Document:

EXHIBIT
10.28

 

Amendment No.2 to Collaboration
Agreement

 

This Amendment, effective September 17, 2003, is to the
Collaboration Agreement (the “Collaboration Agreement”) effective December 18,
2002 between Sunesis Pharmaceuticals, Inc., (“Sunesis”) a Delaware corporation,
having a principal place of business at 341 Oyster Point Boulevard, South San
Francisco 94080 and Biogen, Inc. (“Biogen”), a Massachusetts corporation,
having a principal place of business at 14 Cambridge Center, MA 02142.

 

The parties hereby agree to the following amendments to the
Collaboration Agreement.

 

Section 2.6.1 is hereby deleted and replaced with the following:

 

2.6.1 Biogen Election of First Tier Targets. At any time during
the first [*] ([*]) months of the Research Term, Biogen has an exclusive
option, in its sole discretion, to add [*] and two additional targets (each of [*]
and the two identified targets, a “First Tier Target”) under the
Research Program by providing written notice to Sunesis. Promptly following
Biogen’s notice to Sunesis of such election, the JRC shall evaluate the
potential target to be added under the Research Program, and the outline of a
research plan for such potential target. Subject to Sections 2.6.3 and 5.2,
upon written agreement of the Parties, such target shall be deemed a “Secondary
Target” (with a description of such target attached at Amended Exhibit
1.22) and shall be added under the Research Program on the same terms and
conditions of this Agreement as a Target. As of effective date of this amendment,
[*] has been identified as a third target and both [*] and [*] have been added
under the Research Program as provided. A fourth target shall be identified by
Biogen and approved by Sunesis by January 1, 2004.

 

Further, Exhibit 1.22 is hereby deleted and replaced with amended
Exhibit 1.22 (as described below):

 

 

Confidential treatment has been requested for portions of this
exhibit.  The copy filed herewith omits
the information subject to the confidentiality request.  Omissions are designated as [*].  A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

 

AMENDED
EXHIBIT 1.22

 

TARGETS

 

A.                                    Primary
Target

 

(i)                                     “TNF[*]
TNF” shall mean the protein encoded by the gene specified by GenBank
accession number [*]

 

B.                                    Secondary
Targets

 

1.                                      First
Tier Targets

 

(i)                                     “[*]”
shall mean the protein encoded by the gene specified by GenBank   accession
number [*]

 

(ii)                                  “[*]”
shall mean the protein encoded by the gene specified by GenBank accession
number [*]

 

(iii)                               “           ” shall mean                                                                                                     

 

2. Second Tier Un-named Targets

 

(i)                                     “           ” shall mean                                                                                                     

 

(iv)                              “           ” shall mean                                                                                                     

 

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

 

All other provisions of the Collaboration Agreement shall remain
unchanged.

 

IN WITNESS WHEREOF, the Parties hereto have
caused this Amendment to be duly executed by their authorized representatives
and delivered in duplicate originals as of the date first written above.

 

 

	
  BIOGEN, INC.

  	
  SUNESIS PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Tilt:

  	
   

  	
   

  	
  Title:EXHIBIT 10.29

 

Execution Copy

 

COLLABORATION
AGREEMENT

 

This COLLABORATION
AGREEMENT (the “Agreement”), effective as of August 25, 2004 (the “Effective
Date”), is made by and between Sunesis Pharmaceuticals, Inc., a Delaware
corporation, having a principal place of business at 341 Oyster Point
Boulevard, South San Francisco, CA 94080 (“Sunesis”), and Biogen Idec MA Inc.,
a Massachusetts corporation, having a principal place of business at 14
Cambridge Center, Cambridge, MA (“Biogen Idec”).  Sunesis and Biogen Idec are sometimes
referred to herein individually as a “Party” and collectively as the “Parties”.

 

BACKGROUND

 

A.                                   Sunesis
has developed proprietary technology and know-how for the discovery and
optimization of small molecules that bind to enzyme targets and protein-protein
interfaces, with special expertise towards kinases;

 

B.                                     Biogen
Idec engages in the research, development and commercialization of
pharmaceutical compounds;

 

C.                                     Sunesis
and Biogen Idec wish to collaborate to discover and develop small molecules
that modulate certain Targets, especially Kinase Targets, with the goal of
delivering compounds with desired activity and selectivity; and

 

D.                                    Biogen
Idec wishes to acquire exclusive licenses under the Collaboration Technology to
develop and commercialize Target Selective Compounds in the Field resulting
from the collaboration, as well as certain other rights to the results of the
collaboration, and Sunesis wishes to grant to Biogen Idec such license, all on
the terms and conditions herein.

 

NOW, THEREFORE, for and in consideration of the
covenants, conditions and undertakings hereinafter set forth, it is agreed by
and between the Parties as follows:

 

ARTICLE
1

DEFINITIONS

 

As used herein, the
following terms will have the meanings set forth below:

 

1.1                                 “Affiliate”
of a Party shall mean any corporation or other business entity which during the
Term of this Agreement Controls, is Controlled by or is under common Control
with such Party but only for so long as such entity Controls, is Controlled by,
or is under common control with such Party. 
With respect to a particular entity, “Control” shall mean the ownership
directly or indirectly of fifty percent (50%) or more of the stock entitled to
vote for the election of directors, and for nonstock organizations, of the
equity interests entitled to control the management of such entity.

 

 

Confidential treatment has been requested for portions of this
exhibit.  The copy filed herewith omits
the information subject to the confidentiality request.  Omissions are designated as [*].  A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

 

1.2                                 “Co-Funding Option” shall mean
the option of Sunesis to fund a portion of the post Phase I Development Costs
of a Product in the Co-Funded Territory as provided in Section 3.2.  The “Co-Funded Territory” shall have the
meaning set forth in Section 3.2.1.

 

1.3                                 “Collaboration
Compound,” “Active Compound,” “Excluded Compound,” “Licensed
Pre-Existing Compound,” “Other Compound,” “Synthesized Compound”
and “Target Selective Compound” shall have the meanings set forth below:

 

1.3.1                        “Active
Compound” shall mean a soluble chemical compound that can bind
non-covalently to a Collaboration Target or a Target for which such compound is
counterscreened, in each case where such compound modulates the enzymatic
activity of such Target at a concentration of [*] or lower.

 

1.3.2                        “Collaboration
Compound” shall mean each compound that is: (i) a Synthesized Compound,
(ii) a Collaboration Derivative Synthesized by or under authority of either
Party or any of its Controlled Affiliates, after the Effective Date but prior
to the third (3rd) anniversary of the end of the Research Term,
(iii) a Licensed Pre-Existing Compound, (iv) Covered by a Valid Claim of a
Joint Collaboration Patent or a Sunesis Collaboration Patent, or (v) Covered by
a Valid Claim of a patent within the Sunesis Core Technology as applied (A) to
a Collaboration Target by or under authority of either Party or any of its
Controlled Affiliates, or (B) to a Target other than a Collaboration Target by
or under authority of Biogen Idec or any of its Controlled Affiliates.

 

1.3.3                        “Excluded
Compounds” shall mean any compound, to the extent the same is:
(i) disclosed in either Party’s patents or patent applications as of the
Effective Date; (ii) in the possession of either Party as of the Effective
Date; (iii) acquired by a Party from a Third Party after the Effective Date by
way of a merger with, or acquisition of, such Third Party; or (iv)
independently developed by a Party outside of the Research Program without use
of or access to any Collaboration Technology, or any Confidential Information
of the other Party; in each of (i) through (iv) above, as evidenced by such
Party’s contemporaneous written records. 
Notwithstanding the foregoing, Excluded Compounds shall not include
Licensed Pre-Existing Compounds. 
Further, both Parties agree that there are no Sunesis Excluded Compounds
that are Target Selective against the Raf/[*] Target as of the Effective Date.

 

1.3.4                        “Licensed
Pre-Existing Compounds” shall mean any compound that is (i) Target
Selective against the Raf/[*] Target or any Target in the Target Selection
Pool, and (ii) in the possession of Sunesis or disclosed in a patent or patent application
owned or controlled by Sunesis, in each case at any time after the Effective
Date but prior to three (3) months after the Effective Date, provided that as
of the date that four (4) Targets have been designated by Biogen Idec as
Collaboration Targets pursuant to Section 2.5.2, (A) any such compound shall
cease to be a Licensed Pre-Existing Compound in the event that such compound is
not Target Selective against any Target that is then a Collaboration Target,
and (B) any such compound that is Target Selective against a Target that is
then a Collaboration Target shall remain a Licensed Pre-Existing Compound.  For clarity, a compound described in (B)
above shall remain a Licensed

 

[*] Certain information on this page has been redacted and filed separately
with the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

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Pre-Existing Compound
irrespective of whether such compound has been measured to be Target Selective
against such Collaboration Target.  
Notwithstanding anything else in this Section 1.3.4, License
Pre-Existing Compounds shall exclude in all cases any compound that is Target
Selective against the [*] Target.

 

1.3.5                        “Other
Compound” shall mean a Collaboration Compound that is not Target Selective
against any Target that is a then a Collaboration Target.

 

1.3.6                        “Synthesized
Compound” shall mean any Active Compound that is actually Synthesized by
either Party alone or by both Parties jointly during the Research Term in the
course of activities directed to a Target that is then a Collaboration Target
in the performance of the Research Program in accordance with the then-current
Research Plan.  For avoidance of doubt, “Synthesized
Compounds” shall not include Excluded Compounds.  A compound, even if it is prepared or
identified during the Research Term, cannot be considered a Synthesized
Compound unless there has been the application of (i) a patent within the
Sunesis Core Technology to a Target that is then a Collaboration Target, (ii)
Joint Collaboration Technology, or (iii) Sunesis Collaboration Technology
actually disclosed to Biogen Idec during the Research Term, in each case during
its discovery, preparation, or identification.

 

1.3.7                        “Target
Selective Compound” shall mean any Collaboration Compound that is Target
Selective against a Target that is then a Collaboration Target.

 

1.4                                 “Collaboration
Technology” shall mean all Collaboration Patents and Collaboration
Know-How.

 

1.4.1                        “Collaboration
Patents” shall mean all Biogen Idec Collaboration Patents, Sunesis
Collaboration Patents and Joint Collaboration Patents.

 

1.4.2                        “Collaboration
Know-How” shall mean all Biogen Idec Collaboration Know-How, Sunesis
Collaboration Know-How and Joint Collaboration Know-How.

 

1.5                                 “Biogen
Idec Collaboration Technology” shall mean all Biogen Idec Collaboration
Patents and Biogen Idec Collaboration Know-How.

 

1.5.1                        “Biogen
Idec Collaboration Patents” shall mean all patents, patent applications and
invention disclosures the subject of which is an invention that is: (i)
conceived in the course of performing the Research Program during the Research
Term and reduced to practice prior to the third (3rd) anniversary of
the end of the Research Term solely by or under authority of personnel of
Biogen Idec or any of its Controlled Affiliates; or (ii) conceived and reduced
to practice solely by or under authority of personnel of Biogen Idec or any of
its Controlled Affiliates after the Effective Date but prior to the third (3rd)
anniversary of the end of the Research Term in the course of activities
directed to the discovery, research, or development of Collaboration
Compounds.  It is to be understood that
Biogen Idec Collaboration Patents shall include any divisions, continuations,
continuations-in-part, reissues, reexaminations, extensions or other
governmental actions which extend any of the patent applications or patents in
(i) or (ii) above, and any substitutions, confirmations, registrations,
revalidations or foreign counterparts of any of the foregoing.  Notwithstanding the foregoing, Biogen Idec
Collaboration Patents shall in all cases exclude Sunesis Core Technology and
Joint Collaboration Patents.

 

3

 

1.5.2                        “Biogen
Idec Collaboration Know-How” shall mean any Know-How: (i) made or developed
solely by or under authority of personnel of Biogen Idec or any of its
Controlled Affiliates in the course of performing the Research Program during
the Research Term; or (ii) made or developed solely by or under authority of
personnel of Biogen Idec or any of its Controlled Affiliates after the
Effective Date but prior to the third (3rd) anniversary of the end
of the Research Term in the course of activities specifically related to the
discovery, research, or development of Collaboration Derivatives.  Notwithstanding the foregoing, Biogen Idec
Collaboration Know-How shall in all cases exclude Sunesis Core Technology,
Joint Collaboration Know-How and Excluded Compounds.

 

1.6                                 “Sunesis
Collaboration Technology” shall mean all Sunesis Collaboration Patents and
Sunesis Collaboration Know-How.

 

1.6.1                        “Sunesis
Collaboration Patents” shall mean all patents, patent applications and
invention disclosures the subject of which is an invention that is: (i)
conceived in the course of performing the Research Program during the Research
Term and reduced to practice prior to the third (3rd) anniversary of
the end of the Research Term solely by or under authority of personnel of
Sunesis or any of its Controlled Affiliates; or (ii) conceived and reduced to
practice solely by or under authority of personnel of Sunesis or any of its
Controlled Affiliates after the Effective Date but prior to the third (3rd)
anniversary of the end of the Research Term in the course of activities
directed to the discovery, research, or development of Collaboration
Derivatives.  It is to be understood that
Sunesis Collaboration Patents shall include any divisions, continuations,
continuations-in-part, reissues, reexaminations, extensions or other
governmental actions which extend any of the patent applications or patents in
(i) or (ii) above, and any substitutions, confirmations, registrations,
revalidations or foreign counterparts of any of the foregoing.  Notwithstanding the foregoing, Sunesis
Collaboration Patents shall in all cases exclude Sunesis Core Technology and
Joint Collaboration Patents.

 

1.6.2                        “Sunesis
Collaboration Know-How” shall mean any Know-How: (i) made or developed
solely by or under authority of personnel of Sunesis or any of its Controlled
Affiliates in the course of performing the Research Program during the Research
Term; or (ii) made or developed solely by or under authority of personnel of
Sunesis or any of its Controlled Affiliates after the Effective Date but prior
to the third (3rd) anniversary of the end of the Research Term in
the course of activities specifically related to the discovery, research, or
development of Collaboration Derivatives. 
Notwithstanding the foregoing, Sunesis Collaboration Know-How shall in
all cases exclude Sunesis Core Technology, Joint Collaboration Know-How and
Excluded Compounds.

 

1.7                                 “Joint
Collaboration Technology” shall mean all Joint Collaboration Patents and
Joint Collaboration Know-How.

 

1.7.1                        “Joint
Collaboration Patents” shall mean all patents, patent applications and
invention disclosures the subject of which is an invention that is: (i)
conceived in the course of performing the Research Program during the Research
Term and reduced to practice prior to the third (3rd) anniversary of
the end of the Research Term jointly by, or under authority of, both Parties;
(ii) conceived and reduced to practice jointly by, or under authority of, both
Parties after the Effective Date but prior to the third (3rd) anniversary
of the end of the Research Term in the

 

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course of activities
directed to the discovery, research, or development of Collaboration
Derivatives; (iii) conceived in the course of performing the Research Program
during the Research Term and reduced to practice prior to the third (3rd)
anniversary of the end of the Research Term using Joint Collaboration Know-How,
Sunesis Collaboration Know-How or Sunesis Core Technology by or under authority
of personnel of Biogen Idec or any of its Controlled Affiliates; or (iv)
conceived and reduced to practice using Joint Collaboration Know-How, Sunesis
Collaboration Know-How or Sunesis Core Technology by or under authority of
personnel of Biogen Idec or any of its Controlled Affiliates after the
Effective Date but prior to the third (3rd) anniversary of the end
of the Research Term in the course of activities directed to the discovery,
research, or development of Collaboration Derivatives.  It is to be understood that Joint
Collaboration Patents shall include any divisions, continuations,
continuations-in-part, reissues, reexaminations, extensions or other
governmental actions which extend any of the patent applications or patents in
(i), (ii), (iii) or (iv) above, and any substitutions, confirmations,
registrations, revalidations or foreign counterparts of any of the
foregoing.  For clarity, the inventions
described in subsections (iii) and (iv) above are limited to those inventions
directed at or comprising compositions of matter that modulate Targets and/or
methods of use thereof in modulating Targets. 
Notwithstanding the foregoing, Joint Collaboration Patents shall in all
cases exclude Sunesis Core Technology.

 

1.7.2                        “Joint
Collaboration Know-How” shall mean any Know-How: (i) made or developed
jointly by, or under authority of, both Parties in the course of performing the
Research Program during the Research Term; (ii) made or developed jointly by,
or under authority of, both Parties after the Effective Date but prior to the
third (3rd) anniversary of the end of the Research Term in the
course of activities specifically related to the discovery, research, or
development of Collaboration Derivatives; (iii) that is a Synthesized Compound;
or (iv) a Collaboration Derivative Synthesized by or under authority of either
Party or any of its Controlled Affiliates, after the Effective Date but prior
to the third (3rd) anniversary of the end of the Research Term.  Notwithstanding the foregoing, Joint
Collaboration Know-How shall in all cases exclude Sunesis Core Technology,
Excluded Compounds and Biogen Idec Derivatives.

 

For the avoidance of
doubt, in the event a compound is Synthesized, an invention is made or Know-How
is generated in the course of research activities directed to a Target that is
not at the time a Collaboration Target, such compound, invention or Know-How
made in the course of such research activities shall not be deemed to have been
made in the course of performing the Research Program or for use in the Field, regardless
of whether such Target subsequently becomes a Collaboration Target.

 

In addition,
notwithstanding anything in subsections (i) through (iv) of this Section 1.7.2,
Joint Collaboration Know-How shall not include any Know-How that was not made
or developed during the Research Term in the course of activities directed to a
Target that is then a Collaboration Target in the performance of the Research
Program in accordance with the then-current Research Plan.

 

1.8                                 “Collaboration
Derivative” shall mean a chemical compound Synthesized in the course of
activities directed to a Target using as a starting point one or more: (i)
Synthesized Compound(s); (ii) Licensed Pre-Existing Compound(s); (iii)
compound(s) that are Covered by a Valid Claim of a Joint Collaboration Patent
or Sunesis Collaboration Patent; (iv) compound(s)

 

5

 

that are Covered by a
Valid Claim of a patent within the Sunesis Core Technology as applied (A) to a
Collaboration Target by or under authority of either Party or any of its
Controlled Affiliates, or (B) to a Target other than a Collaboration Target by
or under authority of Biogen Idec or any of its Controlled Affiliates; or (v)
Kinase-Active Fragment(s).

 

1.8.1                        “Biogen
Idec Derivative” shall mean a chemical compound that is Synthesized solely
by personnel of Biogen Idec or any of its Controlled Affiliates in the course
of activities directed to a Target that is not then a Collaboration Target,
where such chemical compound is not a Collaboration Derivative.

 

1.9                                 “Combination
Product” shall mean any of (i) a Product that incorporates two or more
active drug substances including a Target Selective Compound, (ii) a Sunesis
Product that incorporates two or more active drug substances including an Other
Compound, or (iii) an Other Biogen Idec Product that incorporates two or more
active drug substances including an Other Compound; in each case where at least
one of the active drug substances is neither a Target Selective Compound, nor
an Other Compound (respectively).

 

1.10                           “Commercially
Reasonable and Diligent Efforts” shall mean the level of effort and
resources normally used by a Party for a product or compound owned or
controlled by it, which is of similar market potential and at a similar stage
in its development or product life, taking into account, without limitation,
with respect to a product issues of safety and efficacy, product profile, the
proprietary position of the product, the then current competitive environment
for the product and the likely timing of the product’s entry into the market,
the regulatory environment of the product, and other relevant scientific,
technical and commercial factors. 
Notwithstanding the foregoing, to the extent that the performance of a
Party’s responsibilities hereunder is adversely affected by the other Party’s
failure to perform its responsibilities hereunder, such Party shall not be
deemed to have failed to use its Commercially Reasonable and Diligent Efforts
in performing such responsibilities. 
Notwithstanding, but not in limitation of the foregoing, Biogen Idec
shall be deemed to be using Commercially Reasonable and Diligent Efforts for a
Co-Funded Product specifically directed at a particular Collaboration Target if
it is using Commercially Reasonable and Diligent Efforts with respect to a
Collaboration Compound specifically directed at such Collaboration Target. In
addition, Biogen Idec shall be deemed to be using Commercially Reasonable and
Diligent Efforts with respect to a Collaboration Target if it is using
Commercially Reasonable and Diligent Efforts to research, develop and
commercialize a Collaboration Compound specifically directed at such
Collaboration Target.  In the event that
there is a good faith dispute as to whether the activities described in a
Diligence Summary constitute Commercially Reasonable and Diligent Efforts to
research, develop and commercialize Collaboration Compounds specifically
directed at a particular Target, then such Party may refer the dispute for a
prompt determination by the JSC.  In the
event that the JSC is unable to reach consensus on such determination, then the
matter shall be referred to the Parties’ respective Chief Scientific
Officers.  Upon such request, the Chief
Scientific Officers shall make themselves reasonably available to meet, and
shall meet either by telephone or if, specifically requested, in person, to
attempt to resolve such matter, and shall thereafter continue to use good faith
efforts to attempt to resolve such matter unless it becomes clear that the
matter cannot be resolved by mutual agreement. 
Thereafter either Party may pursue such legal process as is otherwise
available under applicable law.

 

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1.11                           “Confidential
Information” shall mean, with respect to a Party, all information (and all
tangible and intangible embodiments thereof), which is owned or controlled by
such Party, and is disclosed by such Party to the other Party pursuant to this
Agreement.  Notwithstanding the
foregoing, Confidential Information of a Party shall not include information
which, and only to the extent, the receiving Party can establish by written
documentation (a) has been generally known prior to disclosure of such
information by the disclosing Party to the receiving Party; (b) has become
generally known, without the fault of the receiving Party, subsequent to
disclosure of such information by the disclosing Party to the receiving Party;
(c) has been received by the receiving Party at any time from a source, other
than the disclosing Party, rightfully having possession of and the right to
disclose such information free of confidentiality obligations; (d) has
been otherwise known by the receiving Party free of confidentiality obligations
prior to disclosure of such information by the disclosing Party to the
receiving Party; or (e) is independently developed without reference to or use
of the Confidential Information of the disclosing Party.  For clarity, except as otherwise expressly provided
in this Agreement, Sunesis Collaboration Technology, Joint Collaboration
Technology and the Licensed Pre-Existing Technology shall be deemed
Confidential Information of both Biogen Idec and Sunesis.  For clarity, Biogen Idec Collaboration
Technology shall be deemed Confidential Information solely of Biogen Idec.

 

1.12                           “Covered”
shall mean, with respect to a compound and a Valid Claim, that the manufacture,
use, sale, offer for sale or importation of such compound, but for the licenses
or ownership rights granted herein, would infringe such Valid Claim.

 

1.13                           “Criteria”
shall mean the “Hit Compound Criteria”, and “Lead Compound Criteria”.

 

1.13.1                  “Hit
Compound Criteria” shall mean (i) those criteria set forth in Exhibit
1.13.1 hereto, and (ii) such other criteria that are approved by the JRC
in accordance with Section 2.5.9(a) and agreed in writing by the Parties in
order for such compound to be deemed a Hit Compound. “Hit Compound”
shall mean any Collaboration Compound that meets the Hit Compound Criteria with
respect to a Collaboration Target.

 

1.13.2                  “Lead
Compound Criteria” shall mean (i) those criteria set forth in
Exhibit 1.13.2 hereto, and (ii) such other criteria that are approved
by the JRC in accordance with Section 2.5.9(a) and agreed in writing by the
Parties in order for such compound to be deemed a Lead Compound for purposes of
Section 1.41.  “Lead Compound”
shall mean any Collaboration Compound that becomes a Lead Compound in
accordance with Section 2.6.

 

1.14                           “Development”
shall mean all research and pre-approval development and regulatory activities
regarding the Product.  “Development”
shall include, without limitation, all pre-approval activities related to
research, optimization and design of the appropriate molecule and
identification of back-ups, preclinical testing, test method development and
stability testing, toxicology, formulation, process development, manufacturing
scale-up, qualification and validation, quality assurance/quality control,
clinical studies, manufacturing clinical supplies, regulatory affairs, statistical
analysis and report writing, technology transfer, market research and
development, and all other pre-approval activities.  When used as a verb, “Develop” shall mean to
engage in Development.

 

7

 

1.15                           “Development Candidate” shall
mean a Collaboration Compound designated by Biogen Idec as a Development Candidate
in accordance with Section 2.6.

 

1.16                           “Development Costs” shall mean
the costs and expenses associated with Development activities actually incurred
by the Parties or their Affiliates for a particular Product during the
measurement period and in the territories described in Section 3.2.4(d).  The costs and expenses associated with
Development activities shall include, but are not limited to, costs of studies
on the toxicological, pharmacological, metabolical or clinical aspects of a
Product, including clinical trials, conducted internally or by individual
investigators or consultants and necessary for the purpose of obtaining,
maintaining and/or expanding marketing approval of a Product, process
development, process improvement and scale-up and recovery costs (including
plant costs), validation costs, including qualification lots, the manufacture
of clinical supplies of Product, including failed batches, costs for preparing,
submitting, reviewing or developing data or information for the purpose of
submission to a governmental authority to obtain, maintain and/or expand
manufacturing and/or marketing approval of a Product and costs of marketing
studies related to a Product.  “Development
Costs” shall also include expenses for data management, statistical designs and
studies, document preparation, and other administration expenses associated
with the clinical testing program.  In
determining “Development Costs” chargeable under this Agreement, each Party
will use its respective project accounting systems, and will review and approve
its project accounting systems and methodologies with the other Party.  The Parties hereby agree that efforts of the
employees of a Party or its Affiliates in performing its activities hereunder
shall be charged as Development Costs at the FTE Rate.  Notwithstanding anything in this Section 1.16
to the contrary, only those Development Costs that are contemplated by the
Co-Development Plan and Budget or were otherwise approved by the JSC shall be
chargeable by a Party as Development Costs. 
It is further understood that the activities of the following groups or
functions shall not be chargeable as Development Costs: Corporate Administration,
Human Resources, Legal, Business Development, Finance, Corporate Communication
and Public Affairs.  All payments made by
a Party to a Third Party in connection with the performance of its activities under
the Co-Development Plan and Budget shall be charged as Development Costs at
such Party’s actual out-of-pocket cost. 
Expenses incurred by a Party for equipment, materials and supplies
utilized in performing its activities under the Co-Development Plan and Budget
shall not be separately charged as Development Costs, except for those expenses
incurred by a Party, with the prior written consent of the JSC as set forth in
the Co-Development Plan and Budget, in the purchase or making of equipment,
materials or supplies (other than common laboratory supplies, e.g., pipettes,
test tubes, petri dishes, reagents, and the like) that are to be used
exclusively in connection with the performance of such Party’s activities under
the Co-Development Plan and Budget (e.g., laboratory animals, placebo supplies,
etc.), which expenses shall be charged as Developments Cost at such Party’s
actual out-of-pocket expense incurred in purchasing or making such equipment,
materials or  supplies.

 

1.17                           “Diligence
Summary” shall mean, with respect to particular Target, a summary of
research, development and commercialization activities with respect to such
Target that (i) were performed by the reporting Party or its Third Party
collaborators in the previous twelve (12) month period (or shorter period from
the prior report or relevant Target designation, if applicable), and (ii) as of
the date the Diligence Report, are planned in good faith for the following
twelve (12) month period.  For clarity,
it is understood and acknowledged that in

 

8

 

providing a Diligence
Report, a Party shall not be required to disclose scientific results, specific
research activities or the identity of any Third Party collaborator or
potential collaborator, but shall at a minimum provide a summary of the total
number of FTEs dedicated or planned to be dedicated to the discovery,
optimization, development and commercialization of Collaboration Compounds that
are specifically directed at the relevant Target, and a summary of the
functional allocation of such FTEs.

 

1.18                           “Exclusivity
Period” shall mean: (i) with respect to Biogen Idec, the period from the
Effective Date until the end of the Research Term, and (ii) with respect to
Sunesis the period from the Effective Date until one year following the end of
the Research Term.

 

1.19                           “Field”
shall mean the treatment, prevention and/or diagnosis of disease in humans
through modulation of the Collaboration Targets.  For the avoidance of doubt, the scope of the
Field shall not extend to activities of the Parties with protein, peptide or
nucleic acid therapeutics directed to biological targets.  The term peptide therapeutics in the
preceding sentence shall mean peptides having a molecular weight greater than
1,000 daltons.

 

1.20                           “FTE”
shall mean, with respect to a Party, the equivalent of the work time of a
full-time scientist or a full-time project team leader over a twelve-month
period (including normal vacations, sick days and holidays), equal to at least [*]
([*]) weeks of work.  In the case of less
than a full-time person, the portion of an FTE year devoted by such person to
the Research Program shall be determined by dividing the number of days during
any twelve-month period devoted by such person to the Research Program by the
total number of working days of such person’s full-time scientist during such
twelve-month period.  “FTE Rate” for both
Parties shall mean $[*] per annum per FTE from the Effective Date through
December 31, 2005.  Thereafter, the FTE
Rate will be adjusted by the Inflation Index. 
As used herein, “Inflation Index” shall mean the percentage increase in
the Consumer Price Index for all Urban Consumers, as published by the U.S.
Department of Labor, Bureau of Statistics, since the Effective Date.

 

1.21                           “Gross
Sales” shall mean the gross amount invoiced by either Party or its
Affiliates or permitted Sublicensees for sales of a product.  However, Gross Sales shall
not include amounts received by
such Party (or any of its Affiliates) from transactions with an Affiliate or
Sublicensee, where the product in question will be resold by such Affiliate or
Sublicensee to an independent Third Party distributor, agent or end user and
such amounts received by the Affiliate or
Sublicensee from such resale is included in Gross Sales.

 

1.22                           “Kinase”
shall mean a human enzyme, the primary biological function of which is to
catalyze transfer of phosphate from adenosine triphosphate.

 

1.23                           “Kinase-Active
Fragment” shall mean a non-tethered intermediate compound of a tethered
compound (as that term is described in U.S. Patent number 6,335,155 B1), where
such tethered compound (i) is either (A) a compound that binds to the purine
binding site of a Kinase, or (B) a compound that binds to the adaptive region
of a Kinase; (ii) is actually made or used by either Party alone or by both
Parties jointly during the Research Term in the course of activities

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

9

 

directed to a Target that
is then a Collaboration Target in the performance of the Research Program in
accordance with the then-current Research Plan; and (iii) exhibits structure
activity relationships and specific binding to one or more Kinase.  For clarity, “intermediate compound” as used
in this Section 1.23 shall mean that portion of the tethered compound which
does not contain the linking or tethering moiety.

 

1.24                           “Know-How”
shall mean any data, inventions, methods, proprietary information, processes,
techniques, technology, or material (including biological or other materials).

 

1.25                           “Licensed
Pre-Existing Technology” shall mean all Licensed Pre-Existing Patents
and Licensed Pre-Existing Know-How.

