
  Royalty Payments Are Not Due and Limitations Thereon

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.6

  	
  Not
  Due Royalty Payments on Supplies for Clinical Trials

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.7

  	
  Other
  Payments for Sales Within the United States

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.8

  	
  Sales Reporting

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.9

  	
  Timelines of Payments

  	
   

  

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

ii

 

	
   

  	
  9.10

  	
  Financial
  Records and Verification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.11

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  INTELLECTUAL
  PROPERTY MATTERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Maintenance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2

  	
  Patent Term
  Extension or Equivalent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.3

  	
  Notification Regarding
  Infringement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.4

  	
  Litigation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.5

  	
  Payments and Patent
  Litigation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.6

  	
  Other Intellectual
  Property

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.7

  	
  Improvements
  to the Manufacturing Process

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Freedom to Execute
  Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.2

  	
  Patent Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.3

  	
  Genentech, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.4

  	
  BII Affiliate(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.5

  	
  BMI Sublicensee(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  ASSIGNMENT, CHANGE IN
  CONTROL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Ability of BMI
  to Assign Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.2

  	
  Waiver of Consent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.3

  	
  Change in Control

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  TERM AND TERMINATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Duration of Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.2

  	
  Paid-Up License

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.3

  	
  Termination
  Because of Unremedied Breach

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.4

  	
  Termination
  Because of Insolvency

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.5

  	
  Court-Awarded Damages

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.6

  	
  Continuation of
  Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.7

  	
  Duties of BMI After
  Breach

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.8

  	
  Duties of BMI After
  Bankruptcy

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  CONFIDENTIALITY

  	
   

  

 

[  * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

 

iii

 

	
   

  	
  14.1

  	
  Transmittal of
  Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.2

  	
  Approval of Public
  Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.3

  	
  Acknowledgment
  of Private Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  COMMUNICATIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Instructions for
  Communications

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  MISCELLANEOUS PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.1

  	
  Governance of Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.2

  	
  Entire Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.3

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.4

  	
  Original
  Agreement and Counterparts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.5

  	
  No Waiver of Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.6

  	
  Section Titles

  	
   

  

 

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iv

 

LETTER AMENDMENT TO THE OMEGA
INTERFERON LICENSE AGREEMENT

 

BioMedicines, Inc.

1301 Marina Village Parkway

Suite 200

Alameda, CA 
94501

U.S.A.

 

21 February 2000

 

Dear Sirs:

 

Under an Agreement dated July 17, 1998,
Boehringer Ingelheim International GmbH (“BII”) has granted BioMedicines, Inc.
(“BMI”) certain rights to formulations of Omega Interferon (the “Agreement”)
and BMI is commencing clinical trials with one such formulation.  This letter Amendment is to confirm the
agreement between BII and BMI to more specifically define the rights granted in
relation to new dosage forms and indications.

 

Therefore, BII and BMI hereby agree as follows:

 

A.                                    Definitions:  All capitalised items not otherwise defined
in this letter Amendment shall have the meaning given to them in the Agreement.

 

B.                                    Section 1.3
is amended to read as follows:  “1.3 “Field” shall mean the treatment of humans by the
administration of Licensed Product for diseases, disorders, conditions and the
like except multiple sclerosis.”

 

C.                                    Section 1.6
is amended to read as follows:  “1.6 “Licensed Product” shall mean one or more pharmaceutical
products initially developed by BII and containing Omega Interferon (which is
described more fully in Appendix A), including all such products suitable for
administration [*] whether or not initially
developed by BII, and for use in the Field, including new formulations, if any,
developed by BII or BMI after the Effective Date.”

 

D.                                    A
new Section 2.4 is added as follows: 
“2.4 BII agrees to inform BMI in advance before BII grants rights to any
[*] of Omega Interferon to any third
party and to discuss any possible conflict between BMI and such third party.
BII agrees to exclude the indications [*] from any
such rights granted to a third party. 
Any agreement between BII and such third party will provide for a fair
compensation to BMI in the event such third party benefits from [*] at BMI’s expense under the R&D Agreement.”

 

E.                                      The
beginning of the first sentence of Section 5.2.3 is amended to read as
follows:  “5.2.3 “Rights of
First Refusal”  Within thirty
(30) days after receiving from BMI the final clinical trial report for one of
the clinical studies described in Appendix D...”

 

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2

 

 

The definition of “Reversion
Terms” in Section 5.2.3 is extended by adding a new sentence as
follows:  “Reversion Terms” shall also
apply to development of the oral dosage form referred to in Section 5.2.4
(new) and the sustained release dosage form referred to in Section 5.2.5
(new) as the case may be.”