 

1.25.1                  “Licensed
Pre-Existing Patents” shall mean any patent or patent application directed
at or comprising compositions of matter that modulate Targets and/or methods of
use thereof in modulating Targets owned or controlled by Sunesis at any time
after the Effective Date but prior to three (3) months after the Effective
Date, as well as any divisions, continuations, continuations-in-part, reissues,
reexaminations, extensions or other governmental actions which extend any of such
patent applications or patents, and any substitutions, confirmations,
registrations, revalidations or foreign counterparts of any of the foregoing.

 

1.25.2                  “Licensed
Pre-Existing Know-How” shall mean any Know-How specifically related to
Licensed Pre-Existing Compounds owned or controlled by Sunesis at any time
after the Effective Date but prior to three (3) months after the Effective
Date.

 

1.26                           “NDA”
shall mean a New Drug Application (or its equivalent), as defined in the U.S.
Food, Drug and Cosmetic Act and the regulations promulgated thereunder, or any
corresponding or similar application, registration or certification in any
jurisdiction for marketing authorization of a Product.

 

1.27                           “Net Sales”
shall mean, with respect to a product, Gross Sales less applicable Sales
Returns and Allowances.

 

If a sale, transfer or
other disposition with respect to a product is made for consideration other
than cash or is not at arm’s length, then the Net Sales from such sale,
transfer or other disposition shall be the arm’s length fair market value
thereof.  For purposes of this Agreement, “sale” shall
mean any transfer or other distribution or disposition, but shall not include
transfers or other distributions or dispositions of product, at no charge, for
pre-clinical, clinical or regulatory purposes or in connection with patient
assistance programs or other charitable purposes or to physicians or hospitals
for promotional purposes.

 

In
the event that a product is sold in the form of a Combination Product, Net
Sales for the Combination Product shall be determined by multiplying actual Net
Sales of the Combination Product (determined by reference to the definition of
Net Sales set forth above) during the royalty payment period by the fraction
A/A+B where A is the average sale price of products containing the Target
Selective Compound, or Other Compound as is contained in such Combination
Product as the sole active drug substance when sold separately in finished form
(an “Agreement Product”), and B is the average sales price of products
containing only the other active ingredients when sold separately in finished
form, in each case during the applicable

 

10

 

royalty
payment period in the country in which the sale of the Combination Product was
made, or if sales of both types of products did not occur in such period, then
in the most recent royalty payment period in which sales of both occurred.  Where the Agreement Product is sold separately
in finished form but the other ingredients are not, Net Sales for the
Combination Product shall be determined by multiplying actual Net Sales of the
Combination Product (determined by reference to the definition of Net Sales set
forth above) during the royalty payment period by the ratio of the average
per-unit sale price of the Agreement Product when sold separately in finished form to the average per-unit Net Sales of the
Combination Product, in each case during the applicable royalty payment period
in the country in which the sale of the Combination Product was made.  Where the other active ingredients are sold
separately in finished form but the Agreement Product is not, Net Sales for the
Combination Product shall be determined by multiplying actual Net Sales of the
Combination Product (determined by reference to the definition of Net Sales set
forth above) during the royalty payment period by the difference obtained by
subtracting from one (1) the ratio of the average per-unit sale price of
products containing only the other active ingredient
when sold separately in finished form to the average per-unit Net Sales of the
Combination Product, in each case during the applicable royalty reporting
period in the country in which the sale of the Combination Product was made.  In the event that such average sales price
cannot be determined for either of the Agreement Product or for products
containing only the other active ingredient included in the Combination
Product, Net Sales for purposes of determining payments under this Agreement
shall be determined by good faith negotiations between the Parties.

 

1.28                           “Phase I”
shall mean human clinical trials, the
principal purpose of which is the preliminary evaluation of safety in healthy
individuals as more fully defined  in 21
C.F.R. §312.21(a) or similar clinical study in a country other than the United
States.  An initial study in patients
where the primary purpose is the preliminary evaluation of safety will be
considered a Phase I study.

 

1.29                           “Phase
II” shall mean human clinical
trials conducted on a limited number of patients for the primary purpose of
evaluation of both clinical efficacy and safety, and/or to obtain a preliminary
evaluation of the dosage regimen, as more fully defined in 21 C.F.R.
§312.21(b).

 

1.30                           “Phase III”
shall mean human clinical trials, the
principal purpose of which is to establish substantial evidence of both safety
and efficacy in patients with the disease or condition being studied, as more
fully defined in 21 C.F.R. §312.21(c) or similar clinical study in a country
other than the United States.  Phase III
shall also include any other human clinical trial intended to serve as a
pivotal trial to support the submission of an application for regulatory
approval.

 

1.31                           “Product,”
“Non-Kinase Other Biogen Idec Product,” “Other Biogen Idec Product,”
and “Sunesis Product” shall have the following meanings:

 

1.31.1                  “Non-Kinase
Other Biogen Idec Product” shall mean an Other Biogen Idec Product that
does not contain any Other Compounds that are directed at a Kinase.

 

1.31.2                  “Other
Biogen Idec Product” shall mean a pharmaceutical preparation for sale by
prescription, over-the-counter, or any other method for all uses in humans
and/or 

 

11

 

animals, in which Biogen
Idec or its Affiliates incorporates one or more Other Compound(s) as an active
ingredient, and does not incorporate any Target Selective Compounds as an
active ingredient.  It is understood that
Other Biogen Idec Products containing different active ingredient(s) (i.e. a
different active ingredient or an additional active ingredient) or a different
formulation shall be deemed different “Other Biogen Idec Products”.

 

1.31.3                  “Product”
shall mean a pharmaceutical preparation for sale by prescription,
over-the-counter, or any other method for all uses in humans and/or animals,
which incorporates one or more Target Selective Compound as an active drug
substance.  It is understood that
Products containing different active ingredient(s) (i.e. a different active
ingredient or an additional active ingredient) or a different formulation shall
be deemed different “Products”.

 

1.31.4                  “Sunesis
Product” shall mean a pharmaceutical preparation for sale by prescription,
over-the-counter or any other method for all uses in humans and/or animals, in
which Sunesis or its Affiliates incorporates an Other Compound as an active
ingredient.

 

1.32                           “Regulatory
Approval” shall mean approval of the health regulatory agency in a country
(FDA in the U.S. and comparable authority outside the U.S.) necessary for the marketing
and sale of a product in the applicable country.  As used herein, “Regulatory Approval” shall
not include pricing or reimbursement approval.

 

1.33                           “Research
Program” shall mean the activities undertaken by the Parties pursuant to
the Research Plan, during the Research Term.

 

1.34                           “Research
Term” shall mean the period commencing on the Effective Date and ending on
the later of (i) the four (4) year anniversary of the Effective Date, or
(ii) if extended in accordance with Section 2.3 below, the end of the
last one (1) year extension period; provided that the Research Term shall in
all events terminate upon an earlier termination of the Agreement in accordance
with Article 14 below.

 

1.35                           “Sales
Returns and Allowances” shall mean, with
respect to a specific Product, Sunesis Product or Other Biogen Idec Product,
the sum of (a) and (b), where:  (a) is a
provision, determined by a Party under U.S. GAAP for sales of such product for
(i) trade, cash and quantity discounts on such product (other than price discounts
granted at the time of invoicing and which are already included in the
determination of Gross Sales), (ii) credits or allowances given or made for
rejection or return of, and for uncollectable amounts on, previously sold
product or for rebates or retroactive price reductions (including Medicare,
Medicaid and similar types of rebates and chargebacks), (iii) taxes, duties or
other governmental charges levied on or measured by the billing amount for such
product, as adjusted for rebates and refunds (excluding income and franchise
taxes), (iv) charges for freight and insurance directly related to the
distribution of such product, to the extent included in Gross Sales, and (v)
credits for allowances given or made for wastage replacement, indigent patient
and any other sales programs agreed to by the Parties for such product; and (b)
is a periodic adjustment of the provision determined in (a) to reflect amounts
actually incurred by a Party for items (i), (ii), (iii), (iv) and (v) in clause
(a).

 

12

 

1.36                           “Selectivity
Parameters” shall mean, with respect to a particular Target, the
parameters  necessary to objectively
determine whether a compound is Target Selective against such Target, including
the following: (i) the relevant cell-based assay, and assay conditions and
criteria related thereto, and (ii) the relevant biochemical assay, and assay
conditions and criteria related thereto, including without limitation the ATP
concentration (expressed as a factor of KM) to be
used in such biochemical assay.

 

1.37                           “Sublicensee”
shall mean a Third Party expressly licensed by a Party to make, use, import,
offer for sale or sell Product, Sunesis Product or Other Biogen Idec Product,
as applicable.  The term “Sublicensee” shall
not include distributors (i.e. a Third Party who purchases product from a Party
for resale).

 

1.38                           “Sunesis
Core Technology” shall mean all patents, patent applications, and invention
disclosures (all as listed on Exhibit 1.38) and all information, materials and
other subject matter, and improvements thereof, relating to (i) mutants or the use thereof in screening, (ii) the use of novel protein engineering techniques and
their application in drug discovery, (iii) target-directed fragment discovery
and maturation to produce drug leads, including monophores, extenders and
fragments and monophore, extender and fragment libraries for such purposes, or
(iv) covalent tethering and techniques related thereto (e.g. NMR, X-ray, mass
spec. AUC, Biacore) and its use to discover fragments and test binding
hypotheses of fragments and leads: (a) controlled by Sunesis and/or its
Controlled Affiliates prior to the Effective Date or during the Research Term;
or (b) made by Biogen Idec in the course of activities directed to the
discovery, research, or development of Collaboration Compounds; provided, in
the case of (b) that such item was made using or derived from Sunesis Core
Technology.  Sunesis Core Technology
shall also include any divisions, continuations, continuations-in-part,
reissues, reexaminations, extensions or other governmental actions which extend
any of the patent applications or patents in (a) or (b) above, and any
substitutions, confirmations, registrations, revalidations or foreign
counterparts of any of the foregoing.

 

1.39                           “Synthesize,”
“Synthesis” or “Synthesized” shall mean, with respect to a
chemical composition, the act of (i) first physical synthesis of such chemical
composition, or (ii) if such composition had previously been first actually
synthesized, first physically establishing, in a relevant assay, that such
composition is Target Selective against a specific Target.  For avoidance of doubt Synthesize shall not
include chemical compositions synthesized in
vivo.

 

1.40                           “Target,”
“[*]Target,” “Collaboration Targets,” “Non-Kinase Target,”
“Other Biogen Idec Target,” “Raf/[*] Target” and “Sunesis
Target” shall have the meanings set forth below:

 

1.40.1                  “[*]
Target” shall mean the human [*] protein kinase together with the [*] protein
family members [*]-A, [*]-B, and [*]-C.

 

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

13

 

1.40.2                  “Collaboration
Targets” shall mean (i) the Raf/[*] Target, and (ii) those additional
Targets that are designated as Collaboration Targets by Biogen Idec in
accordance with Section 2.5 during the Research Term.

 

1.40.3                  “Non-Kinase
Target” shall mean a Target that is not a Kinase.

 

1.40.4                  “Other
Biogen Idec Target” shall mean a Target that has been designated as an
Other Biogen Idec Target in accordance with Section 2.5.6 or 2.5.7, provided
that any Target that is removed as an Other Biogen Idec Target pursuant to
Section 2.5.8 after being so designated shall no longer be considered a Other
Biogen Idec Target.

 

1.40.5                  “Raf/[*]
Target” shall mean the human Raf protein kinase together with the Raf
protein family members [*] and [*], and the [*] protein [*] and [*].

 

1.40.6                  “Sunesis
Target” shall mean a Sunesis Target that has been designated as a Sunesis
Target in accordance with Section 2.5.3, 2.5.6 or 2.5.7, provided that any
Target that is removed as a Sunesis Target pursuant to Section 2.5.8 after
being so designated shall no longer be considered a Sunesis Target.

 

1.40.7                  “Target”
shall mean, except as described in Section 1.40.1 and 1.40.5 above, a single
human protein, and with respect to Collaboration Targets, such other variant
species of such protein as are determined in accordance with Section 2.5.9
below.

 

1.41                           “Target
Selective” shall mean, when used to describe a chemical compound with
respect to a specified Target, that such compound exhibits an IC50 at or below [*] ([*]) in a relevant cell-based
assay, and below the [*] of the IC50 of (i) [*] ([*]) in an enzyme
assay (measured at ATP concentrations [*] ([*]) times the KM) or
(ii) [*] ([*]) times the IC50 of the selected lead.  For the purposes of the foregoing, the
relevant cell-based and enzyme assays shall be as specified pursuant to Section
2.5.9(b), and the IC50
referenced in (ii) shall be measured in the same enzyme assay as (i).

 

1.42                           “Third
Party” shall mean any person or entity other than Sunesis and Biogen Idec,
and their respective Affiliates.

 

1.43                           “Valid
Claim” shall mean (i) a claim of an issued and unexpired patent (or the
equivalent in a supplementary protection certificate), which has not lapsed or
become abandoned or been declared invalid or unenforceable by a court of
competent jurisdiction or an administrative agency from which no appeal can be
or is taken or (ii) a claim of a pending patent application, filed in good
faith, which claim shall not have been canceled, withdrawn, abandoned or
rejected by an administrative agency from which no appeal can be taken;
provided that no more than seven (7) years has passed since the filing
date for such patent application.

 

1.44                           Additional
Terms.  In addition to the foregoing,
the following terms shall have the meaning defined in the corresponding Section
below:

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

14

 

	
  Definition

  	
   

  	
  Section

  Defined

  	
   

  
	
  Actual Amount

  	
   

  	
  7.1.2

  	
   

  
	
  Available

  	
   

  	
  Exhibit
  2.5

  	
   

  
	
  Biogen Idec Competitor

  	
   

  	
  3.2.4(c)

  	
   

  
	
  Change in Control

  	
   

  	
  3.2.4(b)

  	
   

  
	
  Co-Development Plan and Budget

  	
   

  	
  3.2.2

  	
   

  
	
  Co-Funded Product

  	
   

  	
  3.2.1

  	
   

  
	
  Co-Funding Percentage

  	
   

  	
  3.2.3

  	
   

  
	
  Controlling Party

  	
   

  	
  10.3.4

  	
   

  
	
  Cooperating Party

  	
   

  	
  10.3.4

  	
   

  
	
  Co-Promoted Product

  	
   

  	
  4.2

  	
   

  
	
  Co-Promotion Option

  	
   

  	
  4.2

  	
   

  
	
  Election Notice

  	
   

  	
  3.2.1

  	
   

  
	
  Election Notice

  	
   

  	
  4.2.1

  	
   

  
	
  Eligible
  Collaboration Targets

  	
   

  	
  3.2.4(a)

  	
   

  
	
  Indemnitee

  	
   

  	
  13.3

  	
   

  
	
  Indemnitor

  	
   

  	
  13.3

  	
   

  
	
  Indication

  	
   

  	
  7.4.2(b)

  	
   

  
	
  Initial Development Plan

  	
   

  	
  3.3.1

  	
   

  
	
  Initial Territory

  	
   

  	
  3.2

  	
   

  
	
  Infringement Action

  	
   

  	
  10.3.4

  	
   

  
	
  JCC

  	
   

  	
  5.5.1

  	
   

  
	
  JDC

  	
   

  	
  5.4.1

  	
   

  
	
  JRC

  	
   

  	
  5.3.1

  	
   

  
	
  Joint Patent Committee

  	
   

  	
  10.2.2

  	
   

  
	
  Joint Patent Counsel

  	
   

  	
  10.2.2

  	
   

  
	
  Joint Steering Committee

  	
   

  	
  5.1

  	
   

  
	
  Joint Sub-Committee

  	
   

  	
  5.2

  	
   

  
	
  Liabilities

  	
   

  	
  13.1

  	
   

  
	
  Milestone Compound

  	
   

  	
  7.4.1

  	
   

  
	
  Milestone Target

  	
   

  	
  7.4.1

  	
   

  
	
  Notice Period

  	
   

  	
  3.2.1

  	
   

  
	
  Other Biogen Idec Technology

  	
   

  	
  6.2.4

  	
   

  
	
  Other Party

  	
   

  	
  Exhibit
  2.5

  	
   

  
	
  Phase II Drug Collaboration

  	
   

  	
  2.7.1

  	
   

  
	
  Phase II Notice

  	
   

  	
  3.2.1

  	
   

  
	
  post Phase I Development Costs

  	
   

  	
  3.2.4(d)

  	
   

  
	
  Product Team

  	
   

  	
  3.3

  	
   

  
	
  Projected Start Date

  	
   

  	
  3.2.1

  	
   

  
	
  Proposed Target

  	
   

  	
  Exhibit
  2.5

  	
   

  
	
  Proposing Party

  	
   

  	
  Exhibit 2.5

  	
   

  
	
  Raf/[*] Patents

  	
   

  	
  10.1.1(a)

  	
   

  
	
  Receiving Party

  	
   

  	
  2.5.6

  	
   

  
	
  Requesting Party

  	
   

  	
  2.5.6

  	
   

  
	
  Research plan

  	
   

  	
  2.2

  	
   

  
	
  Reverted Product

  	
   

  	
  3.5

  	
   

  
	
  Royalty Products

  	
   

  	
  7.5.1

  	
   

  
	
  Sales and Marketing Plan

  	
   

  	
  5.5.2

  	
   

  
	
  Series C-2

  	
   

  	
  7.2.2

  	
   

  
	
  Subject Infringement

  	
   

  	
  10.3.1

  	
   

  
	
  Target selection pool

  	
   

  	
  2.5.1

  	
   

  
	
  Term

  	
   

  	
  14.1

  	
   

  

 

ARTICLE
2

RESEARCH PROGRAM AND TARGET DESIGNATION

 

2.1                                 General;
Conduct of Research.  Subject to the
terms and conditions set forth herein, the Parties agree to conduct research
under the Research Plan on a collaborative basis.  Sunesis and Biogen Idec shall each conduct
the Research Program in a good and scientific manner, and in compliance in all
material respect with all requirements of applicable laws, rules and
regulations and all applicable standard laboratory practices to attempt to
achieve their objectives efficiently and expeditiously.  Sunesis and Biogen Idec each shall proceed
diligently with the work set out in the Research Program by using their good
faith efforts.  Sunesis agrees to
dedicate to the Research Program the number of Sunesis FTEs specified in the
Research Plan;

 

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

15

 

provided however, Sunesis
shall not be obligated to incur costs in performing its activities under the
Research Program in excess of the amounts specified under Section 7.1.

 

2.2                                 Research
Plan.  The Parties will conduct the
Research Program in the Field in accordance with a written plan approved by the
JRC (the “Research Plan”).  The Research
Plan shall establish: (i) the scope of the research activities which will be
performed; (ii) the research objectives, work plan activities and schedules
with respect to the Research Program; and (iii) the respective obligations of
the Parties with respect to the Research Program.  The Research Plan shall be reviewed on an
ongoing basis and may be amended by approval of the JRC from time to time as it
deems necessary or appropriate.  The
initial Research Plan is attached hereto as Exhibit 2.2.

 

2.3                                 Term
of Research Program.  The Research
Program shall commence on the Effective Date and unless earlier terminated as
described in Article 14, continue for an initial period of four (4) years (i.e.
forty-eight (48) months from the Effective Date).  Biogen Idec will have the option to extend
the Research Term for up to two additional one (1) year periods at the level of
research funding by Biogen Idec and FTE support by Sunesis specified in Section
7.1, by providing Sunesis with written notice and full payment of the
technology access fee set forth in Section 7.2.1(b) at least three (3)
months before the end of the initial four (4) year Research Term or the
then-current extension period, as applicable.

 

2.4                                 Collaboration
Target Exclusivity.  Subject to
Section 2.7 and Section 3.5 below, during the Exclusivity Period Sunesis shall
collaborate exclusively with Biogen Idec with respect to each Collaboration
Target and with respect to Target Selective Compounds.  Subject to Section 2.7, during the
Exclusivity Period Biogen Idec shall collaborate exclusively with Sunesis with
respect to each Collaboration Target and with respect to Target Selective
Compounds.  Notwithstanding the
foregoing, neither Party shall be deemed in breach of this Section 2.4 if it
engages in activities, or licenses a Third Party, with respect to a compound
that does not specifically and directly modulate a Collaboration Target, to the
knowledge of such Party at the time such Party engages in such activities or
granted such license (or if earlier, at the time such Party first became
obligated to engage in such activities or grant such license).  It is understood and acknowledged, however,
that nothing in the preceding sentence shall be deemed to limit or modify the
obligations set forth in Section 6.6 hereof or the licenses granted in Article
6.  In addition, it is understood and
acknowledged that nothing in this Section 2.4 shall restrict either Party from
research, development or commercialization activities with protein or peptide
therapeutics directed to Collaboration Targets, either through an internal
program or a bona fide collaboration with a Third Party.  The term peptide therapeutics in the
preceding sentence shall mean peptides having a molecular weight greater than
1,000 daltons.

 

16

 

2.5                                 Designation
of Collaboration Targets under the Research Program.  As of the Effective Date, the Raf/[*] Target
shall be the only Collaboration Target. 
Biogen Idec shall have the right to designate up to a total of five (5)
additional Collaboration Targets during the Research Term in accordance with
Sections 2.5.1 and 2.5.2, subject to such Targets being then Available pursuant
to Exhibit 2.5 attached hereto.  In
addition, Biogen Idec may have the right to designate an additional Target to
be added thereto in accordance with Section 2.5.5, subject to such designated
Target being then Available.

 

2.5.1                        Target
Selection Pool.  On or prior to the
Effective Date, Biogen Idec shall identify [*] ([*]) Targets other than the
Raf/[*] Target as candidates for designation as Collaboration Targets (the “Target
Selection Pool”).  Within three (3)
months after the Effective Date, Biogen Idec shall identify [*] ([*]) additional
Targets (other than the Raf/[*] Target and those Targets already in the Target
Selection Pool) for inclusion in the Target Selection Pool.  Promptly upon receiving notification of each
such proposed Collaboration Target candidate, Sunesis shall determine in good
faith whether such Targets are then Available in accordance with Exhibit 2.5
attached hereto and inform Biogen Idec in the event that one or more such
Targets are not Available (in which case such Target or Targets shall be deemed
removed from the Target Selection Pool). 
Biogen Idec shall have the opportunity to provide alternate proposals
for any such Targets that are not Available, and Sunesis shall then determine
whether such alternate Targets are then Available.  This process shall continue until Biogen Idec
has proposed a total of [*] ([*]) Available Targets in the Target Selection
Pool.

 

2.5.2                        Designation
of Collaboration Targets.  Promptly
upon determining that a Target in the Target Selection Pool is Available, the
Parties shall undertake to clone such Target pursuant to the Research Program,
and shall promptly provide the JRC with such information and data related to
such cloned Targets as has then been generated under the Research Plan.  In the event that [*] ([*]) or more of the
Targets in the Target Selection Pool have been successfully cloned and
expressed as of twelve (12) months after the Effective Date, then Biogen Idec
shall designate, in its sole discretion, [*] ([*]) Targets from the Target
Selection Pool as Collaboration Targets, by so notifying Sunesis in writing on
or before such date.  In the event that
less than [*] ([*]) of the Targets in the Target Selection Pool have been
successfully cloned and expressed as of twelve (12) months after the Effective
Date, then Biogen Idec shall designate the Targets from the Target Selection
Pool that have been successfully cloned and expressed as Collaboration
Targets.  In such event the JRC shall
promptly convene to determine whether to proceed with efforts related to the
Targets remaining in the Target Selection Pool or how the Parties should
otherwise proceed diligently towards designation of [*] ([*]) Targets by Biogen
Idec as Collaboration Targets pursuant to this Section 2.5.2, and the JRC shall
revise the Research Plan to reflect such determination.

 

2.5.3                        Initial
Sunesis Target Selection.  At any
time following the selection by Biogen Idec of Biogen Idec’s initial [*] ([*]) Targets
for the Target Selection Pool as provided under Section 2.5.1 above, but prior
to the first anniversary of the Effective Date, Sunesis may

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

17

 

designate one (1) Target
as a Sunesis Target, provided such Target is not one of the Targets in the
Target Selection Pool.

 

2.5.4                        Biogen
Idec Additional Collaboration Target Selection.  At any time following the first anniversary
of the Effective Date, but during the Research Term, after the initial
Collaboration Targets have been selected under Section 2.5.2 above, Biogen Idec
may designate one (1) additional Target as a Collaboration Target, provided
such Target is then Available.  Promptly
upon receiving notification of such proposed Collaboration Target, Sunesis
shall determine in good faith whether such Target is then Available in
accordance with Exhibit 2.5 attached hereto. 
In the event that such Target is not Available, Sunesis shall so inform
Biogen Idec, Biogen Idec shall have the right to provide an alternate proposal
to Sunesis during the Research Term, and Sunesis shall then determine whether
such alternate Target is then Available. 
This process shall continue until either Biogen Idec designates an
Available Target as a Collaboration Target, or the Research Term expires or
terminates, whichever is earlier.

 

2.5.5                        Biogen
Idec Possible Seventh Collaboration Target Selection.  It is understood and agreed that the Parties
shall frequently counterscreen Collaboration Compounds, and that during the
Research Term the Parties shall promptly share the results of any such
counterscreening to the extent it is undertaken in the course of performing the
Research Program.  At any time during the
Research Term after the second anniversary of the Effective Date, in the event
that the Hit Compound Criteria have not been achieved with respect to any of
Biogen Idec’s six (6) Collaboration Targets (Raf/[*] plus the five (5) others),
then Biogen Idec may designate one (1) additional Target as a Collaboration
Target, provided such Target is then Available. 
Promptly upon receiving notification of such proposed Collaboration
Target, Sunesis shall determine in good faith whether such Target is then
Available in accordance with Exhibit 2.5 attached hereto.  In the event that such Target is not
Available, Sunesis shall so inform Biogen Idec, Biogen Idec shall have the
right to provide an alternate proposal to Sunesis during the Research Term, and
Sunesis shall then determine whether such alternate Target is then
Available.  This process shall continue
until either (i) Biogen Idec designates an Available Target as a Collaboration
Target, (ii) the Research Term expires or terminates, or (iii) the Hit Compound
Criteria are achieved with respect to any of Biogen Idec’s six (6)
Collaboration Targets, whichever is earliest.

 

2.5.6                        Designation
of Other Biogen Idec Targets and Sunesis Targets.  Subject to the terms and conditions of this
Agreement, at any time following the first anniversary of the Effective Date
and during the Term of this Agreement, either Party shall have the opportunity
to obtain at any time certain exclusive license rights as described in Section
6.3 below with respect to a particular Target that is not then a Collaboration
Target, an Other Biogen Idec Target or a Sunesis Target, provided (i) such
Target is then Available as determined in accordance with Exhibit 2.5, and (ii)
at the time of designation of such Target, the designating Party is either (A)
exercising reasonable research or development efforts with respect to
Collaboration Compounds that are specifically directed at such Target, either
through an internal program or a bona fide collaboration with a Third Party, or
(B) actively and in good faith engaged in negotiations with a Third Party
regarding a collaboration directing research or development efforts at
Collaboration Compounds that are specifically directed at such Target.  A Party (the “Requesting Party”) requesting
to designate a Target (a “Requested Target”) as either a Sunesis Target or an
Other Biogen Idec Target shall provide the other Party (the “Receiving Party”)
in writing with a

 

18

 

Diligence Summary and
proposed Selectivity Parameters for the Requested Target.  Upon receiving such materials from a
Requesting Party, the Receiving Party shall promptly and in good faith
determine whether the Requested Target is Available in accordance with Exhibit
2.5 attached hereto and inform the Requesting Party of the results of such
determination.  Upon notice to the
requesting Party that such Target is Available, such Target shall be designated
as an Other Biogen Idec Target or a Sunesis Target, as applicable.  Each Party may exercise this right an
unlimited number of times, provided that neither Party shall be required to
obtain an exclusive license from the other Party.

 

2.5.7                        Not-Available
Targets.  In the event that a
Requested Target is determined to be not-Available by the Receiving Party, the
Parties shall have the alternating right, as described below, to require the
other Party to make such Target Available and to receive the exclusive license
rights described under Section 6.3 below. 
The first time a Requesting Party under Section 2.5.6 above is informed
by the Receiving Party that a Requested Target is not-Available, Biogen Idec
shall have the right for thirty (30) days, but not the obligation, to require
Sunesis (irrespective of whether Sunesis is the Requesting or Receiving Party)
to make the Target Available as an Other Biogen Idec Target and to require
Sunesis to grant Biogen Idec the exclusive license rights described in Section
6.3.  In the event that Biogen Idec does
not elect during such thirty (30) days to require Sunesis to make the Target
Available as an Other Biogen Idec Target, then Sunesis shall have the right,
but not the obligation, for thirty (30) days to require Biogen Idec to make the
Target Available as a Sunesis Target and to require Biogen Idec to grant
Sunesis the exclusive license rights described in Section 6.3.  In the event that Biogen Idec exercises its
right described above to require Sunesis to make a Requested Target Available
as an Other Biogen Idec Target and to require Sunesis to grant Biogen Idec the
exclusive license rights described in Section 6.3, then the next time a
Requested Target is determined to be not-Available then Sunesis shall have the
first right to require Biogen Idec to make such Target Available as a Sunesis
Target on the same terms and conditions described above.  The rights described above shall alternate
every time one Party requires the other Party under this Section 2.5.7 to grant
the exclusive license rights described in Section 6.3.  Notwithstanding the foregoing, this Section
2.5.7 shall not apply in the event that the [*]Target is a Requested Target
that is determined to be not-Available. 
As used in this Section 2.5.7, a Party exercising an option to “require
the other Party to make a Target Available” shall mean that the exercising
Party is designating such Target as an Other Biogen Idec Target or Sunesis
Target, as applicable, notwithstanding the fact that such Target would
otherwise not be Available.  For clarity,
the fact that a Party that is “required to make a Target Available” shall not
mean that such Party is restricted from research, development or commercialization
of compounds directed at such Target, except as otherwise set forth in Section
2.4 or Article 6.  It is understood and
acknowledged that any exclusive license grant that is required under this
Section 2.5.7 shall be subject to any licenses or sublicenses granted to any
Third Party in accordance with Sections 6.1.3 or 6.5 prior to such exclusive
license grant.

 

2.5.8                        Other
Biogen Idec Targets and Sunesis Targets. 
Biogen Idec and Sunesis agree to use Commercially Reasonable and
Diligent Efforts to research, develop and commercialize Other Biogen Idec
Products and Sunesis Products, respectively (excluding for

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

19

 

purposes of this Section
2.5.8, Sunesis Products directed at the Sunesis Target designated under Section
2.5.3), for each Other Biogen Idec Target and Sunesis Target for which they
receive the exclusive license rights described in Section 6.3.  In the event that a Party fails to use
Commercially Reasonable and Diligent Efforts to research, develop and
commercialize either an Other Biogen Idec or Sunesis Product specifically
directed at a particular Other Biogen Idec Target or Sunesis Target (excluding
for purposes hereof, the Sunesis Target designated under Section 2.5.3), the
sole remedy for such breach shall be that such Target shall cease to be an
Other Biogen Idec Target or Sunesis Target and the exclusive licenses rights
granted to such Party under Section 6.3 with respect to such Other Biogen Idec
Target or Sunesis Target shall terminate. 
After designation of a Requested Target as an Other Biogen Idec Target
or Sunesis Target (excluding for purposes of this Section 2.5.8, the Sunesis
Target designated under Section 2.5.3), the Party so designating shall provide
the other Party with a Diligence Summary six months after such designation, and
upon each anniversary of such date for so long as such Target remains an Other
Biogen Idec Target or Sunesis Target, as applicable.

 

2.5.9                        Establishment
of Criteria and Selectivity Parameters; Staffing of Sunesis FTEs.

 

(a)                                  Promptly
following any designation of a Collaboration Target pursuant to this Section
2.5, the Parties shall establish, the definition and scope of such
Collaboration Target, as well as any additional Target-specific criteria for a
compound to be deemed a Hit Compound or Lead Compound for such Collaboration
Target as provided in Section 1.13, provided that the JRC shall not have the
authority to amend the Lead Compound Criteria with respect to the threshold
affinity levels with respect to such Collaboration Target without the written
agreement of the Parties.  In addition,
in the event that Biogen Idec requests additional FTEs with respect to such
Collaboration Target (above those provided for under this Agreement), the
Parties shall mutually agree on whether additional Sunesis FTEs shall be funded
to conduct activities under the Research Program with respect to such
Collaboration Target.

 

(b)                                 In
addition to the foregoing, the Parties shall establish the Selectivity
Parameters for each Collaboration Target. 
The Selectivity Parameters for a specific Collaboration Target may be
amended after initial designation by the JRC only through mutual written
agreement of the Parties.  The
Selectivity Parameters for all Collaboration Targets shall be set forth in
Exhibit 2.5.9 attached hereto; upon request by either Party from time to time,
Exhibit 2.5.9 shall be updated to reflect the Selectivity Parameters for the
then-current Collaboration Targets.

 

(c)                                  In
the event that an Other Biogen Idec Target or a Sunesis Target is designated
during the Term of this Agreement, the Parties shall mutually agree on (i) the
definition and scope of such Target, and (ii) the Selectivity Parameters for
such Target.

 

2.5.10                  Nature
of Collaboration Targets.  For clarity,
it is understood that as of the Effective Date, the Parties are primarily
interested in Kinases as Collaboration Targets; however, the Collaboration
Targets designated under this Section 2.5 may be Kinases or Non-Kinase Targets.

 

20

 

2.6                                 Designation
of Lead Compounds and Development Candidates.   From time to time during the Research Term,
Biogen Idec may approve the designation of any Target Selective Compound within
the Field as a Lead Compound for purposes of Section 1.41 by written notice to
Sunesis, provided such Target Selective Compound meets the Lead Compound
Criteria with respect to a Collaboration Target.  Each such notice shall set forth in writing
the IC50
concentrations that such designated Lead Compound exhibits with respect to the
relevant cell-based and enzyme assays established for such Collaboration Target
under Section 2.5.9.  Biogen Idec shall
have complete discretion as to the designation of any Target Selective Compound
within the Field as a Development Candidate by providing written notice to
Sunesis of such designation.  Biogen Idec’s
right to specify a Development Candidate shall survive the expiration of the
Research Term.  Notwithstanding the
foregoing, it is understood and agreed that if Biogen Idec undertakes GLP
toxicity studies or GMP manufacturing with respect to a particular Target
Selective Compound, such Target Selective Compound shall be deemed designated
by Biogen Idec as a Development Candidate for the purposes of Sections 3.3 and
7.3.

 

2.7                                 Phase
II Drug Collaborations; Excluded Compound Programs.

 

2.7.1                        Phase
II Drug Collaborations.  Subject to
the licenses granted under Article 6, notwithstanding Sections 2.4 and 6.6 and
subject to the provisions of this Section 2.7: (i) Biogen Idec shall not be
prohibited from collaborating with a Third Party on the development and
commercialization of chemical compounds in-licensed from or controlled by such
Third Party against a Collaboration Target, and (ii) Sunesis shall not be prohibited
from collaborating with a Third Party on the development and commercialization
of chemical compounds in-licensed from or controlled by such Third Party
against a Collaboration Target; provided that in subsection (ii), such
Collaboration Target is not an Eligible Collaboration Target, and in both
subsections (i) and (ii) that such compounds are in Phase II clinical trials or
later stage of development or commercialization at the time of initiation of
such collaboration (each, a “Phase II Drug Collaboration”).  As of the Effective Date, except for those
compounds listed on Exhibit 2.7.1, neither Party is party to a Phase II Drug
Collaboration.  Each Party shall notify
the other Party in writing upon entering into a Phase II Drug
Collaboration.  Nothing in this paragraph
is intended as the grant of a license by either Party to the other Party.

 

2.7.2                        Excluded
Compound Programs.  Subject to the
licenses granted under Article 6, in addition to the foregoing, notwithstanding
Section 2.4 neither Party shall be prohibited from researching, developing or
commercializing Excluded Compounds, with the proviso that Sunesis shall be
subject to the provisions of Section 6.6 below. 
Nothing in this paragraph is intended as the grant of a license by
either Party to the other Party.

 

2.8                                 Reports;
Records; Inspections.

 

2.8.1                        Reports.  Each Party shall keep the other Party
informed of its progress and results in performing the Research Program.  Sunesis and Biogen Idec shall each provide
the other, at least once quarterly, a written summary of research activities
and results in connection with the Research Program.  In addition, each Party shall promptly
provide the JRC in accordance with procedures to be agreed upon by the JRC with
data and information pertaining to all Synthesized Compounds identified by such
Party, including the chemical structures of such

 

21

 

Synthesized Compounds and
structure-activity data with respect thereto, and such other information as the
Parties agree.

 

2.8.2                        Research
Records.  Sunesis and Biogen Idec
shall maintain records of the Research Program (or cause such records to be
maintained) in sufficient detail and in good scientific manner as will properly
reflect all work done and results achieved in the performance of the Research
Program.

 

2.8.3                        Inspections.  During the Research Term, and for three (3)
years thereafter, the Parties shall provide each other access to the records
referred to in this Section, upon reasonable request, during ordinary business
hours and subject to appropriate confidentiality agreement in the event that
Third Party confidential information is involved.

 

2.8.4                        Clinical
Data.  For the avoidance of doubt,
nothing in this Section 2.8 shall obligate Biogen Idec to provide Sunesis with
any clinical data generated with respect to a Product prior to delivery of a
Phase II Notice in accordance with Section 3.2.1, or as otherwise explicitly
provided in Article 3.

 

ARTICLE
3

PRODUCT DEVELOPMENT

 

3.1                                 Development
by Biogen Idec.  Following the
selection of each Development Candidate in accordance with Section 2.6
above, Biogen Idec shall be responsible for undertaking a development program
aimed at ultimately seeking Regulatory Approval for any Products incorporating
such Development Candidate.

 

3.2                                 Co-Funding
Option.  Sunesis shall have the
right, on a Product-by-Product basis, to elect to fund a portion of post Phase
I Development Costs of Products specifically directed to Eligible Collaboration
Targets in all countries worldwide other than Japan (the “Initial Territory”).  In the event that Sunesis elects to exercise
its Co-Funding Option with respect to the Initial Territory for a particular
Product pursuant to the preceding sentence, then Sunesis shall have the right
to elect to fund a portion of post Phase I Development Costs of such Product in
Japan, all in accordance with this Section 3.2.

 

3.2.1                        Election.  For so long as Sunesis continues to have a
Co-Funding Option, Biogen Idec shall notify Sunesis at least [*] ([*]) months,
but not more than [*] ([*]) months, prior to initiation of the first
Phase II trial for each Product in each of the applicable territories
described above in Section 3.2 where the primary endpoint of such trial
involves a preliminary determination of efficacy.  Such notice shall include the date by which
such Phase II trial will start (the “Projected Start Date”), and shall
include (i) a description in detail of the indication for which such
Phase II trial will be directed, together with a comprehensive, detailed
preliminary plan and budget estimates, prepared and provided in good faith, for
the conduct of all further development of such Product (the “Initial
Development Plan”), and (ii) all preclinical data for such Product, and the
final report and access to all clinical data generated with respect to at least

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

22

 

one Phase I trial for
such Product, as well as the final report and access to all clinical data
generated with respect to all other Phase I trials of such Product initiated
prior to the date of such notice that are necessary for, or form the basis of,
the first Phase II trial of such Product (each, a “Phase II Notice”).  Sunesis may elect, by so notifying Biogen
Idec in writing at least [*] ([*]) month prior to the Projected Start Date
(the “Notice Period”), to participate in the further development of such
Product in the applicable territory, as described in this Section 3.2 (such
notice, the “Election Notice”). 
Following the Phase II Notice and until the end of the Notice
Period, Biogen Idec shall cooperate fully with Sunesis, and shall promptly
provide Sunesis with access to such material information, to the extent such
information is not included in the Initial Development Plan or otherwise has
not been communicated previously to Sunesis, as Sunesis may reasonably request
to enable Sunesis to make an informed decision whether to exercise its Co-Funding
Option under this Section 3.2 with respect to such Product.  Such cooperation shall include, without
limitation, consulting with Sunesis in good faith regarding the Initial
Development Plan, and the financial, scientific and regulatory assumptions
reflected therein.  In the event Sunesis
exercises its Co-Funding Option with respect to a particular Product (such
Product, a “Co-Funded Product”), the provisions of Sections 3.2.2 through 3.2.5
below shall apply with respect to such Co-Funded Product in the Co-Funded
Territory.  The “Co-Funded Territory”
shall consist of the Initial Territory for each Co-Funded Product, and in the
event Sunesis elects to exercise its Co-Funding Option for Japan with respect
to a particular Co-Funded Product, the Co-Funded Territory shall mean all
territories worldwide for such Co-Funded Product.

 

3.2.2                        JDC.  For each Co-Funded Product, the Parties shall
establish and maintain a JDC in accordance with Section 5.4 below, which shall
be responsible for establishing the plan and budget for the development of each
Development Candidate (each, a “Co-Development Plan and Budget”) and overseeing
the implementation of such plan.  Such
Co-Development Plan and Budget shall be comprehensive and shall fully describe
at least the proposed activities related to ongoing preclinical studies,
formulation, process development, clinical studies and regulatory plans, and
other activities and timelines directed to obtaining the initial and subsequent
Regulatory Approvals in each applicable country.  Unless otherwise specified in a
Co-Development Plan and Budget amounts reflected for a full year shall be
deemed budgeted in equal amounts for each calendar quarter of such year.

 

3.2.3                        Co-Funding
Obligation.  In the event Sunesis
exercises its Co-Funding Option with respect to a Product, Sunesis shall be
obligated to reimburse Biogen Idec for a percentage (the “Co-Funding Percentage”)
of post Phase I Development Costs for such Product, subject to the provisions
of this Section 3.2.  It is understood
and agreed that the Co-Funding Percentage shall initially be [*] percent ([*]%)
for each Co-Funded Product. In addition the following shall apply:

 

(a)                                  The
Co-Development Plan and Budget will be updated on a quarterly basis.  Promptly following the final Biogen Idec
Board of Directors meeting each calendar year during the development activities
for a particular Co-Funded Product or such other date as is mutually agreed by
the Parties, the JDC shall update and amend the Co-Development Plan and

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

23

 

Budget for such Co-Funded
Product for the subsequent year.  Biogen
Idec shall provide Sunesis with reasonable opportunity to provide input into
each Co-Development Plan and Budget, and , subject to Article 5, Biogen Idec
shall reasonably consider Sunesis’ comments in establishing and updating each
Co-Development Plan and Budget.

 

(b)                                 Within
thirty (30) days after the end of each calendar quarter, Biogen Idec shall
provide to Sunesis a statement reflecting the total post Phase I Development
Costs incurred by Biogen Idec in accordance with the then-current
Co-Development Plan and Budget during such calendar quarter with respect to
each Co-Funded Product.  Within thirty
(30) days after Sunesis’ receipt of such statement, Sunesis shall reimburse
Biogen Idec for the applicable Co-Funding Percentage of the post Phase I
Development Costs incurred by Biogen Idec during such calendar quarter for such
Co-Funded Product.

 

(c)                                  Upon
ninety (90) days written notice to Biogen Idec, Sunesis may terminate its Co-Funding
Option for a particular Co-Funded Product. 
In such event, Sunesis’ funding obligation under this Section 3.2.3
above shall apply only with respect to post Phase I Development Costs for
activities conducted with respect to such Co-Funded Product prior to the  effective date of such termination.  Should Sunesis terminate its Co-Funding
Option under this Section 3.2 with respect to a particular Co-Funded Product,
(i) any royalties payable to Sunesis on such Co-Funded Product shall be paid in
accordance with Section 7.5.1, subject to Section 7.5.2(b), and (ii)
Sunesis shall relinquish its right to participate in the JDC pursuant to
Section 5.4 and any right to its Co-Promotion Option under Section 4.2 for
such Co-Funded Product.

 

(d)                                 Upon
written notice to Biogen Idec at least ninety (90) days prior to the end of a
budget year, Sunesis may elect to [*] its Co-Funding Percentage for a
particular Co-Funded Product to either [*]% or [*]%, by so notifying Biogen
Idec in writing, referencing this Section 3.2.3(d) and specifying such [*] percentage.  In such event, Sunesis shall receive a [*]
royalty on Net Sales of such Co-Funded Product in accordance with the schedule
set forth in Section 7.5.2(c) below and Sunesis’ Co-Promotion rights under
Section 4.2 shall be correspondingly [*]. 
Upon such election, Sunesis’ previous Co-Funding Percentage under this
Section 3.2.3 shall apply only with respect to post Phase I Development Costs
for activities conducted with respect to such Co-Funded Product prior to the
end of the budget year in which Sunesis provided notice of such [*], thereafter
Sunesis’ co-funding obligation under this Section 3.2.3 shall apply to the
applicable [*] Co-Funding Percentage of the post Phase I Development Costs with
respect to such Co-Funded Product. 
Sunesis may [*] its Co-Funding Percentage in accordance with this
Section 3.2.3(d) more than once, provided that (i) Sunesis shall not be
permitted to subsequently [*] its Co-Funding Percentage for such Co-Funded
Product, and (ii) Sunesis may [*] its Co-Funding Percentage under this Section
3.2.3(d) no more than once per budget year. 
As used herein, “budget year” shall mean a calendar year, provided that
Biogen Idec shall have the right to change the budget year to coincide with
Biogen Idec’s annual budget cycle, provided that Biogen Idec provide Sunesis
with at least one hundred twenty (120) days notice of such change.

 

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

24

 

(e)                                  Notwithstanding
the foregoing, in the event that Sunesis experiences a Change in Control, then
Sunesis’ Co-Promotion rights under Section 4.2 and the right to participate in
the JDC under Section 5.4 and any Product Teams under Section 3.3 shall
terminate.  In addition:

 

(i)                                     With
respect to any Co-Funded Product for which Sunesis has exercised its Co-Funding
Option prior to such Change of Control, Sunesis’ rights and obligations under
this Section 3.2.3 shall continue, provided that Biogen Idec shall no longer be
obligated to provide the detailed plans required of a Co-Development Plan and
Budget to Sunesis (or its successor entity), but shall provide Sunesis (or its
successor entity) with annual budgets of post Phase I Development Costs for
such Co-Funded Product.

 

(ii)                                  Sunesis’
Co-Funding Option with respect to future Products shall continue as well (i.e.
with respect to Products that are not Co-Funded Products as of the date of such
Change of Control), provided that Biogen Idec shall no longer be obligated to
provide for each Product the detailed plans and clinical data required of an
Initial Development Plan and Phase II Notice. 
Biogen Idec shall, however, provide Sunesis (or its successor entity)
with annual budgets of post Phase I Development Costs for such Co-Funded
Product in accordance with the timetable for a Phase II Notice set forth in
Section 3.2.1, and shall provide reasonable cooperation to Sunesis (or its
successor entity) in evaluating such Product and the post Phase I Development
Costs related thereto, including consulting with Sunesis (or its successor
entity) in good faith regarding such annual budgets and the financial,
scientific and regulatory assumptions reflected therein.

 

3.2.4                        Certain
Terms.  As used in this Section 3.2,
the following terms shall have the meanings set forth below:

 

(a)                                  “Eligible
Collaboration Targets” shall mean up to two (2) Collaboration Targets.  Each Eligible Collaboration Target shall be
determined upon exercise of the Co-Funding Option by Sunesis for a Product
directed at a Collaboration Target, whereupon such Collaboration Target shall
be deemed an Eligible Collaboration Target. 
It is understood that there may be more than one (1) Co-Funded Product
directed at a single Eligible Collaboration Target.

 

(b)                                 “Change
in Control” shall mean with respect to Sunesis the closing of any of the
following: (i) the sale or disposition of all or substantially all of the
assets of Sunesis or its direct or indirect parent corporation to a Biogen Idec
Competitor, (ii) the acquisition, directly or through a subsidiary, by a Biogen
Idec Competitor of more than fifty percent (50%) of the outstanding shares of
voting capital stock of Sunesis or its direct or indirect parent corporation,
or (iii) the merger or consolidation of Sunesis or its direct or indirect
parent corporation with or into a Biogen Idec Competitor, other than, in the
case of this clause (iii), an acquisition or merger or consolidation of Sunesis
or its direct or indirect parent corporation in which holders of shares of the
voting capital stock of Sunesis or its direct or indirect parent corporation,
as the case may be, immediately prior to the acquisition, merger or
consolidation will have at least fifty percent (50%) of the ownership of voting
capital stock of the acquiring Biogen Idec Competitor or the surviving corporation
in such merger or consolidation, as the case may be, immediately after the
merger or consolidation.

 

25

 

(c)                                  “Biogen
Idec Competitor” shall mean a Third Party: (i) whose revenues from sales of
pharmaceutical products, on a consolidated basis in the last full fiscal year
prior to the Change of Control, were in excess of US $[*], or (ii) that as of
the closing of the Change of Control is commercializing, or conducting ongoing [*]
or [*] with respect to, a therapeutic product which is [*] to one or more [*] which
Biogen Idec is then commercializing, or conducting ongoing [*] or [*] with
respect thereto.

 

(d)                                 “post
Phase I Development Costs” shall mean, with respect to a particular Co-Funded
Product, the Development Costs incurred by the Parties or their Affiliates
after completion of Phase I trials for such Co-Funded Product in the Co-Funded
Territory for such Co-Funded Product. 
For the avoidance of doubt, (i) post Phase I Development Costs shall not
include any Development Costs incurred by the Parties or their Affiliates for
any subsequent Phase I trials, and (ii) Development Costs relating to
activities directed at obtaining Regulatory Approval in Japan for a Co-Funded
Product shall not be considered post Phase I Development Costs to the extent
such Development Costs are incurred (A) prior to completion of the Phase I
trials for such Co-Funded Product in Japan, or (B) if no Phase I trials are
necessary or performed for such Co-Funded Product in Japan, then prior to
initiation of any clinical trial other than a Phase I trial.

 

3.3                                 Product
Team.  Upon Sunesis’ exercise of the
Co-Funding Option, the Parties shall form a product team with respect to each
Co-Funded Product that shall report to the JDC, comprised of Biogen Idec and
Sunesis personnel that will implement the further development and regulatory
affairs with respect to that Co-Funded Product (each a “Product Team”) in
accordance with the Co-Development Plan and Budget.  It is understood that both Biogen Idec and
Sunesis shall have the opportunity for meaningful participation in the
activities of the Product Team commensurate with their respective levels of
funding participation.  Sunesis shall be
notified at least two weeks in advance of the date of each Product Team meeting
and shall have the opportunity to have its representatives attend such
meeting.  Biogen Idec shall provide such
Sunesis representatives with all information distributed to Biogen Idec members
of the Product Team, and such other material information as Sunesis may
reasonably request from time to time. 
The Parties expect that Sunesis will exercise its Co-Funding Option with
respect to the first Product directed to the Raf/[*] Target.  Accordingly, upon designation of a
Development Candidate in accordance with Section 2.6 above with respect to a
Product directed at the Raf/[*] Target, the Parties shall establish a Product
Team for such Product (i.e. even though the Product is not yet a Co-Funded
Product).  In such event, the Parties
shall maintain such Product Team under this Section 3.3 until the Co-Funding
Option lapses with respect to such Product. 
For clarity, it is understood that the establishment of a Product Team
hereunder for such Product directed at the Raf/[*] Target shall not obligate
Sunesis to subsequently exercise the Co-Funding Option with respect to such
Product Team.

 

3.4                                 Regulatory
Matters.  Biogen Idec shall file and
be the owner of all regulatory filings for Target Selective Compounds and/or
Products (including Co-Funded Products) developed

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

26

 

pursuant to this
Agreement, including all NDAs and Regulatory Approvals, unless otherwise agreed
by the Parties.

 

3.5                                 Product
Reversion.  In the event that Biogen
Idec fails to use Commercially Reasonable and Diligent Efforts to develop and
commercialize a Co-Funded Product pursuant to Article 9 or in the event that
Sunesis terminates this Agreement pursuant to Section 14.2 for Biogen Idec’s
breach, pursuant to Section 14.3 for Biogen Idec’s bankruptcy or in the event
that Biogen Idec terminates this Agreement pursuant to Section 14.4 for
convenience, Sunesis shall have the right to assume the development and
commercialization of such Co-Funded Product, subject to the terms and
conditions of this Section 3.5, upon notice to Biogen Idec.  Upon effective date of such notice from
Sunesis, such Co-Funded Product shall be designated a “Reverted Product”, the
terms set forth in Section 1 of Exhibit 3.5 attached hereto shall thereafter
apply, and Sunesis shall pay royalties to Biogen Idec as provided under 7.6.2
on Net Sales of such Reverted Product by Sunesis.

 

ARTICLE
4

 

PRODUCT
COMMERCIALIZATION

 

4.1                                 Commercialization
Rights.  Subject to the provisions of
Section 4.2, Biogen Idec shall be responsible for the establishment and
implementation of the strategy, plans and budgets for marketing and promotion
of the Products.

 

4.2                                 Co-Promotion
Option.  Sunesis will have an option
(the “Co-Promotion Option”) to co-promote each Co-Funded Product in the
Co-Funding Territory, according to the terms and conditions set forth in this
Section 4.2.  This Co-Promotion
Option may be exercised at Sunesis’ discretion on a Product-by-Product and
country-by-country basis for any Co-Funded Product, by so notifying Biogen Idec
in writing within ninety (90) days of the submission of the first NDA for such
Co-Funded Product in such country (each such Co-Funded Product for which
Sunesis exercises the Co-Promotion Option being referred to as a “Co-Promoted
Product”).  Prior to filing the first NDA
for a Co-Funded Product in a country, Biogen Idec shall provide to Sunesis with
a good faith estimate of the number of field force personnel to be deployed for
such Co-Funded Product in the applicable territory for the [*] period following
the launch, on a [*] basis, together with a then-current Sales and Marketing
Plan for such Co-Funded Product.  The
estimate of the number of field force personnel to be deployed shall be
prepared by the JCC, and shall take into consideration the then-current
marketing and promotion practices in the relevant markets and the number and
nature of other products, if any, including the detail position, if applicable,
that such field force personnel will be selling.  In situations where field force personnel
will be selling multiple products, the JCC shall make a good faith allocation
of the field force personnel’s time to be spent on each product.  As used in this Section 4.2, “co-promote”
or “co-promotion” shall mean to promote jointly or joint promotion of a Product
through Biogen Idec’s and Sunesis’ respective sales forces under the same brand
name, with Biogen Idec booking all sales of such Co-Promoted Product.

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

27

 

4.2.1                        Scope
and Coordination of Co-Promotion. 
Upon exercise of its Co-Promotion Option with respect to a Co-Promoted
Product, Sunesis shall have the right to field up to the Co-Funding Percentage
(i.e. [*]%, [*]% or [*]%) (the “Election Percentage”) of the field force, as
such field force is determined in good faith by the JCC, with respect to the
Co-Promoted Product in the applicable territory.  The JCC shall be responsible for coordinating
the co-promotion activities under this Section 4.2, and shall develop the
strategies and programs to optimally carry out marketing and promotional
activities, including but not limited to, the assignment of sales force responsibilities
in accordance with the Sales and Marketing Plan.  It is understood that Sunesis may use one or
more contract service organizations for its activities under this Section 4.2,
provided that with respect to each Co-Promoted Product, Sunesis [*] contract
service organization for such activities more than [*] ([*]) year after
regulatory approval in the United States or the European Union (whichever is
earlier) for such Co-Promoted Product. Sunesis field sales force
representatives will be employed by Sunesis and Sunesis shall be responsible
for all the payment of all such representatives’ salary, out-of pocket expenses
(other than for promotional materials), bonus (Sunesis shall adopt
substantially similar bonus plans/systems as Biogen Idec to reward sales) and
benefits, pension, insurance, social security and any other related
obligations.  Sunesis shall within thirty
(30) days of the end of each calendar quarter send a written report to Biogen
Idec setting out for each applicable territory and each Co-Promoted Product,
the number of field sales force representatives performing co-promotion
activities hereunder, and the number and nature of other products, if any, that
such field force personnel promoted during such calendar quarter.  In the event that in any two [*] Sunesis
fails to achieve at least [*] percent ([*]%) of the field force efforts in a
particular country for a Co-Promoted Product that are allocated to Sunesis in
the applicable Sales and Marketing Plan, Biogen Idec may terminate Sunesis’
right to co-promote such Co-Promoted Product in such country upon written
notice to Sunesis.

 

4.2.2                        Co-Promotion
Obligations.  Sunesis shall employ a
professional and trained sales force to co-promote the Co-Promoted Product, and
such sales force shall meet standards of competence and professionalism as are
common in the pharmaceutical industry. 
In all events, Sunesis’ co-promotion shall be conducted as directed by
the JCC and in accordance with the then current Sales and Marketing Plan and in
accordance with all applicable laws. 
Biogen Idec shall provide to Sunesis sales personnel at Biogen Idec’s
expense any Co-Promoted Product-specific training and promotional materials
(including samples), and shall permit Sunesis sales personnel to attend and
participate in any Co-Promoted Product-specific seminars and sales training
programs at no charge to Sunesis, in each case as reasonably necessary to
effectively promote the particular Co-Promoted Product consistent with the
Sales and Marketing Plan.

 

4.2.3                        Reimbursement.  For the performance of the obligations of
Sunesis under this Section 4.2, Biogen Idec shall reimburse Sunesis as
described herein.  Within thirty (30)
days of the end of each calendar quarter Sunesis shall invoice Biogen Idec
based on direct costs incurred by Sunesis in performing sales promotional
activities under this Section 4.2.  The
cost for a Sunesis sales representative shall be based on a commercial FTE rate
to be reasonably determined annually by the JCC (provided that in the event
that a CSO is employed by Sunesis

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

28

 

as provided in Section
4.2.1, such number will not exceed one hundred ten percent (110%) of Biogen
Idec’s direct cost for a sales representative (i.e. salary, bonus, benefits,
travel and entertainment)).  In the event
that Sunesis sales representatives promote any other products other than such
Co-Promoted Product, then Biogen Idec shall only reimburse for the pro rata
share of the cost of such Sunesis sales representatives.

 

4.2.4                        Right
to Terminate Co-Promotion.  Sunesis
shall have the right, on a territory by territory basis, to terminate its
co-promotion of any Co-Promoted Product, and its obligations under this Section
4.2 with respect to such Co-Promoted Product, on a Co-Promoted
Product-by-Co-Promoted Product basis, upon one hundred eighty (180) days
prior notice to Biogen Idec.  Upon
termination of co-promotion under this Section 4.2.4, Sunesis shall have no
right to reimbursement by Biogen Idec under Section 4.2.3 for services
provided after the effective date of such termination.

 

4.3                                 Amendment
of Sales and Marketing Plan. 
Promptly upon exercise of Sunesis’ Co-Promotion Option hereunder, the
JCC shall meet to revise the Sales and Marketing Plan to reflect the sales
activities to be undertaken by Sunesis, including without limitation the
formulation of a mechanism to establish and adjust cost allocation, and the
definition of a relevant field sales force promotional activity metric for
purposes of allocating the activities of sales representatives.

 

4.4                                 Sunesis
Logo.  The name and logo of Sunesis
shall appear, with reasonable size and prominence, on all packaging, package
inserts, (and to the extent permitted) labeling, marketing and sales materials
and advertisements for all Co-Promoted Products in the applicable territory.

 

4.5                                 Sunesis
Insurance.  In the event that Sunesis
exercises its Co-Promotion Option, Sunesis shall procure and continue to
maintain, at its own cost, the following insurance coverage: Commercial General
Liability, including coverage for products and completed operations (maintained
for a period of [*] after expiration or termination of this Agreement) and
contractual liability (including coverage for advertising and personal injury).
The JCC shall set commercially reasonable and appropriate minimum terms and
conditions for such insurance coverage, consistent with then-current
pharmaceutical industry practice for commercialization efforts of similar scope
to the co-promotion activities undertaken hereunder.  Sunesis shall provide Biogen Idec with a certificate
of insurance reflecting such coverage.

 

ARTICLE
5

MANAGEMENT

 

5.1                                 Joint
Steering Committee.  Within thirty
(30) days of the Effective Date, the Parties shall establish a joint steering
committee (“Joint Steering Committee”) to provide oversight and management of
the activities undertaken under this Agreement. 
The Joint Steering Committee will be composed of two (2) representatives
of each Party who shall be appointed (and may be replaced at any time) by such Party
on prior written notice to the other Party in accordance with this
Agreement.  At least one (1)
representative of a Party on the Joint Steering Committee shall be a
vice-president or more senior officer of such Party, and the representatives
shall have

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

29

 

relevant experience and
expertise in research, development and commercialization of biopharmaceuticals.

 

5.1.1                        Responsibilities.  The Joint Steering Committee shall be
responsible for (i) reviewing the efforts of the JRC in the conduct of the
Research Program, and resolving disputes as to matters to be decided by the JRC
under this Agreement; (ii) reviewing the efforts of the JDC in the conduct of
ongoing development activities and regulatory affairs with respect to Co-Funded
Products under Article 3, and resolving disputes as to matters to be decided by
the JDC under this Agreement; (iii) reviewing the efforts of the JCC in the
conduct of promotional activities of the Parties with respect to Co-Promoted
Products under Article 4, and resolving disputes as to matters to be decided by
the JCC under this Agreement and (iv) taking such other actions as are
specifically allocated to the Joint Steering Committee under this Agreement.

 

5.1.2                        Meetings.
The Joint Steering Committee shall meet quarterly, or at such frequency as
agreed by the respective committee members. 
Meetings of the Joint Steering Committee shall be at such locations as
the Parties agree, and will otherwise communicate regularly by telephone,
electronic mail, facsimile and/or video conference.  With the consent of the Parties, other
representatives of Sunesis or Biogen Idec may attend the Joint Steering
Committee meetings as nonvoting observers.