 

F.                                      New
Sections 5.24. and 5.2.5 are added:

 

“5.2.4 “Oral Form”  If BMI
develops an oral form of Licensed Product, than within thirty (30) days after
receiving from BMI both the final preclinical report for a study reporting the
results of oral [*] testing in an animal model of
Omega Interferon and the results of one of the clinical trials pursuant to Section 5.2.3,
BII shall inform BMI in writing whether it wishes to negotiate the reversion of
some or all of the rights granted to BMI under this Agreement in the countries
of the Territory except for countries where BMI has granted a Sublicense under
Clause 5.2.2.  If BII does so wish, then
both BMI and BII agree to negotiate in good faith for no more than an
additional sixty (60) days the Reversion Terms. 
Until the expiration of this sixty (60) day period, BMI may not conclude
a Sublicense agreement with any third party except for countries in Asia
pursuant to Section 3.2.  Discussions
shall then continue as described in paragraphs 2 and 3 of Clause 5.2.3.”

 

“5.2.5 “[*]”  If BMI develops
a [*] for Licensed Product, then within
thirty (30) days after receiving from BMI both the final [*]
report referred to in Appendix F and the results of one of the clinical trials
pursuant to Section 5.2.3, BII shall inform BMI in writing whether it
wishes to negotiate the reversion of some or all of the rights granted to BMI
under this Agreement in the countries of the Territory except for countries where
BMI has granted a Sublicense under Clause 5.2.2.  If BII does so wish, then both BMI and BII
agree to negotiate in good faith for no more than an additional sixty (60) days
the Reversion Terms.  Until the
expiration of this sixty (60) day period, BMI may not conclude a Sublicense
agreement with any third party except for countries in Asia pursuant to Section 3.2.  Discussions shall then continue as described
in paragraphs 2 and 3 of Clause 5.2.3.”.

 

G.                                    Section 5.3
is revised as follows:  “5.3 “One-Time Rights”  Both
BII and BMI agree that the reversion rights described in Section 5.2.3,
5.2.4 and 5.2.5 shall be “one-time” rights only and shall expire following the
earliest of the following independent and mutually exclusive events:

 

a.                                       the
decision by BII to decline to review the report regarding one of the clinical
studies of Appendix D or the preclinical reports of Sections 5.2.4 or 5.2.5 as
the case may be; or

 

b.                                       the
end of the thirty (30)-day period referred to in Section 5.2.3, 5.2.4 or
5.2.5 as the case may be but then if, and only if, BII has not yet informed BMI
in writing of BII’s wish to negotiate Reversion Terms; or

 

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3

 

c.                                       the
end of the sixty (60)-day negotiation period referred to in Section 5.2.3,
5.2.4 or 5.2.5 as the case may be but then if, and only if, BII and BMI have
not yet agreed on said Reversion Terms.”

 

H.                                    A
new sentence is added at the end of Section 6.2:  “The obligation to provide such written
reports shall also apply to [*] of Omega
Interferon developed by BMI during the term of this Agreement.”

 

I.                                         Wherever
the word “trial” appears in Section 7.1., 7.2 and 7.3 it is replaced by
the word “trials.”

 

J.                                      The
second sentence of Section 7.4 is amended to read as follows:  “BII through its Affiliate BI Austria
(formerly Bender and Co. GmbH) or BI Pharma KG, agrees to supply BMI at
mutually agreed intervals, to be laid down in the R&D Agreement, additional
[*] of Licensed Product or matching
Placebo subject for each batch of [*] to the
stability and release for clinical trials of the Omega Interferon drug
substance batches which were available at BI Austria on the Effective Date.”

 

K.                                    New
Sections 7.6 and 7.7 are added:

 

“7.6  “Bulk Drug Substance”.  BII shall supply to BMI [*]
of Omega Interferon bulk substance.  BMI
agrees to use such bulk substance exclusively for [*]
as described in Appendix E and a [*] as
described in Appendix F.  BMI
acknowledges that this bulk drug substance has not been released for use in
humans.”

 

7.7 “Additional Supplies of Bulk Drug Substance”.  One completion of the [*]
studies described in Appendices E and F and the clinical trials in
Appendix D, BMI will inform BII in each case of its interest in proceeding
with the development of each [*] BMI shall
inform BII on the proposed changes with respect to bulk drug substance and
final [*] supply requirements, based on the
results from such studies.  Within sixty
days upon receiving such information BII or BI Pharma KG shall prepare a
proposal on further drug supply for the support of clinical trials.  If appropriate, BMI shall negotiate with BII
or BI Pharma KG in good faith the terms for BII or BI Pharma KG to supply BMI
with committed quantities of bulk drug substance and drug product for further
development.  BMI and BI Pharma KG will
also agree on a new project plan and on the conditions of supply in terms of
feasibility, time, costs and workscope to be laid down as an Amendment to the
R&D Agreement.  Notwithstanding the
second paragraph of Section L, BMI and BI Pharma KG will also agree to the
terms for the transfer of BI Pharma KG’s rights and obligations to manufacture
sustained release injectable drug product to BMI and/or a third party.