 

5.1.3                        Decisions.  Any approval, determination or other action
of the Joint Steering Committee shall require agreement of the members of the
Joint Steering Committee, with each Party having one (1) vote.  Action that may be taken at a meeting of the
Joint Steering Committee also may be taken without a meeting if a written
consent setting forth the action so taken is signed by all members of the Joint
Steering Committee.

 

5.1.4                        Disputes.  In the event the Joint Steering Committee is
unable to reach consensus on a particular matter within its jurisdiction or
that of the JRC, JDC or JCC (other than as explicitly set forth in Section 15.2
below), the matter shall be referred to executives of the Parties in accordance
with Section 15.1, and if such referral does not resolve such matter, then
Biogen Idec shall have the right to cast a deciding vote on the JSC.
Notwithstanding the foregoing, Biogen Idec shall not have the right to exercise
such deciding vote in a manner that is not consistent with the other terms and
conditions of this Agreement or that imposes a material obligation on
Sunesis.  In the evaluation of a
Diligence Summary pursuant to Section 1.10, any decision of the JSC shall be
binding on the Parties, but in the event the JSC is unable achieve agreement
with respect to such evaluation, then such dispute shall be resolved as set
forth in Section 1.10.

 

5.2                                 Joint
Sub-Committees.  The Parties shall
form the JRC, JDC and JCC (each, a “Joint Sub-Committee”) in accordance with
the terms set forth in Sections 5.2, 5.3, 5.4 and 5.5.

 

5.2.1                        Generally.  Each Joint Sub-Committee shall meet at such
locations as the Parties agree, and will otherwise communicate regularly by
telephone, electronic mail, facsimile and/or video conference.  Each Party shall be responsible for all of
its own expenses associated with attendance of such meetings, and either Party
may replace its respective representatives to each Joint Sub-Committee at any
time, with prior written notice to the other Party.  From time to time, each Joint Sub-Committee
may establish further subcommittees to oversee particular

 

30

 

projects or activities,
and such further subcommittees will be constituted as such Joint Sub-Committee
approves.

 

5.2.2                        Decision
Making.  Decisions of each Joint
Sub-Committee shall be made by unanimous approval of the team leaders from each
Party present in person or by other means (e.g., teleconference) at any
meeting; provided that at least one member from each Party must be so present
and voting.  In the event that unanimity
is not achieved within a Joint Sub-Committee on a decision required to be made
by such Joint Sub-Committee, the matter will be referred to the Joint Steering
Committee, which in each case shall promptly meet and endeavor in good faith to
resolve such matter in a timely manner. 
In the event the Joint Steering Committee is unable to reach consensus
on a particular matter, such matter shall be resolved in accordance with
Section 5.1.4 above.

 

5.3                                 Joint
Research Committee.

 

5.3.1                        Formation.  Within thirty (30) days of the Effective
Date, Biogen Idec and Sunesis will establish a Joint Research Committee (“JRC”)
to oversee, review and recommend direction of the Research Program.  The JRC shall include three (3)
representatives of each of Biogen Idec and Sunesis, with each Party’s members
selected by that Party.  Unless otherwise
agreed by the Parties, at least one (1) representative of each Party to the JRC
must be at least a director or higher level employee of such Party.  During the Research Term, the JRC shall meet
at least quarterly, or at a frequency as agreed by the respective committee
members.  With the consent of the
Parties, other representatives of Sunesis or Biogen Idec may attend meetings of
the JRC as nonvoting observers.

 

5.3.2                        Responsibilities.  The responsibilities of the JRC shall consist
of: (i) monitoring and reporting research progress and ensuring open and
frequent exchange between the Parties regarding Research Program activities;
(ii) designating the variant species of a protein to be included with a
specific Target (iii) establishing or modifying Criteria for the selection of Hit
Compounds, Lead Compounds; (iv) designating Target Selective Compounds as Hit
Compounds and Lead Compounds, (v) modifying the Research Plan; and (vi) taking
such other actions as may be specifically allocated to the JRC by the Parties
(such as making decisions regarding research activities or allocation, but not
the number, of FTEs under the Research Plan).

 

5.4                                 Joint
Development Committee.

 

5.4.1                        Formation.  Promptly following notice from Sunesis that
it is exercising its Co-Funding Option, the Parties shall establish a Joint
Development Committee (“JDC”) with respect to the development of such Co-Funded
Product(s).  The JDC will be composed of
up to three (3) representatives of Biogen Idec (at Biogen Idec’s discretion)
and at least one (1) representative of Sunesis who shall be appointed (and may
be replaced at any time) by the respective Party on written notice to the other
Party in accordance with this Agreement. 
In the event that Sunesis undergoes a Change of Control (as that term is
defined in Section 3.2.4(b) above), the JDC shall be dissolved in accordance
with Section 3.2.3(e).

 

5.4.2                        Responsibilities.  The responsibilities of the JDC shall consist
of (i) overseeing the ongoing development of Co-Funded Product(s),
(ii) establishing Co-Development

 

31

 

Plans and Budgets for
Co-Funded Products, (iii) monitoring and approving development activities
under such Co-Development Plans and Budgets, (iv)  reviewing and approving
regulatory correspondence, final study reports and submissions to Regulatory
Authorities relating to Co-Funded Products, and (v) making such decisions as
are expressly provided in Article 3.

 

5.4.3                        Meetings
and Information.  The JDC shall meet
at least quarterly.  Biogen Idec shall
notify Sunesis at least two weeks in advance of the date of each JDC meeting,
and Sunesis shall have the opportunity to send the Sunesis representative to
each such meeting.  Biogen Idec shall
provide such Sunesis representative with schedules of all such meetings, as
well as any other information distributed to Biogen Idec members of the JDC.

 

5.5                                 Joint
Commercialization Committee.

 

5.5.1                        Formation.  Upon request by either Party following the
initiation of the first Phase III clinical study for a Co-Funded Product,
the Parties shall establish a Joint Commercialization Committee (“JCC”) with
respect to commercialization of such Co-Funded Product(s).  The JCC will be composed of up to three (3)
representatives of Biogen Idec (at Biogen Idec’s discretion) and at least one
(1) representative of Sunesis who shall be appointed (and may be replaced at
any time) by the respective Party on written notice to the other Party in
accordance with this Agreement.

 

5.5.2                        Responsibilities.  The JCC shall have responsibility to monitor
the conduct and progress of the commercialization strategy, plans, and budgets,
including establishment of a plan and budget for the marketing, promotion, sale
and distribution of such Co-Funded Product (each a “Sales and Marketing Plan”)
and managing the promotional activities of the Parties with respect to
Co-Promoted Products under Article 4 above. 
JCC shall update the Sales and Marketing Plan periodically, and no less
often than annually, and shall include therein detailed plans and budgets for
the marketing, promotion, sale and distribution of each Co-Funded Product.

 

5.5.3                        Meetings
and Information.  The JCC shall meet
at least quarterly.  Biogen Idec shall
notify Sunesis at least two weeks in advance of the date of each JCC meeting,
and Sunesis shall have the opportunity to send at least one Sunesis
representative to each such meeting, who shall be designated as a member of the
JCC.  Biogen Idec shall provide such
Sunesis representative with schedules of all such meetings, as well as any
material information distributed to Biogen Idec members of the JCC.

 

ARTICLE
6

LICENSES

 

6.1                                 Research
Licenses.

 

6.1.1                        Research
Licenses to Biogen Idec.

 

(a)                                  Sunesis
Collaboration Technology for Research Program.  Subject to the terms and conditions of this
Agreement, Sunesis hereby grants to Biogen Idec a worldwide,

 

32

 

non-exclusive license
under the Sunesis Collaboration Technology and Sunesis’ interest in the Joint
Collaboration Technology, with the right to grant sublicenses to the extent
provided in Section 6.1.3, to conduct research pursuant to the Research Program
(including but not limited to making, having made, and using Synthesized
Compounds). Unless terminated earlier herein, except as set forth in Section
6.2.1, the license granted under this Section 6.1.1(a) shall expire at the end
of the Research Term.

 

(b)                                 Sunesis
Core Technology and Licensed Pre-Existing Technology.  Subject to the terms and conditions of this
Agreement, Sunesis hereby grants to Biogen Idec a worldwide, non-exclusive
license under the Sunesis Core Technology and Licensed Pre-Existing Technology,
with the right to grant sublicenses solely with respect to Licensed
Pre-Existing Technology and to the extent provided in Section 6.1.3, in each case
to conduct research pursuant to the Research Program (including but not limited
to making, having made, and using Synthesized Compounds).  The foregoing research license to Biogen Idec
under the Sunesis Core Technology shall not include the right to sublicense the
Sunesis Core Technology, or practice Sunesis Core Technology to discover novel
compounds outside the Field, and shall only include the right to conduct
activities in the Research Program. 
Unless terminated earlier herein, except as set forth in Section 6.2.2,
the license granted under this Section 6.1.1(b) shall expire at the end of the
Research Term.

 

(c)                                  Sunesis
Collaboration Technology for Collaboration Compounds.  Subject to the terms and conditions of this
Agreement, Sunesis grants to Biogen Idec a worldwide, non-exclusive license
under the Sunesis Collaboration Technology and Sunesis’ interest in the Joint
Collaboration Technology, in each case with the right to grant sublicenses to
the extent provided in Section 6.1.3, to make, discover, research and/or
develop Collaboration Compounds, alone or as incorporated into Other Biogen
Idec Products.

 

6.1.2                        Research
Licenses to Sunesis.

 

(a)                                  Biogen
Idec Collaboration Technology for Research Program.  Subject to the terms and conditions of this
Agreement, Biogen Idec hereby grants to Sunesis a worldwide, non-exclusive
license under the Biogen Idec Collaboration Technology and Biogen Idec’s
interest in Joint Collaboration Technology, in each case with the right to
grant sublicenses to the extent provided in Section 6.1.3, solely to conduct
research pursuant to the Research Program (including but not limited to making,
having made, and using Synthesized Compounds under the Research Program).
Unless terminated earlier herein, the license granted under this Section
6.1.2(a) shall expire at the end of the Research Term.

 

(b)                                 Joint
Collaboration Technology for Collaboration Compounds.  Subject to the terms and conditions of this
Agreement, Biogen Idec grants to Sunesis a worldwide, non-exclusive license
under Biogen Idec’s interest in the Joint Collaboration Technology, with the
right to grant sublicenses to the extent provided in Section 6.1.3, to make,
discover, research and/or develop Collaboration Compounds, alone or as
incorporated into Sunesis Products.

 

6.1.3                        Sublicensing
of Research Licenses.  Subject to the
terms and conditions of this Agreement, either Party shall have the right to
grant sublicenses (but not to authorize the

 

33

 

grant of further sublicenses)
of the rights granted under Sections 6.1.1 and 6.1.2 above except as
otherwise set forth therein, provided that such sublicense is granted (i) to a
contract research organization (CRO) where the sublicensing Party retains all
commercialization rights to compounds produced by the CRO, or (ii) for the
purposes of a bona fide research collaboration with a Third Party where the
sublicensing Party remains substantially involved in the performance of the
research with such Third Party collaborator. 
It is understood and agreed that nothing in this Section 6.1.3 shall
limit or modify the provisions of Section 2.4.

 

6.2                                 Commercialization
Licenses.

 

6.2.1                        License
under the Sunesis and Joint Collaboration Technology to Target Selective
Compounds.  Subject to the terms and
conditions of this Agreement (including Section 6.1.2 above), Sunesis hereby
grants to Biogen Idec a worldwide, exclusive license under the Sunesis
Collaboration Technology and Sunesis’ interest in the Joint Collaboration
Technology, in each case with the right to grant and authorize sublicenses as
provided in Section 6.5, to research, develop, make, have made, use, import,
offer for sale, sell and otherwise exploit Target Selective Compounds for any
purpose, without regard to the mechanism of action of such Target Selective
Compound, alone or as incorporated into a Product.

 

6.2.2                        License
under the Sunesis Core Technology to Target Selective Compounds.  Subject to the terms and conditions of this
Agreement, Sunesis hereby grants to Biogen Idec a worldwide, non-exclusive
license under the Sunesis Core Technology to make, have made, use, import,
offer for sale and sell Target Selective Compounds for any purpose, without
regard to the mechanism of action of such Target Selective Compound, alone or as
incorporated into a Product.  It is
understood that the foregoing license to Sunesis Core Technology shall not
include the right to practice Sunesis Core Technology to discover novel
compositions.

 

6.2.3                        License
under the Licensed Pre-Existing Technology to Licensed Pre-Existing Compounds.  Subject to the terms and conditions of this
Agreement, Sunesis hereby grants to Biogen Idec a worldwide, exclusive license
under the Licensed Pre-Existing Technology, with the right to grant and
authorize sublicenses as provided in Section 6.5, to research, develop, make,
have made, use, import, offer for sale, sell and otherwise exploit Licensed
Pre-Existing Compounds for any purpose, without regard to the mechanism of
action of such Licensed Pre-Existing Compound, alone or as incorporated into a
Product.

 

6.2.4                        Reverted
Products.  Subject to the terms and
conditions of this Agreement (including Section 6.1.1 above), with respect to
each Terminated Compound Biogen Idec hereby grants to Sunesis a worldwide,
exclusive license under Biogen Idec’s interest in the Biogen Idec Collaboration
Technology, Joint Collaboration Technology and other intellectual property
rights in existence and owned or controlled by Biogen Idec as of the date such
Collaboration Compound becomes a Terminated Compound (“Other Biogen Idec
Technology”), with the right to grant and authorize sublicenses as provided in
Section 6.5, to research, develop, make, have made, use, import, offer for
sale, sell and otherwise exploit such Terminated Compound, alone or as
incorporated into a Reverted Product.  It
is understood and acknowledged that the licenses granted with respect to Biogen
Idec Collaboration Technology and Other Biogen Idec Technology in this Section
6.2.4 extend solely to that technology that is being used on that

 

34

 

Terminated Compound (or a
Reverted Product incorporating such Terminated Compound) as of the date of such
reversion to Sunesis, and solely to the extent necessary for Sunesis to
continue development and commercialization of such Terminated Compound (or a
Reverted Product incorporating such Terminated Compound) in the form in which
such Terminated Compound or Reverted Product exist as of the date of such
reversion to Sunesis.

 

6.3                                 Other
Compounds.

 

6.3.1                        License
to Biogen Idec for Other Biogen Idec Products.

 

(a)                                  Subject
to the terms and conditions of this Agreement, Sunesis hereby grants to Biogen
Idec a worldwide, non-exclusive license under the Sunesis Collaboration
Technology and Sunesis’ interest in the Joint Collaboration Technology, in each
case with the right to grant and authorize sublicenses as provided in Section
6.5, to research, develop, make, have made, use, import, offer for sale, sell
and otherwise exploit Other Compounds for any purpose, alone or as incorporated
in Other Biogen Idec Products. 
Notwithstanding the foregoing, the non-exclusive license granted in this
Section 6.3.1(a) shall at all times exclude Other Compounds that are Target
Selective against Sunesis Targets, subject to Sections 6.3.1(b) and 6.4.

 

(b)                                 Subject
to the terms and conditions of this Agreement (including Section 6.1.2 above),
Sunesis hereby grants to Biogen Idec a worldwide, exclusive license under the
Sunesis Collaboration Technology and Sunesis’ interest in the Joint
Collaboration Technology, in each case with the right to grant and authorize
sublicenses as provided in Section 6.5, to research, develop, make, have made,
use, import, offer for sale, sell and otherwise exploit Other Compounds that are
Target Selective against Other Biogen Idec Targets for any purpose, alone or as
incorporated in Other Biogen Idec Products.

 

6.3.2                        License
to Sunesis for Sunesis Products.

 

(a)                                  Subject
to the terms and conditions of this Agreement, Biogen Idec hereby grants to
Sunesis a worldwide, non-exclusive license under Biogen Idec’s interest in the
Joint Collaboration Technology, in each case with the right to grant and
authorize sublicenses as provided in Section 6.5, to research, develop, make,
have made, use, import, offer for sale, sell and otherwise exploit Other
Compounds for any purpose, alone or as incorporated in Sunesis Products.  Notwithstanding the foregoing, the
non-exclusive license granted in this Section 6.3.2(a) shall at all times
exclude Other Compounds that are Target Selective against Other Biogen Idec
Targets, subject to Sections 6.3.2(b) and 6.4.

 

(b)                                 Subject
to the terms and conditions of this Agreement (including Section 6.1.1 above),
Biogen Idec hereby grants to Sunesis a worldwide, exclusive license under
Biogen Idec’s interest in the Joint Collaboration Technology, in each case with
the right to grant and authorize sublicenses as provided in Section 6.5, to
research, develop, make, have made, use, import, offer for sale, sell and
otherwise exploit Other Compounds that are Target Selective against Sunesis
Targets for any purpose, alone or as incorporated in Sunesis Products.

 

(c)                                  For
the avoidance of doubt, it is understood and acknowledged that the licenses set
forth in this Section 6.3.2 shall not extend to Biogen Idec Derivatives.

 

35

 

6.4                                 Precedence
of Exclusive Licenses.  The Parties
agree that each of the exclusive commercialization licenses under Collaboration
Technology set forth in Sections 6.2.1, 6.3.1(b) and 6.3.2(b) with respect to
Collaboration Compounds that are Target Selective against a particular Target
are granted and taken subject to any of such licenses previously granted
hereunder with respect to Collaboration Compounds that are Target Selective
against a different Target.  For the
purposes of determining whether such licenses are “previously granted” as used
in this Section 6.4, the exclusive licenses set forth in Sections 6.2.1,
6.3.1(b) and 6.3.2(b) shall be considered separate licenses for each
Collaboration Target, Other Biogen Idec Target and Sunesis Target,
respectively, and each separate Target-specific license shall be deemed granted
as of the date of designation of such Target as a Collaboration Target, Other
Biogen Idec Target or Sunesis Target, as applicable.

 

6.5                                 Commercialization
Sublicenses.  Within a reasonable
period of time following grant of any such sublicense, to the extent
sublicensing is permitted under Section 6.2 or 6.3 above, the sublicensing
Party shall provide the other Party with a summary of such sublicense,
including the identity of the Sublicensee (including any Affiliate) and the
rights granted with respect thereto for each product and territory, sufficient
to allow such other Party to verify any amounts then or subsequently due under
Articles 7 and 8 below; provided that such summary may redact confidential
information that the sublicensing Party is reasonably prohibited from
disclosing under the sublicense agreement. 
Any sublicense granted under this Section 6.5 shall be consistent with
all of the terms and conditions of this Agreement, and subordinate thereto, and
the sublicensing Party shall remain responsible to the other Party for the
compliance of each such Sublicensee with the obligations due under this
Agreement.

 

6.6                                 Sunesis
Covenant with Respect to Compounds in the Field.  During the [*], Sunesis represents, warrants
and agrees that it will not market, sell or promote, alone or in collaboration
with others, any pharmaceutical compound that is [*] against a [*] other than
as permitted under Article 4 and Sections 2.7 or 3.5 above, or under an
exclusive license that is granted to Sunesis pursuant to Section 6.3.2(b) and
given precedence pursuant to Section 6.4 over any exclusive licenses granted to
Biogen Idec with respect to such pharmaceutical compound under Section 6.2.1
and 6.3.1(b).  Notwithstanding the
foregoing, after the end of the [*], the covenant set forth in this Section 6.6
shall terminate with respect to any [*] that is [*] against a [*] with respect
to which Biogen Idec is not using Commercially Reasonable and Diligent Efforts,
unless such pharmaceutical compound is also [*] against another [*] with
respect to which Biogen Idec has maintained Commercially Reasonable and
Diligent Efforts after the [*].  Biogen
Idec shall provide Sunesis with a [*] with respect to each [*] upon the [*] and
upon [*] thereof for [*] the covenant set forth in this Section 6.6 [*] with
respect to such [*].

 

6.7                                 No
Other Rights; No Implied Licenses. 
Only the licenses granted or retained pursuant to the express terms of
this Agreement shall be of any legal force or effect.  No other license rights shall be created by
implication, estoppel or otherwise.

 

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

36

 

ARTICLE
7

PAYMENTS

 

7.1                                 Research
Program Funding.

 

7.1.1                        Quarterly
Sunesis FTE Payments.  Unless
otherwise agreed by the Parties, the Research Plan shall at all times provide
for between [*] ([*]) and [*] ([*]) Sunesis FTEs.  Biogen Idec agrees to pay Sunesis research
funding for Sunesis’ conduct of the Research Program quarterly, as described
below.  Unless agreed otherwise by the
JRC, Biogen Idec shall pay Sunesis for [*] ([*]) FTEs multiplied by the FTE
Rate in advance quarterly installments, no later than thirty (30) days after
the start of each calendar quarter.

 

7.1.2                        Quarterly
Reconciliation.  Within
thirty (30) days after the end of each calendar quarter, Sunesis shall
provide to Biogen Idec a statement reflecting the total number of FTEs worked
during the previous calendar quarter, multiplied by the FTE Rate (the “Actual
Amount”).   In the event that the amount
of quarterly FTE payments made by Biogen Idec under 7.1.1 with respect to the
previous calendar quarter is less than the Actual Amount, Biogen Idec shall add
such underpayment to the next quarterly payment by Biogen Idec due under
7.1.1.  In the event that the amount of
quarterly FTE payments made by Biogen Idec under 7.1.1 with respect to the
previous calendar quarter exceeds the Actual Amount, Biogen Idec shall be
entitled to credit such overpayment against any payments by Biogen Idec due
under 7.1.1 with respect to subsequent calendar quarters.  Sunesis shall provide Biogen Idec with a
final reconciliation of any underpayments or overpayments within the earlier of
thirty (30) days of: (i) termination of the Research Term, including any
extensions thereof, and (ii) termination of this Agreement.  Any Party owing the other Party money
pursuant to the final reconciliation shall pay the other Party within thirty
(30) days of the final reconciliation.

 

7.1.3                        Research
Term Extension.  Unless otherwise
agreed to by the Parties, during any extension of the Research Term beyond the
initial four (4) year Research Term, the Research Plan shall provide for
between [*] ([*]) and [*] ([*]) Sunesis FTEs, to be paid in accordance with
Sections 7.1.1 and 7.1.2.  It is
understood and agreed, that in no event is Biogen Idec obligated to extend the
Research Term.

 

7.1.4                        Outsourced
Activities.  In the event the
Research Plan provides, or the JRC agrees, work under the Research Program may
be conducted by a Third Party.  Unless
otherwise agreed by the Parties, Biogen Idec shall bear the out-of-pocket costs
incurred with respect to such work.

 

7.2                                 Technology
Access Fee; Equity Investment

 

7.2.1                        Technology
Access Fee.

 

(a)                                  Upon
signing of this Agreement, an upfront technology access fee of Seven Million
U.S. Dollars ($7,000,000) shall be due to Sunesis, payable by Biogen Idec
within

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

37

 

ten (10) days after the
Effective Date.  Such fee shall be
non-refundable and non-creditable against other amounts due Sunesis hereunder.

 

(b)                                 In
the event that Biogen Idec desires to exercise its option to extend the  initial four (4) year Research Term for one
(1) additional year pursuant to Section 2.3, Biogen Idec shall pay to Sunesis,
at least thirty (30) days before the end of the initial four (4) year Research
Term, an additional technology access fee of $[*].  In the event that Biogen Idec subsequently
desires to exercise its option to further extend the Research Term pursuant to
Section 2.3 (i.e. for a second year), Biogen Idec shall again pay to Sunesis an
additional technology access fee of $[*] at least thirty (30) days before
the end of the then-current extension of the Research Term.

 

7.2.2                        Equity
Investment in Sunesis.  Biogen Idec
agrees to make an equity investment in Sunesis in the amount of Fourteen
Million U.S. Dollars ($14,000,000) pursuant to a Stock Purchase Agreement
substantially of the form set forth in Exhibit 7.2.2 attached hereto.  Biogen Idec shall purchase Sunesis Series C-2
preferred stock (“Series C-2”) at the price of Sunesis’ most recent general
round of private financing, and such preferred stock will have the voting
rights, registration rights, restricted information access and other terms
consistent with the Series C-2, all as set forth in such Stock Purchase
Agreement.  The Parties agree to execute
such Stock Purchase Agreement within ten (10) days after the Effective
Date.  Sunesis agrees that if Biogen Idec
is required (as reasonably determined by an independent auditor) to include any
financial data of Sunesis in Biogen Idec’s financial disclosures, whether due
to the equity investment contemplated by this Section 7.2.2 or otherwise,
Sunesis shall cooperate with Biogen Idec to provide any such required data upon
reasonable request by Biogen Idec.  In
addition, from time to time during the term of this Agreement and upon
reasonable request by Biogen Idec, Sunesis shall provide Biogen Idec with
summary financial or operational data reasonably necessary for an independent
auditor to determine whether Biogen Idec is required to include any financial
data of Sunesis in Biogen Idec’s financial disclosures.

 

7.3                                 Research
Milestones.  On a Target-by-Target
basis, Biogen Idec shall pay to Sunesis the following amounts within
thirty (30) days following the first achievement of the following research
milestones with respect to each Collaboration Target:

 

	
  Research Milestones

  	
   

  	
  Payment
  Amount

  
	
  1.

  	
  The earlier of
  (i) designation of the first Hit Compound for such Collaboration Target by
  the JRC, or (ii) identification of the first Collaboration Compound to meet
  Hit Compound Criteria for such Collaboration Target:

  	
   

  	
  $

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Approval by Biogen
  Idec, in accordance with Section 2.6, of the first Development Candidate for
  such Collaboration Target:

  	
   

  	
  $

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Approval by Biogen
  Idec, in accordance with Section 2.6, of the second Development Candidate for
  such Collaboration Target:

  	
   

  	
  $

  	
  [*]

  

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

38

 

	
  Research Milestones

  	
   

  	
  Payment Amount

  
	
  Collaboration
  Target:

  	
   

  	
   

  

 

7.4                                 Development
Milestones.

 

7.4.1                        Development
Milestone Payments.  With respect to
each (i) Collaboration Target, and (ii) Kinase to which an Other Biogen Idec
Product is directed (a “Milestone Target”), Biogen Idec shall pay to Sunesis on
a Target-by-Target basis the following amounts within thirty (30) days
following the first achievement by Biogen Idec, its Affiliates or Sublicensees,
as the case may be, of each of the following milestones with respect to (i) a
Collaboration Compound that is Target Selective against such Milestone Target,
or (ii) a Product or Other Biogen Idec Product (excluding for purposes hereof
any Non-Kinase Other Biogen Idec Product) incorporating such Collaboration
Compound (a “Milestone Compound”):

 

	
   

  	
   

  	
  Payment
  Amount

  
	
  Development Milestones

  	
   

  	
  

  1st Indication

  	
   

  	
  

  2nd Indication

  
	
  1.

  	
  Initiation of the first
  Phase I trial for such Milestone Compound in any country:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Initiation of the first
  Phase II trial for such Milestone Compound in any country:

  	
   

  	
  [*]

  	
   

  	
  $

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Initiation of the first
  Phase III trial for such Milestone Compound in any country:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Filing of a NDA in the
  U.S. for such Milestone Compound:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Filing of an NDA with
  EMEA for such Milestone Compound:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Filing of a NDA in
  Japan for such Milestone Compound:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Regulatory Approval in
  the U.S. of such Milestone Compound:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Regulatory Approval by
  EMEA of such Milestone Compound:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Regulatory Approval in
  Japan of such Milestone Compound:

  	
   

  	
  $

  	
  [*]

  	
   

  	
  $

  	
  [*]

  

 

Such milestone payments
shall be non-refundable and non-creditable against other amounts due Sunesis
hereunder.

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

39

 

7.4.2                        Certain
Additional Terms.

 

(a)                                  Target-by-Target
Milestones.  It is understood that,
subject to Section 7.4.2(b), the payments under this Section 7.4 shall be due
only once with respect to each Milestone Target.

 

(b)                                 Multiple
Indications.  With respect to a
particular Milestone Target, if any Milestone Compound specifically directed at
such Milestone Target is developed for a second Indication in a separate
disease, it is understood that the payments for Development Milestones 2
through 9 will become due and payable at the time such Milestone Compound
achieves such Development Milestone for such second Indication; provided, that
the amounts due above for such second Indication will be the lower amounts
reflected for such Indications in the right most column of the table under
Section 7.4.1 above.  As used herein “Indication”
shall mean a disease or condition for which approval for use of a Milestone
Compound can be sought from the FDA or a regulatory authority or agency of a
country other than the United States with responsibilities comparable to those
of the FDA.  Notwithstanding the
foregoing, varying forms or degrees of severity of the same disease shall be
considered the same Indication, even if they require separate approvals from
the FDA or other regulatory authority or agency.  For the avoidance of doubt, in the field of
cancer, different tumor tissue types shall be considered different
Indications.  Notwithstanding anything
else in this Section 7.4, in the event that both the first and second
Indication for which Development Milestone 2 was achieved with respect to a
particular Milestone Target (or deemed to be achieved pursuant to 7.4.2(d)) are
cancer Indications, Biogen Idec shall not be required to pay to Sunesis
Development Milestone 2 for the second Indication with respect to such
Milestone Target as set forth in Section 7.4.1, provided that Biogen Idec shall
thereafter pay Development Milestones 3 through 9 upon achievement of the
relevant Development Milestone with respect to such Indication and such
Milestone Target.

 

(c)                                  Discontinued
Compounds.  If Biogen Idec ceases all
clinical development of a particular Milestone Compound that is specifically
directed at a particular Milestone Target, after having made one or more of the
payments due under Section 7.4.1 above on the achievement of a particular
milestone by such Milestone Compound, there shall be no payment due upon the
accomplishment of that same milestone with respect to the next Milestone
Compound that is specifically directed at the same Milestone Target to achieve
such milestone.

 

(d)                                 Accrued
Milestones.  If a research milestone
for a Milestone Target under Section 7.3 above is achieved with respect to
such Milestone Target, or a development milestone for a Milestone Compound
under Section 7.4.1 above is achieved with respect to such Milestone
Compound, in each case before a prior research milestone under Section 7.3
or a prior development milestone under Section 7.4.1 for such Milestone
Target or Milestone Compound, respectively, then the earlier milestone payments
shall then also be due with respect to such Milestone Target or Milestone
Compound, as the case may be.

 

7.4.3                        Reports;
Payments.  Within ten (10) business
days of the occurrence of any event which would trigger a milestone payment
according to Section 7.3 or 7.4, Biogen Idec shall inform Sunesis of such
occurrence.  The corresponding payment
shall be due thirty (30) days after the occurrence of such event.

 

40

 

7.5                                 Royalties
on annual Net Sales of Products.

 

7.5.1                        Products
Generally.  Subject to Section 7.5.2
and 7.5.3, Biogen Idec shall pay to Sunesis a royalty on Net Sales by Biogen
Idec, its Affiliates and their Sublicensees of Products (other than Net Sales
of Co-Funded Products in the Co-Funded Territory) and Other Biogen Idec
Products (excluding for purposes hereof Net Sales of any Non-Kinase Other
Biogen Idec Product), (“Royalty Products”), on a Royalty Product-by-Royalty
Product basis, equal to the percentage of such Net Sales set forth below:

 

 

	
  Annual Net Sales

  	
   

  	
  Royalty
  on Net Sales

  
	
  Portion of
  Annual Net Sales of such Royalty Product up to $[*]:

  	
   

  	
  [*]%

  
	
   

  	
   

  	
   

  
	
  Portion of Annual Net
  Sales of such Royalty Product between $[*] and $[*]:

  	
   

  	
  [*]%

  
	
   

  	
   

  	
   

  
	
  Portion of Annual Net
  Sales of such Royalty Product between $[*] and $[*]:

  	
   

  	
  [*]%

  
	
   

  	
   

  	
   

  
	
  Portion of Annual Net
  Sales of such Royalty Product over $[*]:

  	
   

  	
  [*]%

  

 

For purposes of the
foregoing and Section 7.5.2 below, “annual Net Sales” shall mean, for a
particular Product, the worldwide Net Sales of such Product for the particular
calendar year.  In the event that in a calendar
quarter portions of the worldwide Net Sales of a particular Product are subject
to royalty obligations under both Sections 7.5.1 and 7.5.2, the applicable
royalty rate under Section 7.5.2 shall be applied to worldwide Net Sales based
on the proportion of worldwide Net Sales generated in the Co-Funded Territory.

 

7.5.2                        Co-Funded
Products.

 

(a)                                  Subject
to Section 7.5.2(b) and 7.5.2(c) and 7.5.3, Biogen Idec shall pay to Sunesis a
royalty on annual Net Sales by Biogen Idec, its Affiliates and their Sublicensees
of Co-Funded Products in the Co-Funded Territory, on a Co-Funded
Product-by-Co-Funded Product basis, equal to the percentage of such Net Sales
set forth below:

 

	
  Annual Net Sales

  	
   

  	
  Royalty on Net Sales

  
	
  Portion of
  Annual Net Sales of such Co-Funded Product up to $[*]:

  	
   

  	
  [*]%

  
	
   

  	
   

  	
   

  
	
  Portion of Annual Net
  Sales of such Co-Funded Product between $[*] and $[*]:

  	
   

  	
  [*]%

  
	
   

  	
   

  	
   

  
	
  Portion of Annual Net
  Sales of such Co-Funded Product between $[*] and $[*]:

  	
   

  	
  [*]%

  
	
   

  	
   

  	
   

  
	
  Portion of Annual Net
  Sales of such Co-Funded Product over $[*]:

  	
   

  	
  [*]%

  

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission.  Confidential
treatment has been requested with respect to the omitted portions.

 

41

 

(b)                                 Upon termination by Sunesis under
Section 3.2.3(c) of
its obligation to fund post Phase I Development Costs for any particular
Co-Funded Product, Biogen Idec shall pay the royalty rate under
Section 7.5.1 with respect to Net Sales of the terminated Co-Funded
Product, except as set forth in this Section 7.5.2(b).  In the event that Sunesis’ termination of its
co-funding obligations with respect to a particular Co-Funded Product
followed a material change in the Co-Development Plan and Budget for such Co-Funded
Product or activities thereunder (as defined in this Section 7.5.2(b)) from the
Initial Development Plan, then notwithstanding the foregoing, Biogen Idec shall
pay the royalty rate under Section 7.5.2(a) above with respect to Net
Sales of the terminated Co-Funded Product until such time as (i) the amount by
which (A) the cumulative royalties paid under this Section 7.5.2 for such
Co-Funded Product after
the date of Sunesis’ termination of its co-funding obligations with
respect to such Co-Funded Product exceeds (B) the cumulative royalties for Net
Sales of such Co-Funded Product that would have otherwise been payable during
such period under Section 7.5.1, equals (ii) the amount paid by Sunesis to
Biogen Idec for post Phase I Development Costs for such Co-Funded Product prior
to the effective date of the termination. 
Thereafter, Biogen Idec shall pay royalties on Net Sales of such Co-Funded
Product according to Section 7.5.1.  For the purposes of
the foregoing, a “material change in the Co-Development Plan and Budget
for such Co-Funded Product or activities thereunder” shall mean: a material
change in the indication for which Regulatory Approval will be sought, which
results in a material change in the number or size of the trials for such
Regulatory Approval, which results in an increase of fifty percent (50%) or
more in the post Phase I Development Costs budgeted in the then-current
Co-Development Plan and Budget for a particular calendar year, relative to
those post Phase I Development Costs set forth in the Initial Development Plan
for that calendar year.

 

(c)                                  Upon
a [*] by Sunesis under
Section 3.2.3(d) of
its Co-Funding Percentage with respect to any particular Co-Funded
Product, Biogen Idec shall pay a  royalty
rate equal to the royalty rate under Section 7.5.2(a) [*] the applicable
royalty [*] set forth below with respect to Net Sales of the [*] Co-Funded
Product [*] of royalties otherwise specified in this Section 7.5.2.

 

	
  [*] Co-Funding Percentage

  	
   

  	
  Royalty [*] From Section 7.5.2(a)

  
	
  [*]%

  	
   

  	
  [*]%

  
	
  [*]%

  	
   

  	
  [*]%

  

 

For example, in the event that Sunesis [*] its
Co-Funding Percentage from [*] percent ([*]%) to [*] percent ([*]%), then the [*]
royalty rates set forth in Section 7.5.2(a) above (i.e. [*]%, [*]%, [*]% and [*]%
for their respective ranges of Annual Net Sales) would each be [*] by [*]%
(i.e. to [*]%, [*]%, [*]% and [*]%, respectively).

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

42

 

7.5.3                        Third
Party Patents.

 

(a)                                  If:
(i) a Valid Claim of a Third Party should be in force in any country during the
Term of this Agreement covering the practice of the Sunesis Core Technology,
Licensed Pre-Existing Technology, Sunesis Collaboration Technology or Joint
Collaboration Technology as licensed to Biogen Idec under Section 6.2.1 or
Section 6.3.1 with respect to the manufacture, use or sale of any Collaboration
Compound, (ii) it should prove in Biogen Idec’s reasonable judgment, after
consultation with Sunesis, impractical or impossible for Biogen Idec to
commercialize such Collaboration Compound without obtaining a royalty bearing
license from such Third Party under such Valid Claim in said country (with such
agreement not to be unreasonably withheld or delayed), and (iii) the royalty
paid to such Third Party is directed to the practice of rights granted to
Biogen Idec under Section 6.2.1 or Section 6.3.1 with respect to such
Collaboration Compound, then Biogen Idec shall be entitled to a credit against
the royalty payments due under Section 7.5 with respect to the same
Collaboration Compound in such country of an amount equal to [*] percent ([*]%)
of the royalty paid to such Third Party for such Collaboration Compound in such
country, arising from the practice of such Sunesis Core Technology, Licensed
Pre-Existing Technology, Sunesis Collaboration Technology or Joint
Collaboration Technology with respect to the manufacture, use or sale of the
Collaboration Compound in said country, with such credit not to exceed [*] percent
([*]%) of the royalty otherwise due under this Agreement for such Collaboration
Compound in such country.

 

(b)                                 If:
(i) a Valid Claim of a Third Party should be in force in any country during the
Term of this Agreement covering the practice of (A) the Joint Collaboration
Technology as licensed to Sunesis under Section 6.3.2, or (B) the Biogen Idec
Collaboration Technology, Joint Collaboration Technology or other intellectual
property rights in existence and owned or controlled by Biogen Idec licensed to
Sunesis under Section 6.2.4, in each case with respect to the manufacture, use
or sale of any Collaboration Compound, (ii) it should prove in Sunesis’
reasonable judgment, after consultation with Biogen Idec, impractical or
impossible for Sunesis to commercialize such Collaboration Compound without
obtaining a royalty bearing license from such Third Party under such Valid
Claim in said country (with such agreement not to be unreasonably withheld or
delayed), and (iii) the royalty paid to such Third Party is directed to the
practice of rights granted to Sunesis under Section 6.2.4 or Section 6.3.2 with
respect to such Collaboration Compound, then Sunesis shall be entitled to a
credit against the royalty payments due under Section 7.5 or 7.6 with respect
to the same Collaboration Compound in such country of an amount equal to [*] percent
([*]%) of the royalty paid to such Third Party for such Collaboration Compound
in such country, arising from the practice of the intellectual property
described in (A) or (B) above with respect to the manufacture, use or sale of
the Collaboration Compound in said country, with such credit not to exceed [*] percent
([*]%) of the royalty otherwise due under this Agreement for such Collaboration
Compound in such country.

 

7.6                                 Royalties
on Net Sales of Sunesis Products and Non-Kinase Other Biogen Idec Products.

 

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

43

 

7.6.1                        Other
Biogen Idec Products.  Biogen Idec
shall pay to Sunesis a royalty equal to [*] percent ([*]%) of Net Sales by
Biogen Idec, its Affiliates and their Sublicensees of Non-Kinase Other Biogen
Idec Products, provided that this Section 7.6.1 shall not apply to Net Sales of
Kinase Other Biogen Idec Products, which Net Sales shall be governed by Section
7.5.1 above.

 

7.6.2                        Sunesis
Products.

 

(a)                                  Sunesis
shall pay Biogen Idec at a royalty rate equal to the royalty rate provided
under Section 7.5.1with respect to Net Sales of Reverted Products by Sunesis,
its Affiliates and their Sublicensees.

 

(b)                                 Subject
to Section 7.6.2(a) above, Sunesis shall pay to Biogen Idec a royalty equal to [*]
percent ([*]%) of Net Sales of Sunesis Products by Sunesis, its Affiliates and
their Sublicensees.

 

7.7                                 Royalty
Term.  The royalties due pursuant to
Section 7.5 and Section 7.6 above shall be payable on a country-by-country
and product-by-product basis commencing on the first commercial sale in a
country and continuing until the later of: (i) the expiration of the last
Valid Claim of the Sunesis Core Technology, the Licensed Pre-Existing Patents
or the Joint Collaboration Patents covering the sale or use of such Product,
Sunesis Product, or Other Biogen Idec Product, as applicable, in such country,
or (ii) the tenth (10th) anniversary of the first commercial
sale of such product in such country.

 

ARTICLE
8

PAYMENTS, BOOKS AND RECORDS

 

8.1                                 Royalty
Reports and Payments.  After the
first sale of a product on which royalties are payable by a Party hereunder, such
Party shall make quarterly written reports to the other Party within sixty (60)
days after the end of each calendar quarter, stating in each such report,
separately the number, description, and aggregate Net Sales, by territory, of
each such Product,  Other Biogen Idec
Product or Sunesis Product sold during the calendar quarter upon which a
royalty is payable under Section 7.5 or Section 7.6 above, as
applicable.  Concurrently with the making
of such reports, such Party shall pay to the other Party royalties due at the
rates specified in Section 7.5 or Section 7.6 above, as applicable.

 

8.2                                 Payment
Method.  All payments due under this
Agreement shall be made by bank wire transfer in immediately available funds to
a bank account designated by the Party owed such payment.  All payments hereunder shall be made in U.S.
dollars.  Any payments that are not paid
on the date such payments are due under this Agreement shall bear interest to
the extent permitted by applicable law at a rate equal to the 3-month LIBOR
rate at the close of business on the date such payment is due, plus an
additional two percent (2%), calculated on the number of days such payment is
delinquent.

 

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

44

 

8.3                                 Place
of Royalty Payment; Currency Conversion. 
The functional currency for accounting will be U.S. dollars.  Except as the Parties otherwise mutually
agree, for billing and reporting, Development Costs and Net Sales will be
translated, if necessary, into U.S. dollars using the currency exchange rates
quoted by Bloomberg Professional, a service of
Bloomberg L.P., or in the event Bloomberg Professional
is not available, then the Eastern U.S. edition of The Wall
Street Journal on the last business day of the applicable calendar
quarter.

 

8.4                                 Records;
Inspection.  Each Party shall keep,
and shall ensure that its Affiliates keep, complete, true and accurate books of
account and records for the purpose of determining the amounts payable under
this Agreement.  Such books and records
shall be kept at the principal place of business of such Party, for at least
three (3) years following the end of the calendar quarter to which they
pertain.  Such records will be open for
inspection by a public accounting firm to whom the audited Party has no
reasonable objection and subject to such accounting firm entering into a
satisfactory confidentiality agreement, solely for the purpose of determining
the payments to the other Party hereunder. 
Such inspections may be made no more than twice each calendar year, at
reasonable times and on reasonable notice. 
Inspections conducted under this Section 8.4 shall be at the
expense of the auditing Party, unless a variation or error producing an
increase exceeding [*] percent ([*]%) of the amount stated for the period
covered by the inspection is established in the course of any such inspection,
whereupon all reasonable costs relating to the inspection for such period and
any unpaid or overpaid amounts that are discovered will be promptly paid or
refunded by the appropriate Party, in each case together with interest noted in
Section 8.2 thereon from the date such payments were due (if underpaid) or paid
(if overpaid) .

 

8.5                                 Withholding
Taxes.  Each Party shall pay any and
all taxes levied on account of amounts payable to it under this Agreement.  If laws or regulations require that taxes be
withheld, the paying Party will (i) deduct those taxes from the remittable
payment, (ii) timely pay the taxes to the proper authority, and (iii) send
proof of payment to the other Party within sixty (60) days following that
payment.

 

ARTICLE
9

DILIGENCE

 

9.1                                 Diligence;
Reports.  Biogen Idec shall use
Commercially Reasonable and Diligent Efforts to develop and commercialize
Co-Funded Products within the Field. 
Biogen Idec agrees to keep Sunesis fully informed regarding all
Co-Funded Development Plans and the research, development and commercialization
activities with respect to each Co-Funded Product, including by providing
Sunesis with reports at least quarterly regarding ongoing activities being
undertaken with respect to Co-Funded Products. 
This Section 9.1 shall not limit other provisions of this Agreement that
address the provision of information regarding Products.

 

9.2                                 Reversion
of a Co-Funded Product. If Biogen Idec fails to use Commercially Reasonable
and Diligent Efforts to develop and commercialize a Co-Funded Product, and
Biogen Idec shall continue to fail to use Commercially Reasonable and Diligent
Efforts to

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

45

 

develop and commercialize
such Co-Funded Product for sixty (60) days after written notice thereof from
Sunesis, then such Co-Funded Product shall become a Reverted Product.

 

9.3                                 Diligence
for a Reverted Product.  Sunesis
shall use Commercially Reasonable and Diligent Efforts to develop and
commercialize each Reverted Product. 
Sunesis agrees to keep Biogen Idec fully informed regarding the
development and commercialization activities with respect to each Reverted
Product, including by providing Biogen Idec with reports at least quarterly
regarding ongoing activities being undertaken with respect to Reverted
Products.

 

9.4                                 Termination
of a Reverted Product.  If Sunesis
fails to use Commercially Reasonable and Diligent Efforts to develop and
commercialize a Reverted Product, and Sunesis shall continue to fail to use
Commercially Reasonable and Diligent Efforts to develop and commercialize such
Reverted Product for sixty (60) days after written notice thereof from Biogen
Idec, then such Reverted Product shall cease to be a Reverted Product, and the
licenses granted to Sunesis under Section 6.2.4 shall terminate with respect to
Terminated Compounds incorporated in such Reverted Product.  Thereafter, such Terminated Compounds shall
be Target Selective Compounds and subject to Biogen Idec’s licenses under
Section 6.2 and obligations to pay royalties and milestones to Sunesis pursuant
to Article 7.  In addition, the terms set
forth in Section 2 of Exhibit 3.5 shall apply to such Reverted Product.

 

ARTICLE
10

INTELLECTUAL PROPERTY

 

10.1                           Ownership;
Disclosure.

 

10.1.1                  Collaboration
Technology.

 

(a)                                  Raf/[*]
Technology.  All right, title and
interest in and to Joint Collaboration Patents consisting of or directed to the
Raf/[*] Target (the “Raf/[*] Patents”) shall, as between the Parties, be solely
owned by Sunesis.  Biogen Idec shall
assign and hereby assigns to Sunesis all right, title and interest in and to
the Raf/[*] Patents, subject to the licenses granted to Biogen Idec under
Article 6.

 

(b)                                 Ownership
of Compounds.  All Synthesized
Compounds and Collaboration Derivatives that are included in Joint
Collaboration Know-How shall be jointly owned by the Parties, subject to the
licenses granted under Article 6. 
However, ownership of any patents, patent applications and other
intellectual property rights with respect to such compounds and other inventions
made in the course of the Research Program shall be as otherwise set forth in
this Section 10.1.

 

(c)                                  Sunesis
Collaboration Technology.  All right,
title, and interest in and to the Sunesis Collaboration Technology shall be
owned by Sunesis, subject to the licenses granted to Biogen Idec under Article
6.

 

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

46

 

(d)                                 Biogen
Idec Collaboration Technology.  All
right, title, and interest in and to the Biogen Idec Collaboration Technology
shall be owned by Biogen Idec, subject to the licenses granted to Sunesis under
Article 6.

 

(e)                                  All
Joint Collaboration Technology.   All
right, title and interest in and to (i) the Joint Collaboration Patents other
than the Raf/[*] Patents, and (ii) the Joint Collaboration Know-How shall be
jointly owned by the Parties.  Biogen
Idec shall assign and hereby assigns to Sunesis a joint ownership interest in
and to the Joint Collaboration Patents and the Joint Collaboration
Know-How.  Sunesis shall assign and
hereby assigns to Biogen Idec a joint ownership interest in and to the Joint
Collaboration Patents and the Joint Collaboration Know-How.  Except as expressly provided in this
Agreement, neither Party shall have any obligation to account to the other for
profits, or to obtain any approval of the other Party to license, exploit or
enforce the Joint Collaboration Technology, by reason of joint ownership
thereof, and each Party hereby waives any right it may have under the laws of
any jurisdiction to require any accounting or consent related thereto.  It is understood and agreed that all Joint
Collaboration Technology that is jointly owned pursuant to this Section
10.1.1(e) shall be subject to the licenses granted under Article 6.

 

10.1.2                  Sunesis
Core Technology.  All right, title
and interest in and to the Sunesis Core Technology, and in any improvements to
Sunesis Core Technology (i) made using or derived from Sunesis Core Technology,
and (ii) made by or under authority of either Party or its Affiliates during
the Term of this Agreement, shall, as between the Parties, be owned solely by
Sunesis.  Biogen Idec hereby assigns to
Sunesis all of its and its Affiliates rights in and to such inventions and
improvements made using or derived from Sunesis Core Technology (including all
patent and other intellectual property rights therein), subject to the licenses
granted to Biogen Idec under Article 6.

 

10.1.3                  Licensed
Pre-Existing Technology. All right, title and interest in and to the
Licensed Pre-Existing Technology shall, as between the Parties, remain owned
solely by Sunesis, subject to the licenses granted to Biogen Idec under
Article 6.

 

10.1.4                  Disclosure.  Each Party shall promptly disclose to the
other, all inventions relating to Sunesis Collaboration Technology, Joint
Collaboration Technology and Sunesis Core Technology conceived or reduced to
practice (provided that such conception takes place after the Effective Date)
in connection with this Agreement prior to the third (3rd)
anniversary of the end of the Research Term.

 

10.2                           Patent
Prosecution.

 

10.2.1                  Sunesis
Core Technology and Raf/[*] Patents. 
Sunesis shall have the right to control the preparation, filing,
prosecution and maintenance of the Raf/[*] Patents, Licensed Pre-Existing
Patents and patent applications and patents directed to Sunesis Core Technology
using patent counsel of Sunesis’ choice, provided that such decisions made by
Sunesis in the preparation, filing, prosecution, and maintenance of such
patents and patent applications shall be

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission.  Confidential
treatment has been requested with respect to the omitted portions.

 

47

 

reasonable and Sunesis
shall employ reasonable efforts not to substantially negatively impact Biogen
Idec’s rights hereunder.

 

10.2.2                  Collaboration
Patents.  All preparation, filing,
prosecution and maintenance of Collaboration Patents shall be governed by this
Section 10.2.2.  Biogen Idec and Sunesis
shall establish a joint patent committee (the “Joint Patent Committee”) to (i)
select patent counsel mutually agreeable to both Parties (the “Joint Patent
Counsel”) to prepare, file, prosecute and maintain the Collaboration Patents,
and (ii) to control the filing, prosecution, and maintenance of Collaboration
Patents. The Joint Patent Committee shall ensure that the Joint Patent Counsel
keeps both Parties fully informed as to prosecution activities assigned to the
Joint Patent Counsel.  The Joint Patent
Committee shall include one (1) representative from each of Biogen Idec and Sunesis.  Sunesis and Biogen Idec may each replace its
Joint Patent Committee representative at any time, upon written notice to the
other Party.  During the Term of this
Agreement, the Joint Patent Committee shall meet at least annually (such
meetings may be telephonic), or more frequently as reasonably requested by
either Party from time to time, at such locations as the Parties agree, and
will otherwise communicate regularly by telephone, electronic mail, facsimile
and/or video conference.  With the
consent of the Parties, other representatives of Sunesis or Biogen Idec may
attend the Joint Patent Committee meetings as nonvoting observers.  Each Party shall be responsible for all of
its own expenses associated with attendance of such meetings.  Decisions of the Joint Patent Committee shall
be made by unanimous approval of the members present in person or by other
means (e.g., teleconference) at any meeting; provided that at least one member
from each Party must be so present and voting. 
In the event the Parties cannot reach unanimous agreement on a matter
relating to prosecution relating to the Biogen Idec and Joint Collaboration
Patents under this Section 10.2.2, Biogen Idec shall have final decision making
authority; provided such decision is reasonable and does not substantially
negatively impact Sunesis’ rights hereunder. 
On the other hand, in the event the Parties cannot reach unanimous
agreement on a matter relating to prosecution relating to the Sunesis
Collaboration Patents under this Section 10.2.2, Sunesis shall have final
decision making authority; provided such decision is reasonable and does not
substantially negatively impact Biogen Idec’s rights hereunder.  As used herein, “prosecution” shall include
interferences, re-examinations, reissues, oppositions and the like.

 

10.2.3                  Prosecution
Costs.  During the Term of this
Agreement, all costs associated with filing, prosecuting, issuing and
maintaining (i) the Raf/[*] Patents, the Sunesis Collaboration Patents, the
Licensed Pre-Existing Patents and patent applications and patents within the
Sunesis Core Technology shall be borne by Sunesis; and (ii) the Biogen Idec
Collaboration Patents and Joint Collaboration Patents shall be borne by Biogen
Idec.

 

10.2.4                  Cooperation.  Each Party will cooperate fully with the
other Party and provide all information and data, and sign any documents,
reasonably necessary and requested by the other Party for the purpose of
preparing, filing and prosecuting patent applications pursuant to this Section
10.2.

 

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

48

 

10.2.5                  Abandonment.  Either Party may elect to decline to file or,
having filed, decline to further prosecute and maintain or enforce any
Collaboration Patents for which they have been granted final decision making
authority under Section 10.2.2 above and to which the other Party has received
a license under the terms of this Agreement. 
In the event that a Party declines to file or, having filed, declines to
further prosecute and maintain or enforce any such pending patent rights, then
such abandoning Party shall provide the other Party with written notice thereof
prior to the expiration of any deadline, without considering any possible
extensions thereof, relating to such activities, but in any event at least
thirty five (35) business days prior notice. 
In such circumstances the non-abandoning Party shall have the right to
decide, with reason and with written notice at least thirty (30) business days
prior to the deadline, that such abandoning Party should continue to file or
prosecute such patent rights.  The abandoning
Party shall then have the option to decide, with at least twenty (20) business
days notice to the non-abandoning Party to: (i) continue to file or prosecute
or enforce such patent rights at its cost and expense, or (ii) allow the
non-abandoning Party to file or prosecute such patent rights at its own cost
and expense using counsel of its own choice. 
In the event that the abandoning Party elects option (ii), then the
abandoning Party shall cooperate with the other Party to promptly transfer
relevant prosecution materials to the other Party.  It is understood and agreed that transfer of
prosecution of particular patent rights pursuant to subsection (ii) above shall
not affect the ownership or licenses otherwise provided in this Agreement.

 

10.3                           Enforcement.

 

10.3.1                  Notice.          In
the event a Party becomes aware of any actual or potential infringement or
misappropriation of the Sunesis Collaboration Technology or Joint Collaboration
Technology (a “Subject Infringement”), such Party shall notify the other Party.

 

10.3.2                  Biogen
Idec.  Subject to the terms of this
Section 10.3.2, Biogen Idec shall have the sole right, but not the obligation,
to take legal action to enforce and defend the Sunesis Collaboration Technology
or Joint Collaboration Technology against Subject Infringements by Third
Parties at its sole cost and expense, to the extent such Subject Infringement
is within the field of use of Biogen Idec’s exclusive license under Section
6.2.1 or 6.3.2(b) above.  If, within six
(6) months following a request by Sunesis to do so, Biogen Idec fails to take
such action to enforce the Sunesis Collaboration Patents or Joint Collaboration
Patents with respect to a Subject Infringement, Sunesis or its designee shall,
in its sole discretion, have the right, at its sole expense, to take such
action.  In addition, Biogen Idec shall
have the sole right, but not the obligation, to take legal action to enforce
and defend any actual or potential infringement or misappropriation of the Biogen
Idec Collaboration Technology.

 

10.3.3                  Sunesis.  To the extent a Subject Infringement is not
covered by Section 10.3.2 above, Sunesis (or its designee) shall have the
initial right, but not the obligation, to take reasonable legal action to
enforce and defend the Sunesis Collaboration Technology or Joint Collaboration
Technology against such Subject Infringements by Third Parties at its sole cost
and expense.  If, within six (6) months
following a request by Biogen Idec to do so, Sunesis fails to take such action
to enforce the Sunesis Collaboration Patents or Joint Collaboration Patents
with respect to such Subject Infringement, and the Subject Infringement is in a
field not licensed exclusively to Sunesis hereunder, Biogen Idec or its
designee shall, in its sole discretion, have the right, at its sole expense, to
take such action.

 

49

 

10.3.4                  Cooperation;
Costs and Recoveries.  If a Party
(the “Controlling Party”) brings an action with respect to a Subject
Infringement in accordance with this Section 10.3.4 (an “Infringement
Action”), then the other Party (the “Cooperating Party”) shall cooperate as
reasonably requested, at such Controlling Party’s expense, in the pursuit of
such Infringement Action, including if necessary by joining as a nominal Party
to the Infringement Action.  In any case,
the Cooperating Party shall have the right, even if not required to be joined,
to participate in such Infringement Action with its own counsel at its own
expense.  The costs and expenses of the
Infringement Action shall be the responsibility of the Controlling Party, and
any damages or other monetary rewards or settlement payments actually received
and retained by the Controlling Party shall first be applied to reimburse the
Controlling Party’s out-of-pocket expenses directly attributed to the
Infringement Action, then the other Party’s out-of-pocket expenses directly
attributed to the Infringement Action, and the remainder shall be shared as
follows: [*] percent ([*]%) to the Controlling Party and [*] percent ([*]%) to
the other Party.

 

ARTICLE
11

CONFIDENTIALITY

 

11.1                           Confidentiality.
During the Term of this Agreement and for a period of five (5) years following
the expiration or earlier termination hereof, each Party shall maintain in
confidence the Confidential Information of the other Party, shall not use or
grant the use of the Confidential Information of the other Party except as
expressly permitted hereby, and shall not disclose the Confidential Information
of the other Party (in each case, irrespective of whether such Confidential
Information is also the Confidential Information of the receiving Party),
except (i) on a need-to-know basis to such Party’s directors, officers and
employees, (ii) to such Party’s consultants performing work contemplated by the
Agreement, and to any bona fide subcontractor performing work for such Party
hereunder, or (iii) to the extent such disclosure is reasonably necessary in
connection with such Party’s activities under rights and licenses expressly
authorized by this Agreement (including the permitted sublicensees).  To the extent that disclosure to any person
is authorized by this Agreement, prior to disclosure, a Party shall obtain
written agreement of such person to hold in confidence and not disclose, use or
grant the use of the Confidential Information of the other Party except as
expressly permitted under this Agreement. 
Each Party shall notify the other Party promptly upon discovery of any
unauthorized use or disclosure of the other Party’s Confidential Information.  Notwithstanding the foregoing, the exceptions
set forth in (i), (ii) and (iii) above shall apply to disclosure by Sunesis of
Confidential Information of Biogen Idec that is specifically related to an
Other Biogen Idec Target or a Collaboration Target (including without
limitation the identity of such Targets and any SAR data for such Targets that
are Confidential Information of such other Party) solely to the extent such
disclosure is necessary for Sunesis and its employees, consultants and
subcontractors to perform the Research Program as contemplated by the Research
Plan.  In addition, the exceptions set
forth in (i), (ii) and (iii) above shall not apply to disclosure by Biogen Idec
of Confidential Information of Sunesis that is specifically related to a
Sunesis Target.

 

11.2                           Permitted
Use and Disclosures.  The
confidentiality obligations under this Article 11 shall not apply to the
extent that a Party is required to disclose information by

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

50

 

applicable law,
regulation or order of a governmental agency or a court of competent
jurisdiction; provided, however, that such Party shall provide
written notice thereof to the other Party (to the extent not prohibited by law
or court order), and consult with the other Party with respect to such
disclosure to the extent reasonably protectable and provide the other party
reasonable opportunity to object to any such disclosure or to request
confidential treatment thereof. 
Notwithstanding the provisions of this Section, either Party may, to the
extent necessary, disclose Confidential Information of the other Party, to any
governmental or regulatory authority in connection with the development of a
product which it has the right to develop under this Agreement.

 

11.3                           Nondisclosure
of Terms.  Each of the Parties hereto
agrees not to disclose the financial terms of this Agreement to any Third Party
without the prior written consent of the other Party hereto, which consent
shall not be unreasonably withheld, except to such Party’s attorneys, advisors,
investors, potential bona fide collaborators and Sublicensees, and others on a
need to know basis under circumstances that reasonably protect the
confidentiality thereof, or to the extent required by law (and with appropriate
requests made for confidential treatment), including filings required to made
by law with the Securities and Exchange Commission, or any national securities
exchange.  Notwithstanding the foregoing,
prior to execution of this Agreement, the Parties have agreed upon the
substance of information that can be used to describe the terms and conditions
of this transaction, and each Party may disclose such information, as modified
by mutual written agreement of the Parties, without the consent of the other
Party.

 

11.4                           Publication.  Any manuscript by Sunesis or Biogen Idec on
subject matter in connection with the Research Program to be published or
publicly disclosed, shall be subject to the prior review of the other Party at
least thirty (30) days prior to submission. 
Further, to avoid loss of patent rights as a result of premature public
disclosure of patentable information, the receiving Party shall notify the
disclosing Party in writing within thirty (30) days after receipt of any
disclosure whether the receiving Party desires to file a patent application on
any invention disclosed in such scientific results.  In the event that the receiving Party desires
to file such a patent application, the disclosing Party shall withhold
publication or disclosure of such scientific results until the earlier of
(i) a patent application is filed thereon, (ii) the Parties determine
after consultation that no patentable invention exists, or (iii) ninety
(90) days after receipt by the disclosing Party of the receiving Party’s
written notice of the receiving Party’s desire to file such patent
application.  Further, if such scientific
results contain the information of the other Party that is subject to use and
nondisclosure restrictions under this Article 11, the publishing Party
agrees to remove such information from the proposed publication or
disclosure.  Following the filing of any
patent application within the Joint Collaboration Technology, in the period
prior to the publication of such a patent application, neither Party shall make
any written public disclosure regarding any invention claimed in such patent
application without the prior consent of the other Party.