 

L.                                     A
new Section 7.8 is added as follows: 
“7.8 “[*]”.  Within sixty (60) days after BMI has provided
BII with all relevant information regarding its plans for development of a [*] including product requirements, expected market size and
manufacturing technology, the Parties will negotiate in good faith the basic
terms of a supply agreement including prices for commercial supplies, minimum
orders, reserved capacity at BII and commitments to

 

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4

 

purchase
by BMI.  A detailed supply agreement will
be concluded at the latest one (1) year prior to the launch of each
Licensed Product.

 

At its sole
discretion, BI Pharma KG may decide to exercise its rights to manufacture [*] under Section 9 of the R&D Agreement by
describing the CMC information for regulatory submissions in the form of a
master file.  BMI agrees to ensure that such
BI Pharma KG rights are acknowledged in any BMI agreements with third parties
on the development of new dosage forms.”

 

M.                                  Appendix
D is updated and consists of the 3 BMI protocols dated 19.04.1999, 15.09.1999
and 18.09.1999.

 

N.                                    Two
new Appendices are added:

 

“E.                                Development
of [*]

 

F.                                      Development
of [*]”

 

Best regards

Boehringer Ingelheim

International GmbH

pps.

 

	
  /s/ Dr. D. Mitchard

  	
   

  
	
   

  
	
  Dr. C. Hauke Dr. D. Mitchard

  

 

Please acknowledge your agreement to the above letter Amendment by
signing below where indicated.

 

BioMedicines, Inc.

 

	
  By:

  	
  /s/ S M Moran

  
	
   

  	
   

  
	
  Name:

  	
   SM Moran, M.D.

  
	
   

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  24 February 2000

  	
   

  
				

 

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5

 

Appendix E

 

Oral Formulation Research Plan

 

BioMedicines, Inc. (BMI) and Protein Delivery, Inc. (PDI)
have executed an agreement to explore the feasibility of developing an oral
formulation of omega interferon.  PDI
will utilize patented technology to [*] to produce
one of two general structures:

 

[*]

 

After generating up to three different OFP or OPF structural classes
representative structures from each class will be examined with the BM8233
commercial assay for quantitating omega interferon.  BMI will supply the assay and methodology.
PDI will establish the assay in its facilities.

 

In addition, these representative structures will be assayed for
bioactivity.  Currently, the two
companies intend to develop the A549-EMCV bioassay utilizing cells and virus
obtained from the U.S. ATCC and methods to be developed by the two
companies.  It is anticipated, however,
that the assay system will be established in a Biohazard 3 capable laboratory
extrinsic to both companies.  The most
probable sites are the University of Utah and Duke University.  Final selection of a bioassay laboratory will
be made at a later date.

 

If a suitable OFP or OPF structure can be identified which is both
measurable and active, the molecule will be scaled up sufficiently to permit
testing of oral absorption.  Currently,
PDI is utilizing a rodent model developed collaboratively with Duke
University.  In addition, BMI is now
negotiating with XTL Biotherapeutics regarding the XTL Trimeris biosystem.

 

The overview described above is necessarily brief and will be expanded
during the course of detailed planning and execution.  Subsequent, more detailed plans can be made
available as they are developed. 
Currently, PDI and BMI expect to pursue the activity-timetable shown on
the following page.

 

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Oral Formulations Activity
Timetable

 

[*]

 

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Appendix F

 

Sustained Release Formulation
Research Plan

 

Bio-Medicines, Inc. (BMI) and Durect, Inc. (DI) have a
non-binding agreement to explore the feasibility of developing a sustained
release formulation of omega interferon. 
DI will utilize patented technology to produce both a new formulation of
unmodified omega interferon suitable for inclusion in the Duros® technology.

 

DI has certain rights under license from the Alza Corporation.  Currently the rights to develop a [*] will need to be obtained from Alza.  BMI and DI have agreed upon a structure for
the feasibility, development and subsequent commercialization duties and
rewards, if any, for the successful development of a sustained release
formulation.

 

The two companies have agreed in principle that a formal proposal will
be made to Alza once it is established that the feasibility work can be
executed. BMI will provide omega interferon, assay reagents and methodologies
and conduct the appropriate quantitative and bioassay testing.  DI will be responsible for developing a
formulation containing omega that is compatible with Duros, will be responsible
for [*] will be conducted [*] to include a maximum of [*]
will be the responsibility of BMI.  The
principal goal will be to determine if omega [*].

 

The overview described above is necessarily brief and will be expanded
during the course of detailed planning and execution.  Subsequent, more detailed plans can be made
available as they are developed. 
Currently, DI and BMI expect to pursue the activity-timetable shown on
the following page.

 

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Sustained Release Formulation
Activity Timetable

 

[*]

 

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114639 v8/HN

 

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