 

ARTICLE
12

REPRESENTATIONS AND WARRANTIES

 

12.1                           Warranty.  Each Party represents and warrants on its own
behalf and on behalf of its Affiliates that:

 

51

 

(i)                                     Such
Party is duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized.

 

(ii)                                  It
has the legal power and authority to enter into this Agreement and to perform
all of its obligations hereunder.

 

(iii)                               This
Agreement is a legal and valid obligation binding upon it and enforceable in
accordance with its terms.

 

(iv)                              All
necessary consents, approvals and authorizations of all governmental
authorities and other persons or entities required to be obtained by such Party
in connection with this Agreement have been obtained.

 

(v)                                 The
execution and delivery of this Agreement and the performance of such Party’s
obligations hereunder (a) do not conflict with or violate any requirement
of applicable laws, regulations or orders of governmental bodies; and
(b) do not conflict with, or constitute a default under, any contractual
obligation of such Party.  Neither Party
will enter into any agreement with any Third Party that conflicts with the
terms of this Agreement.

 

12.2                           Additional
Warranty of Sunesis.  Sunesis
represents and warrants that, to the best of its knowledge as of the Effective
Date, the practice of the Sunesis Core Technology is not generally dominated by
patent rights of a Third Party.  As of
the Effective Date, Sunesis has not received any notice of infringement from
any Third Party relating to the Sunesis Core Technology or any notice
challenging the validity of the Sunesis Core Technology nor does Sunesis have
any knowledge of any infringement relating to any of the Sunesis Core
Technology. It is understood that Sunesis makes no representation or warranty
with respect to any patent rights of Third Parties relating to the
Collaboration Targets.

 

12.3                           Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN
THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY
KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE COLLABORATION TECHNOLOGY,
LICENSED PRE-EXISTING TECHNOLOGY, SUNESIS CORE TECHNOLOGY, COLLABORATION
COMPOUNDS, OTHER COMPOUNDS, OR CONFIDENTIAL INFORMATION, INCLUDING, BUT NOT
LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
VALIDITY OF ANY COLLABORATION TECHNOLOGY, PATENTED OR UNPATENTED, OR
NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

 

ARTICLE
13

INDEMNIFICATION

 

13.1                           Biogen
Idec.  Biogen Idec shall indemnify,
defend and hold harmless Sunesis and its Affiliates and their respective
directors, officers, employees, agents and their respective successors, heirs
and assigns from and against any losses, costs, claims, damages, liabilities or
expense (including reasonable attorneys’ and professional fees and other
expenses of litigation) (collectively, “Liabilities”) resulting from any
claims, demands, actions or other proceedings by

 

52

 

any Third Party to the
extent resulting from: (i) the manufacture, use, sale, handling or storage of
Products,  Co-Funded Products or Other
Biogen Idec Products by Biogen Idec or its Affiliates or Sublicensees or other
designees; (ii) the breach by Biogen Idec of the representations and
warranties made in this Agreement; or (iii) the negligence or intentional
misconduct of Biogen Idec or any of its agents or employees or failure of Biogen
Idec or any of its agents or employees to comply with applicable laws and
regulations; except, in each case, to the extent such Liabilities result from a
material breach of this Agreement by Sunesis, negligence or intentional
misconduct of Sunesis or any of its agents or employees (including sales
representatives involved in co-promoting any Co-Promoted Product) or failure of
Sunesis or any of its employees or agents to comply with applicable laws or
regulations.

 

13.2                           Sunesis.  Sunesis agrees to indemnify, defend and hold
harmless Biogen Idec and its Affiliates and their respective directors,
officers, employees, agents and their respective heirs and assigns from and
against any Liabilities resulting from any claims, demands, actions or other
proceedings by any Third Party to the extent resulting from: (i) the
manufacture, use, sale, handling or storage of Sunesis Products, Co-Promoted
Products or Reverted Products by Sunesis or its Affiliates or Sublicensees or
other designees, (ii) the breach by Sunesis of its representations and
warranties made in this Agreement, or (iii) the negligence or intentional
misconduct of Sunesis or any of its agents or employees or failure of Sunesis
or any of its agents or employees to comply with applicable laws and
regulations; except, in each case, to the extent such Liabilities result from a
breach of this Agreement by Biogen Idec, negligence or intentional misconduct
of Biogen Idec or any of its agents or employees (including sales
representatives involved in co-promoting any Co-Promoted Product) or failure of
Biogen Idec or any of its employees or agents to comply with applicable laws or
regulations.

 

13.3                           Procedure.  If a Party (the “Indemnitee”) intends to
claim indemnification under this Section 13, it shall promptly notify the
other Party (the “Indemnitor”) in writing of any claim, demand, action or other
proceeding for which the Indemnitee intends to claim such indemnification, and
the Indemnitor shall have the right to participate in, and, to the extent the
Indemnitor so desires, to assume the defense thereof with counsel mutually
satisfactory to the Parties; provided, however, that an Indemnitee shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the Indemnitor, if representation of such Indemnitee by the counsel retained by
the Indemnitor would be inappropriate due to actual or potential differing
interests between the Indemnitee and any other Party represented by such
counsel in such proceeding.  The
obligations of this Article 13 shall not apply to amounts paid in settlement of
any claim, demand, action or other proceeding if such settlement is effected
without the consent of the Indemnitor, which consent shall not be withheld or
delayed unreasonably.  The failure to
deliver written notice to the Indemnitor within a reasonable time after the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve the Indemnitor of any obligation to the Indemnitee under
this Article 13.  The Indemnitee, its
employees and agents, shall reasonably cooperate with the Indemnitor and its
legal representatives in the investigation of any claim, demand, action or
other proceeding covered by this Article 13.

 

53

 

ARTICLE
14

TERM AND TERMINATION

 

14.1                           Term.  The Term of this Agreement shall commence on
the Effective Date, and shall continue in full force and effect on a
country-by-country, Product-by-Product, Sunesis Product-by-Sunesis Product,
Other Biogen Idec Product-by-Other Biogen Idec Product and Reverted
Product-by-Reverted Product basis until expiration of both Parties’ royalty
payment obligations in such country with respect to such Products, Sunesis
Products, Other Biogen Idec Products or Reverted Products, as applicable, in
each case unless earlier terminated as provided in this Article 14 (the “Term”).

 

14.2                           Termination
for Breach.  Either Party to this
Agreement may terminate this Agreement in the event the other Party hereto
shall have materially breached or defaulted in the performance of any of its
material obligations hereunder, and such default shall have continued for
sixty (60) days after written notice thereof was provided to the breaching
Party by the non-breaching Party.  Any
termination shall become effective at the end of such sixty (60) day
period unless the breaching Party has cured any such breach or default prior to
the expiration of the sixty (60) day period.  Notwithstanding the foregoing, failure by
either Party to use Commercially Reasonable and Diligent Efforts with respect
to the development and commercialization of a Product, Other Biogen Idec
Product, Sunesis Product or Reverted Product shall not be deemed a breach of
this Agreement.

 

14.3                           Termination
For Bankruptcy.  Either Party hereto
shall have the right to terminate this Agreement forthwith by written notice to
the other Party (i) if the other Party is declared insolvent or bankrupt by a
court of competent jurisdiction, (ii) if a voluntary or involuntary petition in
bankruptcy is filed in any court of competent jurisdiction against the other
Party and such petition is not dismissed within ninety (90) days after filing,
(iii) if the other Party shall make or execute an assignment of substantially
all of its assets for the benefit of creditors, or (iv) substantially all of
the assets of such other Party are seized or attached and not released within
ninety (90) days thereafter.  All rights
and licenses granted under this Agreement by one Party to the other Party are,
and shall otherwise be deemed for purposes of Section 365(n) of the Bankruptcy
Code, licenses of rights to “intellectual property” as defined under Section
101 (56) of the Bankruptcy Code.  The
Parties agree that the licensing Party under this Agreement shall retain and
may fully exercise all of its rights and elections under the Bankruptcy Code in
the event of a bankruptcy by the other Party. 
The Parties further agree that in the event of the commencement of a
bankruptcy proceeding by or against one Party under the Bankruptcy Code, the
other Party shall be entitled to complete access to any such intellectual
property pertaining to the rights granted in the licenses hereunder of the
Party by or against whom a bankruptcy proceeding has been commenced and all
embodiments of such intellectual property.

 

14.4                           Termination
for Convenience by Biogen Idec. 
Provided that Biogen Idec is not in breach of this Agreement, Biogen
Idec will have the right to terminate this Agreement at any time, subject to
the following:

 

14.4.1                  At
any time prior to the second (2nd) anniversary of the Effective
Date, Biogen Idec will have the right to terminate this Agreement (i) by
providing Sunesis written

 

54

 

notice at least six (6)
months in advance, or (ii) immediately upon providing Sunesis written notice
and payment to Sunesis of a termination fee equal to [*] U.S. Dollars ($[*]).

 

14.4.2                  Beginning
on the second (2nd) anniversary of the Effective Date, Biogen Idec
will have the right to terminate this Agreement by providing Sunesis written
notice at least ninety (90) days in advance. 
It is understood that notice may not be given under this Section 14.4.2
prior to the second (2nd) anniversary of the Effective Date.

 

14.5                           Effect
of Breach or Termination.

 

14.5.1                  Accrued
Rights and Obligations.  Termination
of this Agreement for any reason shall not release either Party hereto from any
liability which, at the time of such termination, has already accrued to the
other Party or which is attributable to a period prior to such termination nor
preclude either Party from pursuing any rights and remedies it may have
hereunder or at law or in equity with respect to any breach of this Agreement.

 

14.5.2                  Termination
by Biogen Idec for Breach or Bankruptcy of Sunesis.  In the event of termination of this Agreement
by Biogen Idec pursuant to Section 14.2 due to Sunesis’ breach or by Biogen
Idec pursuant to Section 14.3 for Sunesis’ bankruptcy, in addition to those
provisions surviving under Section 14.8, the following shall apply:

 

(a)          Sections 2.8.2 (Research
Records); 2.8.3 (Inspections) (but only with respect to Biogen Idec’s rights
and Sunesis’ obligations); 6.2.4 (Reverted Products) (but only with respect to
Reverted Products in existence as of the effective date of such termination);
7.3 (Research Milestones); 7.4 (Development Milestones); 7.5 (Royalties on
Annual Net Sales of Products); 7.6 (Royalties on Net Sales of Sunesis Products
and Non-Kinase Other Biogen Idec Products) (except that any royalties payable
by Biogen Idec under Sections 7.3, 7.4, 7.5, and 7.6, commencing upon such
termination and continuing thereafter, shall be reduced by fifty percent
(50%)); 7.7 (Royalty Term); Article 10 (Intellectual Property)(other than
Sections 10.1.4, 10.2.2 and 10.2.3, which shall terminate); and Exhibit 3.5
(Reverted Products) (but only with respect to Reverted Products in existence as
of the effective date of such termination) shall survive.

 

(b)         Biogen Idec shall control
prosecution of the all Collaboration Patents (including Sunesis, Biogen Idec
and Joint) at its own expense.  Sunesis
shall be given the opportunity to review Biogen Idec’s activities and
reasonably consult with Biogen Idec with respect to Sunesis Collaboration
Patents and Joint Collaboration Patents, and Biogen Idec shall in good faith
consider including in such patent applications such claims as Sunesis
reasonably requests.  Biogen Idec shall
keep Sunesis reasonably informed as to the status of such patent matters,
including without limitation by providing Sunesis with (i) copies of any
documents relating to Sunesis Collaboration Patents and Joint Collaboration
Patents which Biogen Idec receives from any patent office within twenty (20)
days of receipt thereof, including notice of all interferences, reissues, reexaminations,
oppositions or requests for patent term extensions, and (ii) the opportunity to
review and comment on any documents relating to Sunesis Collaboration Patents
and Joint Collaboration Patents which will be filed in any patent office as
soon

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

55

 

practicable but in all
cases at least twenty (20) days prior to such filing.  All costs associated with filing,
prosecuting, issuing and maintaining the Licensed Pre-Existing Patents and
patent applications and patents within the Sunesis Core Technology shall be
borne by Sunesis.  In conducting the
prosecution activities described in this Section 14.5.2(b), each Party shall
employ reasonable efforts not to substantially negatively impact the other
Party’s rights under the surviving provisions of this Agreement.

 

(c)          Sunesis’ rights and
obligations under Section 3.2.3 shall survive with respect to Co-Funded
Products for which Sunesis has exercised its Co-Funding Option prior to such
termination, and Biogen Idec shall pay royalties on any such Co-Funded Products
in accordance with Section 7.5.2.  Biogen
Idec shall no longer be obligated to provide the detailed plans required of a
Co-Development Plan and Budget to Sunesis, but shall provide Sunesis with
annual budgets of post Phase I Development Costs for any such Co-Funded
Products.  Sunesis’ Co-Funding Option
with respect to future Products shall terminate, as will Article 4, as well as
Sunesis’ right to participate in the JDC under Section 5.4 and any Product
Teams under Section 3.3.

 

14.5.3                  Termination
by Sunesis for Breach or Bankruptcy of Biogen Idec.  In the event of termination of this Agreement
by Sunesis pursuant to Section 14.2 due to Biogen Idec’s breach or by Sunesis
pursuant to Section 14.3 for Biogen Idec’s bankruptcy, in addition to those
provisions surviving under Section 14.8, the following shall apply:

 

(a)          Sections 2.8.2 (Research
Records); 2.8.3 (Inspections)(but only with respect to Sunesis’ rights and
Biogen Idec’s obligations); 3.5 (Reverted Products); 6.2.4 (Reverted Products);
7.3 (Research Milestones); 7.4 (Development Milestones); 7.5 (Royalties on
Annual Net Sales of Products); 7.6 (Royalties on Net Sales of Sunesis Products
and Other Biogen Idec Products); (except that any royalties payable by Sunesis
under Sections 7.5 and 7.6, commencing upon such termination and continuing
thereafter, shall be reduced by fifty percent (50%)); 7.7 (Royalty Term);
Article 9 (Diligence); Article 10 (Intellectual Property)(other than Sections
10.1.4, 10.2.2 and 10.2.3, which shall terminate); and Exhibit 3.5 (Reverted
Products) shall survive.

 

(b)         Biogen Idec shall control
prosecution of the all Biogen Idec Collaboration Patents and Joint
Collaboration Patents at its own expense. 
Sunesis shall control prosecution of all Sunesis Collaboration Patents
at its own expense.  Sunesis shall be
given the opportunity to review Biogen Idec’s activities and reasonably consult
with Biogen Idec with respect to Sunesis Collaboration Patents and Joint
Collaboration Patents, and Biogen Idec shall in good faith consider including
in such patent applications such claims as Sunesis reasonably requests.  Biogen Idec shall keep Sunesis reasonably
informed as to the status of such patent matters, including without limitation
by providing Sunesis with (i) copies of any documents relating to Sunesis
Collaboration Patents and Joint Collaboration Patents which Biogen Idec
receives from any patent office within twenty (20) days of receipt thereof,
including notice of all interferences, reissues, reexaminations, oppositions or
requests for patent term extensions, and (ii) the opportunity to review and
comment on any documents relating to Sunesis Collaboration Patents and Joint
Collaboration Patents which will be filed in any patent office as soon
practicable but in all cases at least twenty (20) days prior to such
filing.  All costs associated with
filing, prosecuting, issuing and maintaining the Licensed Pre-Existing Patents
and patent

 

56

 

applications and patents
within the Sunesis Core Technology shall be borne by Sunesis.  In conducting the prosecution activities
described in this Section 14.5.3(b), each Party shall employ reasonable efforts
not to substantially negatively impact the other Party’s rights under the
surviving provisions of this Agreement.

 

(c)          Biogen Idec’s rights
with respect to Co-Funded Products and the Co-Funded Option shall be as
follows:

 

(i)                                     With
respect to any Co-Funded Product for which Sunesis has exercised its Co-Funding
Option, and for which Biogen Idec has not obtained Regulatory Approval in any
territory in the Co-Funded Territory for such Co-Funded Product, in each case
as of the effective date of such termination, such Co-Funded Product shall
become a Reverted Product in accordance with Section 3.5 and Exhibit 3.5 and
Sunesis shall thereafter pay royalties to Biogen Idec on Net Sales of such
Reverted Product in accordance with Section 7.5.1.

 

(ii)                                  With
respect to any Co-Funded Product for which Sunesis has exercised its Co-Funding
Option, and for which Biogen Idec has obtained Regulatory Approval in any
territory in the Co-Funded Territory for such Co-Funded Product, in each case
as of the effective date of such termination, Sunesis’ rights and obligations
under Section 3.2.3 shall survive, and Biogen Idec shall pay royalties on any
such Co-Funded Products in accordance with Section 7.5.2.  Biogen Idec shall no longer be obligated to
provide the detailed plans required of a Co-Development Plan and Budget to
Sunesis, but shall provide Sunesis with annual budgets of post Phase I
Development Costs for any such Co-Funded Products.  Sunesis’ Co-Funding Option with respect to
future Products shall terminate, as will Article 4, as well as Sunesis’ right
to participate in the JDC under Section 5.4 and any Product Teams under Section
3.3.

 

(iii)                               Sunesis’
Co-Funding Option under Section 3.2 with respect to future Products shall
continue (i.e. with respect to Products that are not Co-Funded Products as of
the effective date of such termination), provided that Biogen Idec shall no
longer be obligated to provide for each Product the detailed plans and clinical
data required of an Initial Development Plan and Phase II Notice pursuant to
Section 3.2.1.  Biogen Idec shall,
however, provide Sunesis with annual budgets of post Phase I Development Costs
for such Co-Funded Product in accordance with the timetable for a Phase II
Notice set forth in Section 3.2.1, and shall provide reasonable cooperation to
Sunesis in evaluating such Product and the post Phase I Development Costs
related thereto, including consulting with Sunesis in good faith regarding such
annual budgets and the financial, scientific and regulatory assumptions
reflected therein.

 

14.6                           Termination
by Biogen Idec for Convenience.  In
the event of termination of this Agreement by Biogen Idec pursuant to Section
14.4, in addition to those provisions surviving under Section 14.8, the
following shall apply:

 

14.6.1                  Sections
2.8.2 (Research Records); 2.8.3 (Inspections); Articles 3 (Product
Development); 4 (Product Commercialization); 5 (Management) (other than Section
5.3, which shall terminate); 6.2.4 (Reverted Products); 7.3 (Research
Milestones); 7.4 (Development Milestones); 7.5 (Royalties on Annual Net Sales
of Products); 7.6 (Royalties on Net Sales of Sunesis Products and Other Biogen
Idec Products); (except that any royalties payable by Sunesis

 

57

 

under Sections 7.5 and
7.6, commencing upon such termination and continuing thereafter, shall be
reduced by fifty percent (50%)); Section 7.7 (Royalty Term); Article 9
(Diligence); Article 10 (Intellectual Property)(other than Sections 10.1.4,
10.2.2 and 10.2.3, which shall terminate); and Exhibit 3.5 (Reverted Products)
shall survive.

 

14.6.2                  Biogen
Idec shall control prosecution of the all Biogen Idec Collaboration Patents and
Joint Collaboration Patents at its own expense. 
Sunesis shall control prosecution of all Sunesis Collaboration Patents
at its own expense.  Sunesis shall be
given the opportunity to review Biogen Idec’s activities and provide input with
respect to Sunesis Collaboration Patents and Joint Collaboration Patents, and
Biogen Idec shall in good faith consider including in such patent applications
such claims as Sunesis reasonably requests. 
Biogen Idec shall keep Sunesis reasonably informed as to the status of
such patent matters, including without limitation by providing Sunesis with (i)
copies of any documents relating to Sunesis Collaboration Patents and Joint
Collaboration Patents which Biogen Idec receives from any patent office within
twenty (20) days of receipt thereof, including notice of all interferences,
reissues, reexaminations, oppositions or requests for patent term extensions,
and (ii) the opportunity to review and comment on any documents relating to Sunesis
Collaboration Patents and Joint Collaboration Patents which will be filed in
any patent office as soon practicable but in all cases at least twenty (20)
days prior to such filing.  All costs
associated with filing, prosecuting, issuing and maintaining the Licensed
Pre-Existing Patents and patent applications and patents within the Sunesis
Core Technology shall be borne by Sunesis. 
In conducting the prosecution activities described in this Section
14.6.2, each Party shall employ reasonable efforts not to substantially
negatively impact the other Party’s rights under the surviving provisions of
this Agreement.

 

14.6.3                  Biogen
Idec’s rights with respect to Co-Funded Products and the Co-Funded Option shall
be as follows:

 

(a)          With respect to any
Co-Funded Product for which Sunesis has exercised its Co-Funding Option, and
for which Biogen Idec has not obtained Regulatory Approval in any territory in
the Co-Funded Territory for such Co-Funded Product, in each case as of the
effective date of such termination, such Co-Funded Product shall become a
Reverted Product in accordance with Section 3.5 and Exhibit 3.5 and Sunesis
shall thereafter pay royalties to Biogen Idec on Net Sales of such Reverted
Product in accordance with Section 7.5.1.

 

(b)         With respect to any
Co-Funded Product for which Sunesis has exercised its Co-Funding Option, and
for which Biogen Idec has obtained Regulatory Approval in any territory in the
Co-Funded Territory for such Co-Funded Product, in each case as of the
effective date of such termination, Sunesis’ rights and obligations under
Section 3.2.3 shall survive, and Biogen Idec shall pay royalties on any such
Co-Funded Products in accordance with Section 7.5.2.  Biogen Idec shall no longer be obligated to
provide the detailed plans required of a Co-Development Plan and Budget to
Sunesis, but shall provide Sunesis with annual budgets of post Phase I
Development Costs for any such Co-Funded Products.  Sunesis’ Co-Funding Option with respect to
future Products shall terminate, as will Article 4, as well as Sunesis’ right
to participate in the JDC under Section 5.4 and any Product Teams under Section
3.3.

 

(c)          Sunesis’ Co-Funding
Option under Section 3.2 with respect to future Products shall continue (i.e.
with respect to Products that are not Co-Funded Products as of the

 

58

 

effective date of such
termination), provided that Biogen Idec shall no longer be obligated to provide
for each Product the detailed plans and clinical data required of an Initial
Development Plan and Phase II Notice pursuant to Section 3.2.1.  Biogen Idec shall, however, provide Sunesis
with annual budgets of post Phase I Development Costs for such Co-Funded
Product in accordance with the timetable for a Phase II Notice set forth in
Section 3.2.1, and shall provide reasonable cooperation to Sunesis in
evaluating such Product and the post Phase I Development Costs related thereto,
including consulting with Sunesis in good faith regarding such annual budgets
and the financial, scientific and regulatory assumptions reflected therein.

 

14.7                           Transition
of Information and Materials.  With
respect to a Party’s obligation to transition Collaboration Technology,
information and material with respect to a particular compound, each Party shall
cooperate fully (and cause its Affiliates to cooperate fully) with the other
Party to facilitate a smooth and prompt transition of Collaboration Technology,
information and materials that are necessary or useful for the receiving Party
to further research, develop, or otherwise exploit such target and compounds in
the Field.

 

14.8                           Survival
Sections.  In addition to the
provisions set forth in Sections 14.5.2, 14.5.3 and 14.6 above, as applicable,
the following provisions shall survive the expiration or termination of this
Agreement for any reason: Articles 1 (Definitions), 8 (Payments, Books and
Records), 11 (Confidentiality), 12 (Representations and Warranties), 13
(Indemnification), 14 (Term and Termination), 15 (Dispute Resolution) and 16
(Miscellaneous); and Sections 2.5.6, 2.5.7, 2.5.8, 2.5.9(c), 6.1.1(c),
6.1.2(b), Sections 6.2.1, 6.2.2 (Commercialization Licenses to Biogen Idec for
Target Selective Compounds); 6.3 (Other Compounds); 6.4 and 6.5.

 

ARTICLE
15

DISPUTE
RESOLUTION

 

15.1                           Escalation
to Senior Executives.  In the event
of a dispute or matter of significant concern arises between the Parties, then
at the request of either Party, the matter shall be escalated to a senior
executive from each Party.  Such senior
executive shall be either the CEO of such Party, or another senior executive of
such Party who both reports to the CEO and who has direct management
responsibility for the matter in dispute. 
Upon such request, such senior executives shall make themselves
reasonably available to meet, and shall meet either by telephone or if,
specifically requested, in person, to attempt to resolve such matter, and shall
thereafter continue to use good faith efforts to attempt to resolve such matter
unless it becomes clear that the matter cannot be resolved by mutual
agreement.  Thereafter either Party may
pursue such legal process as is otherwise available under applicable law,
except as otherwise set forth in Section 5.1.4 above or Section 15.2 below.

 

15.2                           Independent
Scientific Verification of Certain Disputes.

 

15.2.1                  Independent
Measurements.  In the event the
Parties are unable to reach agreement regarding (i) whether or not a compound
or product is Target Selective against a certain Target, (ii) the IC50 of a
particular “selected lead” as that term is defined in Section 1.41 above, or
(iii) any other independently verifiable scientific determination or
measurement, and the Parties have not resolved such dispute through good faith
negotiations, such dispute will be resolved through performance of the relevant
determination by an independent Third Party. 
The

 

59

 

findings of such Third
Party with respect to such dispute shall be binding on the Parties, and the
costs of such testing shall be shared equally by the Parties.

 

15.2.2                  Other
Determinations. In the event that the Parties are unable to reach agreement
regarding (i) the establishment of Selectivity Parameters pursuant to Section
2.5.9; or (ii) designating the variant species of a protein to be included with
a specific Target pursuant to Section 2.5.9, and the Parties have not resolved
such dispute through good faith negotiations, such dispute shall be resolved in
accordance with this Section 15.2.2. 
Upon written request by either Party, a dispute described in the
preceding sentence will be resolved through the binding determination by a
mutually agreed independent expert in the relevant field of biochemistry.  In the event the Parties cannot agree on such
independent Third Party, then each Party shall nominate an independent
scientist with appropriate expertise, and the Parties’ nominees shall select
the independent expert to perform the binding determination.  Each Party shall prepare a written report
setting forth its position or proposal with respect to the Selectivity
Parameters and/or Target scope, as applicable, and shall submit such report to
the independent expert within ten (10) days after selection of such
expert.  The expert shall select one of
the requested positions as his or her decision, and shall not have the
authority to render any substantive decision other than to so select the
position of either Biogen Idec or Sunesis. 
The findings of such Third Party with respect to such dispute shall be
binding on the Parties, and the costs of such testing shall be borne by the
losing Party.

 

15.3                           Injunctive
Relief.  This Article  15 shall
not be construed to prohibit either Party from seeking preliminary or permanent
injunctive relief, restraining order or degree of specific performance in any
court of competent jurisdiction to the extent not prohibited by this
Agreement.  For avoidance of doubt, any
such equitable remedies provided under this Article 15 shall be cumulative and
not exclusive and are in addition to any other remedies, which either Party may
have under this Agreement or applicable law.

 

15.4                           Matters
to Proceed to Court.  Notwithstanding
the foregoing, any dispute relating to the determination of validity of a Party’s
patents or other issues relating solely to a Party’s intellectual property and
any dispute asserting breach of this Agreement or of the representations and
warranties made hereunder shall be submitted exclusively to the federal court
in Delaware, and the Parties hereby consent to the jurisdiction and venue of
such court.

 

ARTICLE
16 

MISCELLANEOUS

 

16.1                           Governing
Laws.  This Agreement and any dispute
arising from the construction, performance or breach hereof shall be governed
by and construed, and enforced in accordance with, the laws of the state of
Delaware, without reference to conflicts of laws principles.

 

16.2                           Waiver.  It is agreed that no waiver by either Party
hereto of any breach or default of any of the covenants or agreements herein
set forth shall be deemed a waiver as to any subsequent and/or similar breach
or default.

 

16.3                           Assignment.  This Agreement shall not be assignable by
either Party without the written consent of the other Party hereto, except
either Party may assign this Agreement without

 

60

 

such consent to its
Affiliates, or to an entity that acquires all or substantially all of the
business or assets of such Party whether by merger, reorganization,
acquisition, sale, or otherwise; provided, however, that the assignee shall
agree in writing to be bound by the terms and conditions of this Agreement.

 

16.4                           Independent
Contractors.  The relationship of the
Parties hereto is that of independent contractors.  The Parties hereto are not deemed to be
agents, partners or joint venturers of the others for any purpose as a result
of this Agreement or the transactions contemplated thereby.

 

16.5                           Compliance
with Laws.  In exercising their
rights under this license, the Parties shall fully comply in all material
respects with the requirements of any and all applicable laws, regulations,
rules and orders of any governmental body having jurisdiction over the exercise
of rights under this license including, without limitation, those applicable to
the discovery, development, manufacture, distribution, import and export and
sale of Products pursuant to this Agreement.

 

16.6                           Patent
Marking.  Biogen Idec agrees to mark
and use reasonable efforts to make all its Sublicensees mark all Products and
Other Biogen Idec Products sold pursuant to this Agreement in accordance with
the applicable statute or regulations relating to patent marking in the country
or countries of manufacture and sale thereof. 
Sunesis agrees to mark and use reasonable efforts to make its
Sublicensees mark all Sunesis Products sold pursuant to this Agreement in
accordance with the applicable statute or regulations relating to patent
marking in the country or countries of manufacture and sale thereof.

 

16.7                           Notices.  All notices, requests and other
communications hereunder shall be in writing and shall be personally delivered
or by registered or certified mail, return receipt requested, postage prepaid,
in each case to the respective address specified below, or such other address
as may be specified in writing to the other Parties hereto and shall be deemed
to have been given upon receipt:

 

Sunesis:                                                                                                   Sunesis
Pharmaceuticals, Inc.

341 Oyster Point
Boulevard

South San Francisco,
California 94080

Attn: Daryl Winter,
General Counsel

Fax: (650) 266-3505

 

With a
copy to:                                                             Wilson
Sonsini Goodrich & Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, California
94304-1050

Attn: Kenneth A. Clark,
Esq.

Fax: (650) 493-6811

 

	
   

  	
  Biogen Idec

  	
  Biogen Idec 

  

 

MA Inc.

14 Cambridge Center

 

61

 

Cambridge, MA  02141

Attn: Associate Director,
Research Operations

Fax: (617)-679-2616

 

With a
copy to:                                                             Biogen
Idec MA Inc.

14 Cambridge Center

Cambridge, MA  02141

Attn: General Counsel

Fax: (617)-679-2838

 

16.8                           Severability.  In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect to the fullest extent permitted by law without said provision, and the
Parties shall amend the Agreement to the extent feasible to lawfully include
the substance of the excluded term to as fully as possible realize the intent
of the Parties and their commercial bargain. 
If a Party seeks to avoid a provision of this Agreement by asserting
that such provision is invalid, illegal or otherwise unenforceable, the other
Party shall have the right to terminate this Agreement upon sixty (60) days’
prior written notice to the asserting Party, unless such assertion is
eliminated and cured within such sixty (60) day period.  If Biogen Idec has sought to so avoid a
provision of this Agreement, such termination shall be deemed a termination by
Biogen Idec under Section 14.4 above, and if Sunesis has sought such an
avoidance, such termination shall be deemed a termination for breach by Sunesis
under Section 14.2 above.

 

16.9                           Advice
of Counsel.  Sunesis and Biogen Idec
have each consulted counsel of their choice regarding this Agreement, and each
acknowledges and agrees that this Agreement shall not be deemed to have been
drafted by one Party or another and will be construed accordingly.

 

16.10                     Performance
Warranty.  Each Party hereby warrants
and guarantees the performance of any and all rights and obligations of this
Agreement by its Affiliates and Sublicensees.

 

16.11                     Complete
Agreement.  This Agreement with its
Exhibits, constitutes the entire agreement, both written and oral, between the
Parties with respect to the subject matter hereof, and all prior agreements
respecting the subject matter hereof, either written or oral, express or
implied, shall be abrogated, canceled, and are null and void and of no
effect.  No amendment or change hereof or
addition hereto shall be effective or binding on either of the Parties hereto
unless reduced to writing and executed by the respective duly authorized
representatives of Sunesis and Biogen Idec.

 

16.12                     Headings.  The captions to the several Sections and
Articles hereof are not a part of this Agreement, but are included merely for
convenience of reference and shall not affect its meaning or interpretation.

 

16.13                     Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same agreement.

 

62

 

IN WITNESS WHEREOF, the
Parties hereto have caused this Agreement to be duly executed by their
authorized representatives and delivered in duplicate originals as of the
Effective Date.

 

	
  BIOGEN IDEC MA
  INC.

  	
  SUNESIS
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
									

 

63

 

EXHIBIT
1.13.1

 

Hit
Compound Criteria

 

Soluble (not covalently
attached) compounds in at least [*] chemical series with SAR and properties
that indicate clear opportunity for optimization as determined by the Parties.

 

Activity

 

•      Enzyme
activity [*] with clear evidence of SAR

•      Cell
activity [*] in mechanistic cell-based assays

•      [*]
selective against key undesirable countertargets (e.g. countertargets that
would produce unacceptable toxicity or safety issues)

•      SAR
consistent over at least [*] activity

 

Physicochemical
properties

 

•      MW
<600

•      [*]LogD[*]

•      Solubility
[*]

•      in
vitro assays (MDCK, Caco-2) show medium to high permeability and no transporter
activity

•      Stability
in human plasma, liver microsomes [*]% after 1 hr

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

64

 

EXHIBIT
1.13.2

 

Lead
Compound Criteria

 

At least [*] compound series that will be optimized to
identify a Safety Assessment Candidate

 

Biological
activity

 

•                  Biochemical
IC50 [*]

•                  Cell-based
activity [*]

•                              Consistent
SAR between enzyme and cell activity

•                  [*]-fold
selective over close or undesirable kinases

 

Physicochemical
properties

•                  MW
[*]

•                  [*]LogD[*]

•                  Solubility
[*]

 

ADME/PK
that support progression as a high quality drug candidate

In vitro
ADME consistent with good drug-like characteristics

 

•                  HLM
Stability [*]% remaining at [*]

•                  Medium
to good permeability ([*]) as measured in MDCK, CaCO-2, or comparable system

•                  Stability
in stimulated gastric and intestinal fluid (if PO dosing)

•                  p450
inhibition [*]

•                  No
exclusive metabolism by major polymorphic p450 enzymes

•                  Acceptable
protein binding ([*])

•                  PK
profile shows generally good characteristics

•                  Clearance
below liver blood flow

•                  T1/2  [*]

•                  %F
[*]% if PO dosing required/desired

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

65

 

Execution Copy

EXHIBIT
1.38

 

Sunesis Core Technology

 

	
  Sunesis
  No.

  	
   

  	
  Serial No.

  	
   

  	
  Title

  	
   

  	
  Status

  
	
  UC-100

  	
   

  	
  US 09/049,754

  	
   

  	
  Pharmacophore
  Recombination For the Identification of Small Molecule Drug Lead Compounds

  	
   

  	
  Issued as U.S. Patent
  No. 6,344,330

  
	
  UC-100 AU

  	
   

  	
  32113/99

  	
   

  	
  Pharmacophore
  Recombination For the Identification of Small Molecule Drug Lead Compounds

  	
   

  	
  Issued as AU Patent No.
  759327

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  pending

  
	
  [*]

  	
   

  	
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  [*]

  	
   

  	
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  pending

  
	
  [*]

  	
   

  	
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  pending

  
	
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  pending

  
	
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  pending

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  pending

  
	
  SU-100

  	
   

  	
  US 09/105,372

  	
   

  	
  Methods for Rapidly
  Identifying Small Organic Molecule Ligands for Binding to Biological Target
  Molecules

  	
   

  	
  Issued as U.S. Patent
  No. 6,335,155

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  pending

  
	
  SU-100 D1C1

  	
   

  	
  US 10/043,833

  	
   

  	
  Methods for Rapidly
  Identifying Small Organic Molecule Ligands for Binding to Biological Target
  Molecules

  	
   

  	
  allowed

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  	
  pending

  

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

66

 

	
  Sunesis
  No.

  	
   

  	
  Serial No.

  	
   

  	
  Title

  	
   

  	
  Status

  
	
  [*]

  	
   

  	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  pending

  
	
  SU-630 PCT

  	
   

  	
  US03/06217

  	
   

  	
  Methods for Identifying
  Compounds that Modulate Enzymatic Activity

  	
   

  	
  Published as WO
  03/087054

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
  SU-1400 PCT

  	
   

  	
  US03/08725

  	
   

  	
  Identification of
  Kinase Inhibitors

  	
   

  	
  Published as WO
  03/081210

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  	
  pending

  

 

67

 

	
  Sunesis
  No.

  	
   

  	
  Serial No.

  	
   

  	
  Title

  	
   

  	
  Status

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
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  pending

  
	
  SU-1800 PCT

  	
   

  	
  US03/10831

  	
   

  	
  Methods for Identifying
  Exosites

  	
   

  	
  Published as WO
  03/087051

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  pending

  
	
  SU-2200 PCT

  	
   

  	
  US03/10209

  	
   

  	
  Methods and Materials
  to Find and Characterize Molecular Interaction Sites on Proteins

  	
   

  	
  Published as WO
  03/087299

  

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

68

 

EXHIBIT
2.2

 

Research
Plan

 

Overview
of Research Plan

 

The research plan is
designed to employ Sunesis’ TetheringSM with extenders lead-finding
approach to identify novel inhibitors of protein kinases with the goal of
optimizing these to identify Development Candidate compounds for [*] kinase
targets.

 

During approximately the
first [*] months of the collaboration, the research plan will focus on 2
activities:

 

(a)                                  [*]
utilizing TetheringSM with extenders.  The priority focus of this work is to apply
TetheringSM to efficiently [*] up to [*] and advance [*] projects to
lead optimization.  This [*] will occur
in [*] campaigns.  The [*] campaign will
aggressively advance [*] into [*], with the aim of identifying compounds
suitable for early-stage [*] within approximately [*] months, and Hits
Identified by approximately [*] months after initiation of the
collaboration.  If necessary, the [*] campaign
will advance an [*] targets into [*] following the completion of the initial [*]
campaign, and will subsequently derive compounds suitable for lead optimization
approximately [*] months after initiation of the collaboration.

 

(b)                                 A
Lead Optimization effort on Sunesis’ existing Raf Kinase inhibitor lead
compounds to identify Development Candidates suitable for Non-Clinical
Development.  It is anticipated that this
work will result in the identification of [*] Candidates for Raf approximately [*]
months after the collaboration is initiated.

 

After approximately [*] months,
it is expected that the [*] campaign will have generated compounds from the [*]
kinase targets that meet or exceed the [*]. 
Based on the attractiveness of the lead compounds and progress on
subsequent targets, it is expected that [*] kinase target will advance into [*]
project.

 

After approximately [*] months,
it is expected that the [*] campaign will have generated compounds from the [*]
kinase targets that meet the Hits Identified criteria.  Based on an evaluation of the [*], it is
expected that an additional [*] project will be initiated.  Depending on resource availability, the [*] of
this project may be [*] on completion of the Raf project.

 

A GANTT chart that
outlines the major activities covering the different parts of this project is
shown in Figure X. Due to the complexity of managing a portfolio of [*] and [*]
projects to achieve the overall goals of the collaboration, the JRC will have
final responsibility for decisions on [*] of targets, [*] of a full [*] effort
and the balance of priorities and resources across the multiple projects that
define this collaboration.

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

69

 

Research Plan (Months 1-[*])

 

(a)                      Identification
of [*] and [*] from [*] Kinase Targets

 

The goal of this
work will be to screen [*] kinases using Sunesis proprietary TetheringSM
fragment based approach and advance molecules on [*] kinase targets to the [*] stage.  The primary goal of the [*] Phase of the
project will be to [*] against [*] kinase targets that will be advanced into [*]
as efficiently as possible.  Due to the
complexity of balancing multiple targets, the JRC will therefore play a key
role in balancing both priorities and activities to enable the achievement of
this goal.

 

Upon initiation of
the collaboration, both Biogen Idec and Sunesis will jointly work to [*] and [*]
kinases that will be selected and agreed on by both companies.  [*] suitable for [*] kinase [*] ([*] assays),
[*] ([*]) and [*] will be [*] and[*]. For [*], a single [*] will be made,
introducing a Cys residue adjacent to purine pocket, and removing other
reactive surface Cys residue to meet [*] criteria, as defined in [*]. Depending
on the [*] strategy, [*] (or [*]) active [*] of the kinase may also be
generated. Based on an early assessment of both the [*] and [*] of these
targets, the JRC will select [*] kinases to be aggressively advanced into the
first [*] campaign.  It is anticipated
that this [*] campaign will begin within approximately [*] months of initiation
of the collaboration, dependent on the ease of [*].  In parallel with the [*] campaign, the [*] of
the remaining [*] kinases will continue. 
An additional [*] targets may also be selected for [*] at this time, if
it is felt by the JRC that this will enhance the likelihood of establishing [*]
for a second [*] campaign.   Based on the
[*] and [*] of the remaining targets, the JRC will select [*] of these to
initiate a [*] campaign.  It is
anticipated that this campaign will begin following completion of the [*] campaign.

 

The TetheringSM
with extenders approach, to identify [*] (See [*] for [*]), will be conducted
by [*].  This work will initially involve
the selection of purine pocket-binding fragments as extenders.  A combination of existing purine hits, [*] compounds
and possibly [*] will be used to identify these fragments.   [*] fragments will be converted into
extenders that will place a [*] towards the [*] of the kinase bounded by the [*]
and the [*].  The selection of fragments
for [*] will be supported by [*], [*] and [*] where appropriate. The criteria
for [*] are outlined in [*].  [*] for
each kinase will then be [*] against the [*] to identify [*]. It is anticipated
that up to [*] will be conducted on each kinase.  As decided by the JPT and JRC, these [*] may
involve a [*] of [*] and [*] (e.g. [*] vs. [*]) of the kinase, and will be [*] for
each kinase based on the relevant [*] of the [*] in the target disease, and the
likelihood of identifying [*].  Upon
identification and confirmation of [*], [*] will be assembled as [*],
comprising the [*] joined to the [*] by simple ([*] and [*]) [*] and [*] against
the [*] in [*] assays.  Due to the rapid
advancement to [*] with [*], it is anticipated that detailed [*] (e.g. [*]) and
[*] will not be necessary at the [*], accelerating the time to [*] for [*]. We
anticipate that it will take a [*] chemist effort for the [*] and [*] of [*] and
the [*]

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

70

 

of [*] to the [*] stage.    To supplement [*], additional [*] may also
be [*] and [*] to identify [*] against the [*] kinase targets.

 

A decision tree
outlining the key activities and decision points for the [*] phase of the
collaboration is outlined in Figure N. 
Key milestones for progress will occur at the following points in each [*]
campaign:

 

•                  The
[*] to advance into each [*] campaign

 

•                  The
[*] of [*] in the [*] of kinases.  (This
event may trigger the addition of [*] from Biogen Idec)

 

•                  The
[*] of [*] with [*], and promising [*] properties for [*].

 

(b)                      [*]
on Raf Kinase Inhibitors

 

The objective of
this work is to progress Raf Kinase inhibitors to [*] a [*] that will be [*] to
[*] ([*] to enable [*]).  A full [*] on
the [*] and [*] already conducted at Sunesis to [*] Raf Kinase inhibitors will
allow Biogen Idec and Sunesis to [*] for [*] on this target.  In general, it is assumed that [*] will
involve an [*] team of approximately [*] who will work to improve the [*] (in [*]
and [*]), [*] and other [*] of existing [*] to [*] a [*].  The advancement of compounds from [*] will be
supported by a number of activities: (i) [*]: Sunesis has developed preliminary
[*] and [*] for compound [*].  These and
additional [*] (that may need to be [*]) will be used to [*] compounds in
support of [*] of [*] and [*].   A [*] step
of the joint project team will be to [*] and [*] the existing [*] and set plans
for using these and other [*] to [*] the [*] of [*] (ii) [*] of compounds to determine
and [*] and [*] for the compounds.  (iii)
[*] to [*] to [*] for [*] the target [*] and [*] of [*].  This will involve the establishment and [*] of
[*] for [*] of [*] of the Raf [*] in [*] and [*].  In addition,  [*], [*] and [*] will also be employed as
needed to [*].

 

The [*] for this
part of the project are (i) [*] and [*] of compounds that [*] the [*] milestone.  This milestone reflects the [*] of compounds
with a [*] of [*] (in [*] and [*]) that also show [*] and [*] in [*].  (ii) [*] of compounds that meet the [*].  These compounds will meet the [*] for a
target [*], including showing [*] by the [*] and [*] desired [*].  (iii) [*] selected.  This milestone reflects the [*] of the [*] that
will be progressed into [*].

 

Both Sunesis and
Biogen Idec will contribute resources to [*] for Raf.  Both companies will support [*], and [*] ([*]
and [*]).  Biogen Idec will additionally
provide the [*] for the [*] and [*] and subsequent [*] activities.

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

71

 

Research
Plan (Months[*])

 

[*] on [*] Kinase Targets

 

When [*] or [*] of
compounds from [*] that meet the [*] are discovered for a given target, then
the project may be advanced into a [*] program. 
The [*] efforts on the [*] from [*] will advance in a [*] to that of the
Raf project, with [*] for both [*] and [*].

 

It is anticipated
that [*] will be [*] for [*] kinase within [*] months of initiation of the
project, prior to the completion of either the [*] activities on Raf or the [*]
campaign.  It is anticipated that the [*]
of [*] for [*] from targets in the [*] campaign will occur after approximately [*]
months.  The JRC will decide the
responsibility for resources to [*] on these kinases.  Increased [*] at Sunesis (from [*]) will also
coincident with Sunesis’ involvement in [*] on a [*] kinase.

 

As with the Raf
project, each kinase advanced into [*] will have a [*] of [*] milestones to
track progress: (i) [*] of compounds that meet the [*] milestone.  This milestone reflects the [*] of compounds
with a [*] of [*] that also show promising [*] and [*] in [*].  (ii) [*] of compounds that meet the [*] criteria.  These compounds will meet the [*] for a
target profile, including showing [*] by the [*] and schedule desired [*].  (iii) [*] selected.  This milestone reflects the identification of
the [*] that will be progressed into [*]. Since the Raf project will enter the
collaboration at a [*] stage ([*] with some [*]) it is expected that the
timelines for advancement of the [*] projects to the various milestones will be
[*] months to achieve the [*] milestone for the [*] projects as opposed to the
estimated [*] months for the Raf project.

 

The resource
estimates for each phase of the project, along with the estimates and
allocation of Sunesis resources is shown in Exhibit Y.

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

72

 

EXHIBIT
1:  MILESTONE DEFINITIONS

 

Milestone Definitions

 

[*] Identified

[*]

•                  [*]
to tethering

•                  Single
Reactive [*] adjacent to [*]

•                  Flies
on [*]

•                  [*]
available

•                  [*]
has [*]

•                  Equivalent
to [*] in [*] analysis

•                  Both
[*] (or [*]) and [*] states may be desired for [*]

 

[*] Identified

Valid [*] that probe from [*] towards [*].

•                  Reversible
[*] modifies with [*]

•                  [*]
inhibits [*] as a [*] of [*] of [*]

•                  Blocked
by [*]

•                  Shows
[*] for [*]

•                  [*]
preferred

 

[*] Identified

•                  Fragment
MW [*]

•                  Evidence
of [*] in [*] mode (note: it may be quicker to [*] as [*], rather than to [*])

•                  No
obvious [*] in [*]

 

[*] Identified

[*]  (not [*]) compounds in [*] chemical series
with [*] and properties that indicate clear opportunity for [*].  At least one of these searies should appear
unprecedented.

Activity

•                  [*]
activity [*] with clear evidence of [*]

•                  [*]
activity [*] in mechanistic [*] assays

•                  [*]
selective vs. key [*] targets

•                  [*]
consistent over at least [*] activity

Physicochemical
properties

•                  [*]

•                  [*]LogD
[*]

•                  Solubility [*]

•                  in vitro assays (MDCK, Caco-2) show [*] to
[*] permeability and no transporter activity

•                  Stability
in human plasma, liver microsomes [*]% after [*]

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

73

 

[*]

[*] compound series that
will be [*] to [*] a [*].  Series should
have optimization potential based on [*] and [*].

 

Biological
activity

•                  Biochemical
IC50 [*]

•                  SAR
demonstrated over [*] of activity

•                  [*]fold
selective over close or undesirable kinases

•                  Cell-based
activity [*]

•                  Consistent
SAR between enzyme and cell activity

•                  In vivo efficacy demonstrated: ED50 @ ROA
[*]

 

Physicochemical properties

•                  MW
[*]

•                  [*]LogD
[*]

•                  Solubility
[*]

 

ADME/PK
that support progression as a high quality drug candidate

In
vitro ADME consistent with good drug-like characteristics

•                  HLM
Stability [*]% remaining at [*] minutes

•                  Medium
to good permeability ([*]) as measured in MDCK, CaCO-2, or comparable system

•                  Stability
in stimulated gastric and intestinal fluid (if PO dosing)

•                  p450
inhibition [*]

•                  No
exclusive metabolism by major polymorphic p450 enzymes

•                  Acceptable
protein binding (generally [*]%)

•                  PK
profile shows generally good characteristics

•                  Clearance
below liver blood flow

•                  T1/2
[*]

•                  %F
[*]% if PO dosing required/desired

 

[*] Candidate

A group of up to 5
compounds that will be [*] in [*] and [*] to [*] candidate

In vitro
Biological activity

•                  Cell-based
activity [*]

•                  Biochemical
IC50[*]

•                  [*]fold
selective over close or undesirable kinases

•                  [*]
profiling shows no major flags ([*]% activity at [*])

Pharmacological
properties consistent with TPP

•                  p450
inhibition [*]

•                  no
major metabolism by polymorphic p450 enzymes

•                  No
activation of key p450 enzymes

•                  In
vitro metabolism verified and acceptable

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

74

 

•                  Acceptable
protein binding (generally [*]%)

•                  [*]
consistent with Drug Candidate

•                  PK
profile supports dosing by route and schedule required in clinic

•                  F
[*]% rat, if required to meet target profile

•                  In vivo activity in suitable animal
model(s) by desired route and schedule shows competitive efficacy for disease
relative to key comparator molecules. (ED50 [*])

•                  [*]
assessed and viable

•                  Ames
test, gene profiling negative, acute toxicity acceptable

•                  Synthetic
route evaluation (number of synthetic steps, scalability, cost of goods, etc.)

 

[*] Candidate

Compound that will be
advanced into [*] studies.

[*] properties
consistent with [*]

•                  p450
inhibition [*]

•                  no
major metabolism by polymorphic p450 enzymes

•                  No
activation of key p450 enzymes

•                  Acceptable
protein binding (generally [*]%)

•                  [*]
consistent with Drug Candidate

•                  [*]
supports dosing by route and schedule required in clinic

•                  [*]
in suitable animal model(s) by desired route and schedule shows competitive
efficacy for disease relative to key comparator molecules.

•                  [*]
studies show potential for acceptable therapeutic index

•                  HERG
channel inhibition [*]-fold above cell IC50

•                  [*]
in [*] studies if necessary

•                  [*]
in [*] studies is above optimal therapeutic dose

•                  [*]
models established if necessary for Phase I

[*]

•                  Acceptable
formulation for [*] and [*] studies using [*] components

•                  [*]
route established

•                  [*]
predicted to be reasonable given anticipated [*]

•                  [*]
is reasonably attainable if necessary

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

75

 

Figure
N:  Decision tree for advancement of [*]
of project

 

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

76

 

Figure
X  GANTT Chart for Project

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
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  ID

  	
   

  	
  Task
  Name

  	
   

  	
  Duration

  	
   

  	
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  [*]

  	
   

  	
  [*]

  	
   

  
																																														

 

[*] Certain information on this page has been redacted and filed
separately with the Securities and Exchange Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

77

 

Exhibit
Y Project Resources

 

1.               Overall
Project Resource Projections

 

	
   

  	
   

  	
  2004

  	
   

  	
  2005

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  
	
   

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  
	
  [*] project

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  Total

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*] Projects

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*] Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  TOTAL

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
																																		

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

78

 

2.               Sunesis
Resource Projections

 

	
   

  	
   

  	
  2004

  	
   

  	
  2005

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  
	
   

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  
	
  Sunesis [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  TOTAL 

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sunesis [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL 

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*] Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  TOTAL 

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
																																		

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

79

 

Resource Assumptions

1.               [*]
projects (Raf and [*] campaigns)

a.               Biogen Idec and
Sunesis [*] for [*] of Raf ([*] etc)

•                  Biogen Idec [*] and
[*] for RAF

b.              Biogen Idec will
assume [*] for [*] of [*] kinase project to [*] to [*]

c.               Sunesis will assume
[*] for [*] kinase project to [*]

2.               [*]
Projects

a.               Biogen Idec and
Sunesis [*] and [*] for [*] kinases

b.              Sunesis will assume [*]
for [*] to support [*] phase

c.               Sunesis will
assume [*] for [*] screening.

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

80

 

Execution
Copy

 

EXHIBIT 2.5

 

Determination of the Availability of a Proposed Target

 

For the purposes
of Sections 2.5 and 6.3, except as otherwise provided therein, a Target shall
be deemed “Available” unless one or more of the following conditions is true as
of the date the Party proposing such Target (the “Proposing Party”) first
notifies the other Party (the “Other Party”) in writing of its request to
determine whether such Target (the “Proposed Target”) is Available (which
notice shall describe the purpose of the requested determination of
Availability and reference the applicable Sections of the Agreement under which
such request is being made).

 

1.                                       The
Other Party has granted or is obligated to grant rights to a Third Party to
sell one or more pharmaceutical products directed at the Proposed Target, or
the Other Party is otherwise contractually restrained from granting to the
Proposing Party rights to commercialize products directed to the Proposed
Target;

 

2.                                       The
Other Party is actively and in good faith engaged in negotiations with a Third
Party regarding a transaction described in Section 1, provided that this Section 2
shall prevent a Proposed Target from being deemed “Available” only for such
time as the Other Party is exercising reasonable diligence in such
negotiations;

 

3.                                       The
Other Party has performed research or development on its own behalf regarding
the Proposed Target, and at the time of determination is exercising reasonable
research, development or commercialization efforts with respect to the Proposed
Target, either through an internal program or a bona fide collaboration with a
Third Party; or

 

4.                                       The
Other Party (i) has performed research or development on its own behalf
regarding a Target other than the Proposed Target, and at the time of
determination is exercising reasonable research, development or
commercialization efforts with respect to such other Target, either through an
internal program or a bona fide collaboration with a Third Party, and (ii)
reasonably expects that compounds directed to such other Target may be Target
Selective against the Proposed Target, or that selection of the Proposed Target
will otherwise materially conflict with continuation of the Other Party’s
research, development or commercialization activities directed to such other
Target.

 

Notwithstanding
the foregoing, the condition described in Section 4 shall not prevent a
Proposed Target in the Target Selection Pool from being deemed “Available” to
Biogen Idec, where (i) the time of determination under this Exhibit 2.5 is
within [*]
after the Effective Date, and (ii) the other Target regarding which Sunesis has
performed research or development is a Target other than the [*] Kinase.

 

[*]
Certain information on this page has been redacted and filed separately with
the Securities and Exchange Commission. 
Confidential treatment has been requested with respect to the omitted
portions.

 

81

 

Upon reasonable
request from the Proposing Party for verification of non-Availability of a
Proposed Target, the Other Party shall provide a general description of the
events or conditions that give rise to such non-Availability, provided that the
Other Party shall have the right to provide such materials to the Proposing
Party or, in the Other Party’s sole discretion, an independent Third Party
selected by the Other Party and approved by the Proposing Party, with such
approval not to be unreasonably withheld or delayed and such disclosure subject
to a reasonable confidentiality agreement between the Third Party and the Other
Party.

 

Notwithstanding
the foregoing, a condition described in any of Sections 1 through 4 above shall
prevent a Proposed Target from being deemed “Available” only to the extent that
the grant of rights or activities related to research, development or
commercialization described therein (i) are based in substantial part on one or
more Collaboration Compounds or Collaboration Patents, and (ii) are directed in
substantial part to research, development or commercialization of small
molecules that modulate the applicable Targets.

 

82

 

EXHIBIT 2.5.9

 

Collaboration Target Selectivity Parameters

 

[nothing selected to date]

 

83

 

Execution
Copy

 

EXHIBIT 2.7.1

 

Phase II Drug Compounds

 

[no
exceptions to date]

 

 

Execution
Copy

EXHIBIT 3.5

 

Reverted Products

 

Section 1.  Reversion of a Co-Funded Product to
Sunesis.

 

1.1.                              Biogen
Idec shall cooperate fully with Sunesis and shall provide Sunesis with all
data, documentation, information and materials generated or used by Biogen Idec
in the research, development, production or other exploitation of such Reverted
Product, and Sunesis shall have the right to use and disclose such items.

 

1.2.                              To
the extent not already terminated, the license granted to Biogen Idec under Section 6.2
shall terminate with respect to Collaboration Compounds incorporated in such
Reverted Product.  Thereafter, such
Collaboration Compounds shall be deemed Terminated Compounds for the purposes
of Section 6.2.4.

 

1.3.                              All
right, title and interest in and to (i) all regulatory filings related to the
Reverted Product, including without limitation all INDs, NDAs and all
information and correspondence related thereto, and (ii) any trademarks
specific to the Reverted Product shall be transferred and assigned to Sunesis.

 

1.4.                              Biogen
Idec shall cooperate fully with Sunesis upon Sunesis’ request to assign to
Sunesis, or otherwise secure for Sunesis the benefits of, any arrangement
between Biogen Idec and a Third Party related to the research, development,
production or exploitation of such Reverted Product, including without
limitation clinical research agreements, manufacturing and supply agreements
and distribution agreements.  In the
event that Reverted Products were manufactured by Biogen Idec, then Biogen Idec
shall continue to provide Sunesis at fully loaded cost plus a 15% cost of
capital charge with quantities of Reverted products reasonably ordered by
Sunesis within twelve (12) months after the date of transition.

 

1.5.                              Without
limiting the foregoing, Biogen Idec shall use reasonable efforts to implement
the provisions of this Exhibit 3.5 and to ensure orderly transition and
uninterrupted research and development of the Reverted Product.  Sunesis shall promptly reimburse Biogen Idec’s
reasonable out-of-pocket costs with respect to activities, services and
materials provided by Biogen Idec under Section 1 of this Exhibit 3.5.

 

Section 2.  Termination of a Reverted Product and
Reversion to Biogen Idec.

 

2.1                                 Sunesis
shall cooperate fully with Biogen Idec and shall provide Biogen Idec with all
data, documentation, information and materials generated or used by Sunesis in
the research, development, production or other exploitation of such Reverted
Product, and Biogen Idec shall have the right to use and disclose such items.

 

2.2                                 All
right, title and interest in and to (i) all regulatory filings related to such
Reverted Product, including without limitation all INDs, NDAs and all
information and correspondence related thereto, and (ii) any trademarks
specific to the Reverted Product shall be transferred and assigned to Biogen
Idec.

 

 

2.3                                 Sunesis
shall cooperate fully with Biogen Idec upon Biogen Idec’s request to assign to
Biogen Idec, or otherwise secure for Biogen Idec the benefits of, any
arrangement between Sunesis and a Third Party related to the research,
development, production or exploitation of such Reverted Product, including
without limitation clinical research agreements, manufacturing and supply
agreements and distribution agreements. 
In the event that such Reverted Product were manufactured by Sunesis,
then Sunesis shall continue to provide Biogen Idec at fully loaded cost plus a
15% cost of capital charge with quantities of such Reverted Product reasonably
ordered by Biogen Idec within twelve (12) months after the date of transition.

 

2.4                                 Without limiting the foregoing, Sunesis shall use
reasonable efforts to implement the provisions of this Section 9.4 and to
ensure orderly transition and uninterrupted research and development of such
Reverted Product.  Biogen Idec shall
promptly reimburse Sunesis’ reasonable out-of-pocket costs with respect to
activities, services and materials provided by Sunesis under Section 2 of
this Exhibit 3.5.

 

86

 

Execution
Copy

 

EXHIBIT 7.2.2

 

Stock Purchase Agreement

 

EXECUTION
COPY

 

SUNESIS PHARMACEUTICALS INCORPORATED

 

SERIES C-2 PREFERRED STOCK PURCHASE AGREEMENT

 

This Series C-2
Preferred Stock Purchase Agreement  (this
“Agreement”) is entered into by and between Sunesis Pharmaceuticals
Incorporated, a Delaware corporation (the “Company”) and Biogen Idec MA,
a Massachusetts corporation (the “Purchaser”) as of August 30, 2004.

 

1.               Purchase and
Sale of Preferred Stock.

 

1.1                                 The Company
shall adopt and file with the Secretary of State of the State of Delaware on or
before the Closing (as defined below) the Seventh Amended and Restated
Certificate of Incorporation in the form attached hereto as Exhibit A
(the “Restated Certificate”).

 

1.2                                 The Company
has, or will have before the Closing, authorized the sale and issuance of up to
2,916,667 shares of the Company’s Series C-2 Preferred Stock (the “Series
C-2 Stock”).  Upon the terms and
subject to the conditions set forth in this Agreement, the Purchaser agrees to
purchase at the Closing, and the Company agrees to sell and issue to the
Purchaser at the Closing 2,916,667 shares of Series C-2 Stock at a purchase
price of $4.80 per share.  The shares of
Series C-2 Stock issued to the Purchaser pursuant to this Agreement shall be
hereinafter referred to as the “Shares.”

 

2.               Closing,
Delivery.

 

2.1                                 The purchase
and sale of the Shares shall take place at the offices of Latham & Watkins,
135 Commonwealth Drive, Menlo Park, California, at 10:00 a.m., on the date
hereof, or at such other time and place as the parties shall agree upon (which
time and place are designated as the “Closing”).

 

2.2                                 At the
Closing of the sale of the Shares to the Purchaser, the Company will deliver to
the Purchaser a certificate for 2,916,667 Shares in exchange for cash, a check
or wire transfer in an amount equal to $14,000,000.

 

3.               The Company’s
Representations and Warranties. 
Except as set forth in the Schedule of Exceptions attached hereto as Exhibit B,
the Company represents and warrants to the Purchaser as follows:

 

3.1                                 Organization
and Standing; Restated Certificate and Bylaws.  The Company is a corporation duly organized
and validly existing under, and by virtue of, the laws of the State of Delaware
and is in good standing under such laws. 
The Company has requisite corporate power and authority to own and
operate its properties and assets, and to carry on its business as currently
conducted and as proposed to be conducted. 
The Company is qualified to do business as a foreign corporation in all
jurisdictions in which the failure to be so qualified would have a material
adverse affect on the Company’s business, financial condition or results of
operations.

 

3.2                                 Corporate
Power.  The Company will
have at the Closing all requisite legal and corporate power and authority to
execute and deliver this Agreement and the Eighth Amended and Restated Investor
Rights Agreement set forth as Exhibit C hereto (the “Investor

 

1

 

Rights Agreement”), to sell and issue the Shares
hereunder, to issue the Common Stock issuable upon conversion of the Series C-2
Stock and to carry out and perform its obligations under the terms of the
Investor Rights Agreement.

 

3.3                                 Subsidiaries.  The Company has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association or business entity.

 

3.4                                 Capitalization.  As of the Closing and immediately after
giving effect to the sale of any of the Shares pursuant to the terms of this
Agreement:

 

(a)                                  the authorized
capital stock of the Company will consist of:

 

(A)                              48,916,667
shares of common stock, par value $0.0001 per share (the “Common Stock”), of which 5,763,835 shares will
be issued and outstanding; 8,510,275 shares will be reserved for issuance upon
the (1) conversion of outstanding shares of Series A Preferred Stock of the Company, par value $0.0001 per
share (the “Series A Stock”) and (2) exercise and subsequent conversion
of the outstanding warrants to acquire Series A Stock; 9,768,277 shares will be
reserved for issuance upon the (1) conversion of outstanding shares of Series B
Preferred Stock (the “Series B Stock”) and (2) exercise and subsequent
conversion of the outstanding warrants to acquire Series B Stock; 12,991,185
shares will be reserved for issuance upon (1) the conversion of outstanding
shares of Series C Preferred Stock (“Series C Stock”) and (2) exercise
and subsequent conversion of warrants to acquire Series C Stock; 1,250,000
shares will be reserved for issuance upon the conversion of outstanding shares
of Series C-1 Stock; 2,916,667 shares will be reserved for issuance upon the
conversion of outstanding shares of Series C-2 Stock and 7,380,616 shares will
be issuable upon the exercise of outstanding options and warrants to purchase
Common Stock (“Option Stock”); and

 

(B)                                36,698,667
shares of Preferred Stock, par value $0.0001 per share, consisting of (1)
8,682,000 shares designated as Series A Stock, of which 8,467,500 shares will
be issued and outstanding and 42,755 shares will be reserved for issuance upon
exercise of outstanding warrants to purchase Series A Stock (“Series A
Warrants”), (2) 10,600,000 shares designated as Series B Stock, of which
9,690,771 shares will be issued and outstanding and 77,506 shares will be
reserved for issuance upon exercise of outstanding warrants to purchase Series
B Stock (“Series B Warrants”), (3) 13,250,000 shares designated as
Series C Stock, of which 12,500,000 will be issued and outstanding and 491,185
shares reserved for issuance upon exercise of outstanding warrants to purchase
Series C Stock (“Series C Warrants”), (4) 1,250,000 shares designated as
Series C-1 Stock, all of which will be issued and outstanding and (5) 2,916,667
shares designated as Series C-2 Stock, all of which will be issued and outstanding.

 

(b)                                 all issued
and outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and nonassessable, have been, or, when issued and
paid for in compliance with the provisions of this Agreement, will be issued in
compliance with all federal and state securities laws, and were not, or will
not be, issued in violation of or subject to any preemptive or similar rights;
and

 

2

 

(c)                                  except as
otherwise set forth in this Section 3.4 and the preemptive rights set
forth in the Investor Rights Agreement, the Company will not have outstanding
any stock or other securities convertible into or exchangeable for any shares
of capital stock of the Company, any rights to subscribe for or to purchase or
any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of any capital stock, or any stock or securities
convertible into or exchangeable for any capital stock of the Company other
than the Series A Warrants, Series B Warrants, Series C Warrants and Option
Stock.

 

3.5                                 Authorization;
Binding Effect. 
All corporate action on the part of the Company, its officers, directors
and stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the Investor Rights Agreement by the Company,
the authorization, sale, issuance and delivery of the Shares and the
performance of all of the Company’s obligations under this Agreement and the
Investor Rights Agreement has been taken or will be taken prior to the
Closing.  This Agreement and the Investor
Rights Agreement, when executed and delivered by the Company, shall constitute
valid and binding obligations of the Company, enforceable in accordance with
their terms, except (i) as subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies and (ii) to
the extent the indemnification provisions in the Investor Rights Agreement may
be limited by applicable federal or state securities laws.  The Shares are duly authorized and, when
issued in compliance with the provisions of this Agreement, will be validly
issued and will be fully paid and nonassessable.  The shares of Common Stock issuable upon
conversion of the Series C-2 Stock in accordance with the Restated Certificate
will be duly authorized, validly issued, fully paid and non-assessable.  The Series C-2 Stock will have the rights,
preferences and privileges described in the Restated Certificate.  The Shares will be free of any liens or
encumbrances other than any liens or encumbrances created by or imposed upon
the holder; provided, however, that the Shares may be subject to restrictions
on transfer under state and/or federal securities laws as set forth herein.

 

3.6                                 Labor
Agreements and Actions. 
The Company is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no labor union
has requested or, to the knowledge of the Company, has sought to represent any
of the employees, representatives or agents of the Company.  There is no strike or other labor dispute
involving the Company pending, or to the knowledge of the Company threatened,
that could have a material adverse effect on the assets, properties, financial
condition, operating results, or business of the Company, nor is the Company
aware of any labor organization activity involving its employees.  The Company is not aware that any officer or
key employee, or that any group of key employees, intends to terminate their
employment with the Company, nor does the Company have a current intention to
terminate the employment of any of the foregoing.  The employment by the Company of each
officer, and each employee of the Company is not party to any employment
agreement with the Company or, to the knowledge of the Company with any other
person, and is terminable at the will of the Company.

 

3

 

3.7                                 Agreements;
Action.

 

(a)                                  Except for
agreements explicitly contemplated hereby, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, or any affiliate thereof nor are there agreements or
understandings between any person and/or entities, which affect or relate to
the voting or giving of written consents with respect to any security or by a
director of the Company.

 

(b)                                 There are no
agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which the Company is a party or by which
it is bound which may involve (i) obligations (contingent or otherwise) of, or
payments to the Company in excess of, $50,000, or (ii) the license of any
patent, copyright, trade secret or other proprietary right to or from the
Company or (iii) provisions restricting or affecting the development,
manufacture or distribution of the Company’s products or services or (iv)
indemnification by the Company with respect to infringements of proprietary
rights.

 

(c)                                  The Company
has not (i) declared or paid any dividends, or authorized or made any
distribution upon or with respect to any class or series of its capital stock,
(ii) made any loans or advances to any person, other than ordinary advances for
travel expenses, or (iii) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course
of business or (iv) incurred any indebtedness for money borrowed or incurred
any other liabilities individually in excess of $50,000 or collectively in
excess of $150,000.

 

(d)                                 For the
purposes of subsections (b) and (c) above, all indebtedness, liabilities,
agreements, understandings, instruments, contracts and proposed transactions
involving the same person or entity (including persons or entities the Company
has reason to believe are affiliated therewith) shall be aggregated for the purpose
of meeting the individual minimum dollar amounts of such subsections.

 

(e)                                  The Company
is not a party to and is not bound by any contract, agreement or instrument, or
subject to any restriction under its Restated Certificate or Bylaws, that
adversely affects its business as now conducted or as proposed to be conducted,
its properties or its financial condition.

 

(f)                                    The Company
has not engaged in the past three months in any discussion (i) with any
representative of any corporation or corporations regarding the merger of the
Company with or into any such corporation or corporations, (ii) with any
representative of any corporation, partnership, association or other business
entity or any individual regarding the sale, conveyance or disposition of all or
substantially all of the assets of the Company or a transaction or series of
related transactions in which more than fifty percent of the voting power of
the Company would be disposed of, or (iii) regarding any other form of
liquidation, dissolution or winding up of the Company.

 

3.8                                 Title.  The Company has good and marketable title to
its properties and assets and has good title to all its leasehold interests, in
each case subject to no mortgage, pledge, lien, lease, encumbrance or charge,
other than (i) the lien of current taxes not yet due and payable and

 

4

 

(ii) liens and encumbrances which do not in any case
materially detract from the value of the property subject thereto or materially
impair the operations of the Company, and which have not arisen otherwise than
in the ordinary course of business.

 

3.9                                 Compliance
with Other Instruments. 
The Company is not in violation or default of any term of its Restated
Certificate or Bylaws, or of any term or provision of any material mortgage,
indebtedness, indenture, contract, agreement, instrument, judgment, order or
decree, and is not in violation of any statute, rule or regulation applicable
to the Company where such violation would materially and adversely affect the
Company.  The execution, delivery and
performance of and compliance with the Agreement, and the issuance of the
Shares, has not resulted and will not result in any material violation of, or
conflict with, or constitute with or without the passage of time and the giving
of notice a material violation or default under, the Company’s Restated
Certificate or Bylaws or any of its agreements having a value in excess of
$50,000, nor result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of the Company.  To its knowledge, the Company has avoided
every condition, and has not performed any act, the occurrence of which would
result in the Company’s loss of any material right granted under any material
license, distribution agreement or other agreement.

 

3.10                           Litigation.  There are no actions, suits, proceedings or
investigations pending against the Company or its properties before any court
or governmental agency (nor, to the Company’s knowledge, is there any
reasonable basis therefor or threat thereof). 
The foregoing includes, without limitation, actions pending or
threatened (or any reasonable basis therefor known to the Company) involving
the prior employment of any of the Company’s employees or consultants, their
use in connection with the Company’s business of any information or techniques
allegedly proprietary to any of their former employers or their obligations
under any agreement with their former employers.  The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. 
There is no action, suit, proceeding or investigation by the Company
currently pending or which the Company intends to initiate.

 

3.11                           Employees.  To the Company’s knowledge, no employee or
consultant of the Company is in violation of any term of any employment
contract, patent disclosure agreement or any other contract or agreement
relating to the relationship of such employee with the Company or any other
party because of the nature of the business conducted or to be conducted by the
Company.

 

3.12                           Registration
Rights; Voting Right. 
Except as set forth in the Investor Rights Agreement, the Company is not
under any contractual obligation to register any of its currently outstanding
securities or any of its securities that may hereafter be issued.  To the Company’s knowledge, no stockholders
of the Company have entered into any agreement with respect to the voting of
capital shares.

 

3.13                           Governmental
Consent, etc.  No consent,
approval or authorization of or designation, declaration or filing with any
governmental authority on the part of the Company is required in connection
with the valid execution and delivery of this Agreement, or the offer, sale or
issuance of the Shares, or the consummation of any other transaction
contemplated hereby,

 

5

 

except (a) filing of the Restated Certificate in the office
of the Delaware Secretary of State or (b) qualification (or taking such action
as may be necessary to secure an exemption from qualification, if available) of
the offer and sale of the Shares under the California Corporate Securities Law
of 1968, as amended, and applicable Blue Sky laws, which filings and
qualifications, if required, will be accomplished in a timely manner.

 

3.14                           Offering.  Subject to the accuracy of the Purchaser’s
representations in Section 4 hereof, the offer, sale and issuance of the Shares to be issued in conformity with the
terms of this Agreement and the issuance of the Common Stock to be
issued upon conversion of the Series C-2 Stock constitute transactions exempt
from the registration requirements of Section 5 of the Securities Act of
1933, as amended (the “Securities Act”), and in compliance with
applicable state securities laws.

 

3.15                           Brokers or
Finders; Other Offers. 
The Company has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by the Company, any liability for
brokerage or finders’ fees or agents’ commissions or any similar charges in
connection with this Agreement.

 

3.16                           Patents and
Trademarks.  The Company
has sufficient title to and ownership
of or rights to or is in the process of acquiring the rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes necessary for its business as now
conducted and, to its knowledge, as proposed to be conducted.  A true and complete list of such intellectual
property is set forth on Schedule 3.16 hereto (the “Company IP”).  To the Company’s knowledge, the Company IP
does not conflict with or infringe upon the rights of any other person or
entity.  The Company has not entered into
any options, licenses, sublicenses or entered into any agreements of any kind
with respect to any of the intellectual property owned by, licensed to or
otherwise controlled by the Company and has not encumbered the intellectual
property of the Company in any way.  The
Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity.  The Company is not aware that any of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere
with the use of such employee’s best efforts to promote the interests of the
Company or that would conflict with the Company’s business as now conducted or
as proposed to be conducted.  Neither the
execution nor delivery of this Agreement or the Investor Rights Agreement, nor
the carrying on of the Company’s business by the employees of the Company, nor
the conduct of the Company’s business as proposed, will, to the Company’s
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees are now obligated.  The Company does not believe it will be
necessary to utilize any inventions of any of the Company’s employees (or
people it currently intends to hire) made prior to their employment by the
Company which are not currently licensed to or owned by the Company.

 

3.17                           Obligations
to Related Parties. 
There are no obligations of the Company to officers, directors,
stockholders or employees of the Company other than (a) for payment of

 

6

 

salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to employees.  None of the officers, directors or
stockholders of the Company, or any members of their immediate families, are
indebted to the Company (other than in connection with purchases of the Company’s
stock) or have any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has
a business relationship, or any firm or corporation which competes with the
Company, except that officers, directors and/or stockholders of the Company may
own stock in publicly traded companies which may compete with the Company.  No officer, director or stockholder, or to
the Company’s knowledge any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Company (other than
such contracts as relate to any such person’s ownership of capital stock or
other securities of the Company).  The
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.

 

3.18                           Disclosure.  This Agreement and the Investor Rights
Agreement and all other certificates and documents delivered in connection
herewith, when taken as a whole, do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein not misleading in light of the circumstances under
which they were made.  The Company has
provided the Purchaser with all the information the Purchaser has requested for
deciding whether to purchase the Shares.

 

3.19                           Employee
Benefit Plans.  The Company
does not have any Employee Benefit Plan
as defined in the Employee Retirement Income Security Act of 1974.

 

3.20                           Taxes.  (a) The Company has paid all federal, state, county,
local, foreign and other taxes, including, without limitation, income taxes,
estimated taxes, excise taxes, sales taxes, use taxes, gross receipts taxes,
franchise taxes, employment and payroll related taxes, property taxes and
import duties, whether or not measured in whole or in part by net income
(hereinafter, “Taxes” or, individually, a “Tax”) which have come
due and are required to be paid by it through the date hereof, and all
deficiencies or other additions to Tax interest and penalties award by it in
connection with any such Taxes, other than Taxes being disputed by the Company
in good faith for which adequate reserves have been made in accordance with
United States generally accepted accounting principles (“GAAP”); (b) the
Company has timely filed or caused to be filed all returns for Taxes that it is
required to file on and through the date hereof (including all applicable extensions), and all such Tax
returns are accurate and complete in all material respects, (c) with
respect to all Tax returns of the Company, (i) there is no unassessed Tax
deficiency proposed or, to the knowledge of the Company, threatened against the
Company and (ii) no audit is in progress with respect to any return for Taxes,
no extension of time is in force with respect to any date on which any return
for Taxes was or is to be filed and no waiver or agreement is in force for the
extension of time for the assessment or payment of any Tax; (d) all provisions
for Tax liabilities of the Company with respect to the Financial Statements (as
defined below) have been made in accordance with GAAP consistently applied, and
all liabilities for Taxes of the Company attributable to periods prior to or
ending on the date hereof have been adequately provided for on the Financial
Statements; and (e) there are no liens for Taxes on the assets of the Company.

 

7

 

3.21                           Proprietary
Information and Inventions Agreements.  Each employee, consultant and officer of the
Company has executed an agreement with the Company regarding confidentiality
and proprietary information substantially in the form or forms made available
to the Purchaser.  The Company, after
reasonable investigation, is not aware that any of its employees or consultants
is in violation thereof, and the Company will use its reasonable best efforts
to prevent any such violation.  All
consultants to or vendors of the Company with access to confidential
information of the Company are parties to a written agreement substantially in
the form or forms made available to the Purchaser, under which, among other
things, each such consultant or vendor is obligated to maintain the
confidentiality of confidential information of the Company.  The Company is not aware that any of its
consultants or vendors is in violation thereof, and the Company will use its
reasonable best efforts to prevent any such violation.

 

3.22                           Permits.  The Company
has all franchises, permits, licenses and any similar authority necessary for
the conduct of its business as now being conducted by it, the lack of which could materially and adversely
affect the business, properties, prospects, or financial condition of the
Company and believes, after reasonable investigation, that it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted.  The
Company is not in default in any material respect under any of such franchises,
permits, licenses or other similar authority.

 

3.23                           Corporate
Documents.  The Restated
Certificate and Bylaws of the Company are in the form made available to the
Purchaser.  The copy of the minute books
of the Company made available to the Purchaser, contains minutes of all
meetings of directors and stockholders and all actions by written consent
without a meeting by the directors and stockholders since the date of
incorporation and reflects all actions by the directors (and any committee of
directors) and stockholders with respect to all transactions referred to in
such minutes accurately in all material respects.

 

3.24                           Real
Property Holding Corporation. 
The Company is not a United States real property holding corporation
within the meaning of the Internal Revenue Code Section 897(c)(2) and any
regulations promulgated thereunder.

 

3.25                           Insurance.  The Company maintains with financially sound
and reputable insurers, insurance with respect to its properties and business
against such casualties and contingencies, of such types (including, without
limitation, errors and omissions coverage), on such terms and in such amounts
(including deductibles, co-insurance and self-insurance, if adequate reserves
are maintained with respect thereto) as are customary in the case of similarly
situated entities engaged in a similar business.

 

3.26                           Financial
Statements.  The Company
has made available to the Purchaser its audited financial statements (including
balance sheet, income statement and statement of cash flows) for the years
ended December 31, 2003 and December 31, 2002 and its unaudited financial
statements (including balance sheet, income statement and statement of cash
flows) for the interim period ended June 30, 2004 (collectively, the “Financial
Statements”).  The Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated,
except that the Financial Statements may not contain all footnotes required by
generally accepted accounting principles.

 

8

 

The Financial Statements fairly present the financial
condition and operating results of the Company as of the dates, and for the
periods, indicated therein, subject to normal year-end audit adjustments.  Except as set forth in the Financial
Statements, the Company has no material liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to June 30, 2004 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Financial
Statements, which, in both cases, individually or in the aggregate are not
material to the financial condition or operating results of the Company.

 

3.27                           Investment Company.  The Company is not and is not controlled by
or affiliated with an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

 

4.               Representation
and Warranties of the Purchaser. 
The Purchaser represents and warrants to the Company as follows:

 

4.1                                 This
Agreement and the Investor Rights Agreement each constitute the Purchaser’s
valid and legally binding obligation, enforceable in accordance with its terms.

 

4.2                                 The
Purchaser is purchasing the Shares for its own account for investment purposes
only and not with a view to, or for resale in connection with, any “distribution”
thereof for purposes of the Securities Act of 1933, as amended (the “Securities
Act”).  The Purchaser understands
that the Shares have not been registered under the Securities Act or any
applicable state securities laws by reason of a specific exemption therefrom
that depends upon, among other things, the bona fide nature of the investment
intent as expressed herein.

 

4.3                                 The
Purchaser has discussed the Company and its plans, operations and financial
condition with the Company’s officers
and has received all such information as the Purchaser deems necessary
and appropriate to enable it to evaluate the financial risk inherent in making
an investment in the Shares.  The
Purchaser has received satisfactory and complete information concerning the
business and financial condition of the Company in response to the Purchaser’s
inquiries.

 

4.4                                 The
Purchaser realizes that the purchase of the Shares will be a highly speculative
investment.  The Purchaser is able,
without impairing the Purchaser’s financial condition, to hold the Shares for
an indefinite period of time and to suffer a complete loss of the Purchaser’s
investment.  The Purchaser recognizes
that the Company has only recently been organized and that it has a limited
financial and operating history and the investment in the Company involves
substantial risks.  The Purchaser
understands all of the risks related to the purchase of the Shares.  By virtue of the Purchaser’s experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company, the Purchaser is capable of evaluating the
merits and risks of the Purchaser’s investment in the Company and has the
capacity to protect the Purchaser’s own interests.

 

4.5                                 The
Purchaser understands that the Shares must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
registration is otherwise available. 
Moreover, the Purchaser understands that the Company is under no

 

9

 

obligation to register the Shares except as otherwise
provided in the Investor Rights Agreement. 
The Purchaser is aware of Rule 144 promulgated under the Securities
Act, which permits limited resale of securities purchased in a private
placement subject to the satisfaction of certain conditions.  The Purchaser understands that the Shares
will be imprinted with a legend that prohibits the transfer of the Shares
unless they are registered or such registration is not required in the opinion
of counsel reasonably satisfactory to the Company.

 

4.6                                 The
Purchaser represents that it is an “accredited investor” as such term is
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

4.7                                 The
Purchaser understands that the proceeds of this financing will not be
sufficient to carry the Company to the point of profitability.

 

4.8                                 The
Purchaser understands that while management forecasts, if any, were made in
good faith, such forecasts may be inaccurate and operating results could differ
dramatically and materially from the results forecast by management.

 

5.               Conditions
to Closing of the Purchaser. 
The Purchaser’s obligations to purchase the Shares at the Closing are,
at the option of the Purchaser, subject to the fulfillment of the following
conditions:

 

5.1                                 Representations
and Warranties Correct. 
The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the Closing,
provided that with respect to any representation or warranty that is qualified
as to materiality, the applicable materiality standard applied shall not be
increased by virtue of the materiality reference contained in this
Section 5.1.

 

5.2                                 Performance;
Compliance Certificate. 
The Company shall have performed and complied with all covenants,
agreements, obligations and conditions that are required to be performed or
complied with by it on or before the Closing. 
The Company shall have delivered to the Purchaser a certificate of the
Company executed by the President of the Company, dated as of the date of the
Closing certifying to the fulfillment of the conditions specified in Sections
5.1 and 5.2 of this Agreement.

 

5.3                                 Blue Sky.  The Company shall have obtained all necessary
Blue Sky law and other permits and qualifications, or have the availability of
exemptions therefrom, required by any state for the offer and sale of the
Shares.

 

5.4                                 Restated
Certificate.  The Restated
Certificate shall have been filed with the Delaware Secretary of State and the
Purchaser shall have received reasonably satisfactory evidence thereof.

 

5.5                                 Investor
Rights Agreement. 
The Company, the Purchaser and the other parties thereto shall have
executed and delivered the Investor Rights Agreement.

 

5.6                                 Opinion of
Company Counsel. 
The Purchaser shall have received from Latham & Watkins, counsel for
the Company, an opinion dated as of the Closing, in substantially the form of Exhibit D.

 

10

 

5.7                                 No
Injunction, Etc. 
No order to restrain, enjoin or otherwise prevent the consummation of
this Agreement of the transactions contemplated hereby shall have been entered
by any court or administrative body.

 

5.8                                 Qualifications.  All authorizations, approvals, or permits, if
any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Series C-2 Stock pursuant
to this Agreement shall be duly obtained and effective as of the Closing.

 

5.9                                 Collaboration
Agreement.  The Company
and the Purchaser shall have executed and delivered the Collaboration Agreement
in substantially the form attached hereto as Exhibit E.

 

6.               Conditions
to Closing of the Company. 
The Company’s obligations to issue and sell the Shares at the Closing
are, at the option of the Company, subject to the fulfillment of the following
conditions:

 

6.1                                 Representations
and Warranties Correct.  The representations and warranties made by the
Purchaser in Section 4 hereof shall be true and correct in all material
respects as of the Closing, provided that with respect to any representation or
warranty that is qualified as to materiality, the applicable materiality
standard applied shall not be increased by virtue of the materiality reference
contained in this Section 6.1.

 

6.2                                 Performance;
Compliance Certificate. 
The Purchaser shall have performed and complied with all covenants,
agreements, obligations and conditions that are required to be performed or
complied with by it on or before the Closing. 
The Purchaser shall have delivered to the Company a certificate of the
Purchaser executed by the President of the Purchaser, dated as of the date of
the Closing certifying to the fulfillment of the conditions specified in
Sections 6.1 and 6.2 of this Agreement.

 

6.3                                 Blue Sky.  The Company shall have obtained all necessary
Blue Sky law and other permits and qualifications, or have the availability of
exemptions therefrom, required by any state for the offer and sale of the
Shares.

 

6.4                                 Restated
Certificate.  The Restated
Certificate shall have been filed with the Delaware Secretary of State.

 

6.5                                 Investor
Rights Agreement. 
The Company, the Purchaser and the other parties thereto shall have
executed and delivered the Investor Rights Agreement.

 

6.6                                 No
Injunction, Etc. 
No order to restrain, enjoin or otherwise prevent the consummation of
this Agreement of the transactions contemplated hereby shall have been entered
by any court or administrative body.

 

6.7                                 Qualifications.  All authorizations, approvals, or permits, if
any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Series C-2 Stock pursuant
to this Agreement shall be duly obtained and effective as of the Closing.

 

11

 

6.8                                 Collaboration
Agreement.  The Company
and the Purchaser shall have executed and delivered the Collaboration Agreement
in substantially the form attached hereto as Exhibit E.

 

7.               Miscellaneous.

 

7.1                                 Governing
Law.  This Agreement and
all acts and transactions pursuant hereto and the rights and obligations of the
parties hereto shall be governed, construed and interpreted in accordance with
the laws of the State of California, without giving effect to its principles of
conflicts of law or choice of law.

 

7.2                                 Survival.  The representations and warranties contained
herein shall survive the execution and delivery of this Agreement and the sale
of the Shares.

 

7.3                                 Successors
and Assigns.  The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties as are permitted by this
Agreement.  Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and permitted assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except
as expressly provided in this Agreement.

 

7.4                                 Entire
Agreement.  This
Agreement and the Investor Rights Agreement embody the entire understanding and
agreement between the Purchaser and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.

 

7.5                                 Counterparts.  This Agreement may be executed in any number
of counterparts and signatures and may be delivered by facsimile, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument.

 

7.6                                 Expenses.  The Company and the Purchaser shall each bear
their own legal and other expenses in connection with the transactions
contemplated hereby.

 

7.7                                 Notices,
etc.  All notices and other
communications required or permitted hereunder shall be effective upon receipt
and shall be in writing and may be delivered in person, by telecopy, electronic
mail, overnight delivery service or U.S. mail, addressed (a) if to the
Purchaser, at its address set forth on the signature page of this Agreement, or
at such other address as the Purchaser shall have furnished the Company in
writing, or (b) if to the Company, at the address of its principal office, or
at such other address as the Company shall have furnished to the Purchaser in
writing.

 

7.8                                 California
Corporate Securities Law. 
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY
PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL,
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY
SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS CODE.  THE 

 

12

 

RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO
EXEMPT.

 

7.9                                 Titles and
Subtitles.  The titles of
the paragraphs and subparagraphs of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement.

 

7.10                           Amendments
and Waivers.  Any term of
this Agreement may be amended or waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Company and the holders of at least a majority of the Common
Stock issued or issuable upon conversion of the Shares.  Any amendment or waiver effected in
accordance with this Section 7.10 shall be binding upon the Purchaser and
each transferee of the Shares (or the Common Stock issuable upon conversion
thereof), each future holder of all such securities, and the Company.

 

7.11                           Severability.  If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. 
In the event that the parties cannot reach a mutually agreeable and
enforceable replacement for such provision, then (a) such provision shall
be excluded from this Agreement, (b) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (c) the balance of
the Agreement shall be enforceable in accordance with its terms.

 

7.12                           Confidentiality.  The Company and the Purchaser agree that,
except with the prior written permission of the applicable party, it shall at
all times keep confidential and not divulge, furnish or make accessible to
anyone any confidential information, knowledge or data concerning or relating
to the business or financial affairs of the other party to which such party has
been or shall become privy by reason of this Agreement, discussions or
negotiations relating to this Agreement, the performance of its obligations
hereunder or the ownership of Shares purchased hereunder.  The provisions of this Section 7.12
shall be in addition to, and not in substitution for, the provisions of any
separate nondisclosure agreement executed by the parties hereto with respect to
the transactions contemplated hereby.

 

(Signature Page Follows)

 

13

 

The
parties have executed this Series C-2 Preferred Stock Purchase Agreement
as of the date first written above.

 

 

	
  COMPANY:

  	
  PURCHASER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SUNESIS PHARMECEUTICALS

  	
  BIOGEN IDEC MA

  	
   

  
	
  INCORPORATED

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Daniel N Swisher Jr.

  	
   

  	
  /s/ Mark Wiggins

  	
   

  
	
  Name:

  	
  Daniel N Swisher Jr.

  	
   

  	
  Name:

  	
  Mark Wiggins

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  	
  Title:

  	
  EVP Business Development

  	
   

  
	
  Address:

  	
  341 Oyster Point Blvd.

  	
   

  	
  Address:

  	
  14 Cambridge Center

  	
   

  
	
   

  	
  South San Francisco, CA 94080

  	
   

  	
   

  	
  Cambridge, MA 02142

  	
   

  
	
  Fax:

  	
  (650) 266-3501

  	
   

  	
   

  	
   

  	
   

  
							

 

 

SIGNATURE
PAGE TO PURCHASE AGREEMENT

 

 

EXHIBITS

 

	
  Exhibit A -

  	
   

  	
  Form of Seventh Amended and Restated Certificate of Incorporation

  
	
   

  	
   

  	
   

  
	
  Exhibit B -

  	
   

  	
  Schedule of Exceptions to Representations and Warranties

  
	
   

  	
   

  	
   

  
	
  Exhibit C -

  	
   

  	
  Form of Eighth Amended and Restated Investor Rights Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit D -

  	
   

  	
  Form of Legal Opinion of Latham & Watkins LLP

  
	
   

  	
   

  	
   

  
	
  Exhibit E -

  	
   

  	
  Form of Collaboration Agreement

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