UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: SEPTEMBER 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________
Commission File Number: 0-30235
EXELIXIS, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3257395
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
170 Harbor Way
P.O. Box 511
South San Francisco, CA 94083
(Address of principal executive offices, including zip code)
(650) 837-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:
Yes [X] No [ ]
As of October 31, 2001, there were 49,511,273 shares of the registrant's common
stock outstanding.
EXELIXIS, INC.
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Consolidated Condensed Financial Statements
Consolidated Condensed Balance Sheets
September 30, 2001 and December 31, 2000 3
Consolidated Condensed Statements of Operations
Three and Nine Months ended September 30, 2001 and 2000 4
Consolidated Condensed Statements of Cash Flows
Nine Months ended September 30, 2001 and 2000 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 17
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 18
Item 5. Other Information - Risk Factors 19
Item 6. Exhibits and Reports on Form 8-K 30
SIGNATURE
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements
EXELIXIS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
2001 2000 (1)
---------- --------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 42,813 $ 19,552
Short-term investments 89,470 93,000
Other receivables 2,368 1,493
Inventories - 3,612
Other current assets 2,671 1,987
---------- --------------
Total current assets 137,322 119,644
Property and equipment, net 35,870 23,480
Related party receivables 1,021 494
Goodwill and other intangibles, net 67,454 58,674
Other assets 5,050 2,622
---------- --------------
Total assets $ 246,717 $ 204,914
========== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 11,581 $ 10,050
Line of credit - 1,484
Current portion of capital lease obligations 6,239 3,826
Current portion of notes payable 3,589 1,664
Advances from minority shareholders - 868
Deferred revenue 12,908 6,233
---------- --------------
Total current liabilities 34,317 24,125
Capital lease obligations 9,881 6,341
Notes payable 828 1,635
Convertible promissory note 30,000 -
Minority interest in consolidated subsidiary - 1,044
Other long-term liabilities 200 -
Deferred revenue 22,080 9,036
---------- --------------
Total liabilities 97,306 42,180
---------- --------------
Commitments
Stockholders' equity:
Common stock 50 47
Additional paid-in-capital 338,326 304,339
Notes receivable from stockholders (1,624) (1,805)
Deferred stock compensation, net (5,355) (10,174)
Accumulated other comprehensive income 969 365
Accumulated deficit (182,955) (130,038)
---------- --------------
Total stockholders' equity 149,411 162,734
---------- --------------
Total liabilities and stockholders' equity $ 246,717 $ 204,914
========== ==============
(1) The consolidated condensed balance sheet at December 31, 2000 has been
derived from the audited financial statement at that date but does not include
all of the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
The accompanying notes are an integral part of these consolidated condensed
financial statements.
EXELIXIS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(unaudited)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
2001 2000 2001 2000
--------- --------- --------- ---------
Revenues:
Contract and government grants $ 9,212 $ 5,211 $ 23,649 $ 14,914
License 2,716 907 4,564 2,771
--------- --------- --------- ---------
Total revenues 11,928 6,118 28,213 17,685
--------- --------- --------- ---------
Operating expenses:
Research and development (1) 22,466 13,428 59,836 37,248
General and administrative (2) 5,361 3,845 14,597 11,539
Amortization of goodwill and intangibles 1,397 - 3,673 -
Acquired in-process research and development - - 6,673 -
--------- --------- --------- ---------
Total operating expenses 29,224 17,273 84,779 48,787
--------- --------- --------- ---------
Loss from operations (17,296) (11,155) (56,566) (31,102)
Other income (expense):
Interest and other income 1,617 2,318 5,109 4,331
Interest expense (811) (162) (1,460) (488)
--------- --------- --------- ---------
Total other income 806 2,156 3,649 3,843
Net loss $(16,490) $ (8,999) $(52,917) $(27,259)
========= ========= ========= =========
Net loss per share, basic and diluted $ (0.35) $ (0.22) $ (1.15) $ (1.00)
========= ========= ========= =========
Shares used in computing net loss per share,
basic and diluted 47,750 41,179 45,848 27,235
========= ========= ========= =========
(1) Includes stock compensation expense of $1,136 and $2,291 in the quarters
ended September 30, 2001 and 2000, respectively, and $3,936 and $8,293 in the
nine-month periods ended September 30, 2001 and 2000, respectively.
(2) Includes stock compensation expense of $551 and $1,210 in the quarters ended
September 30, 2001 and 2000, respectively, and $1,921 and $3,766 in the nine-month
periods ended September 30,2001 and 2000, respectively.
The accompanying notes are an integral part of these consolidated condensed
financial statements.
EXELIXIS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(unaudited)
SIX MONTHS ENDED SEPTEMBER 30,
-------------------------------
2001 2000
--------- ---------
Cash flows from operating activities:
Net loss $(52,917) $(27,259)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 7,135 3,207
Amortization of deferred stock compensation 5,857 12,059
Amortization of goodwill and other intangibles 3,673 -
Acquired in-process research and development 6,673 -
Changes in assets and liabilities:
Other receivables (234) (1,363)
Other current assets (717) (1,337)
Related party receivables (474) 226
Other assets (2,731) (532)
Accounts payable and accrued expenses (18) 885
Deferred revenue 20,441 9,587
--------- ---------
Net cash provided by (used in) operating activities (13,312) (4,707)
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (8,326) (12,970)
Proceeds from sale-leaseback of equipment - 5,954
Cash acquired in acquisition 3,463 -
Proceeds from maturity of short-term investments 115,779 -
Purchases of short-term investments (111,562) (77,874)
--------- ---------
Net cash provided by (used in) investing activities (646) (84,890)
--------- ---------
Cash flows from financing activities:
Proceeds from initial public offering, net - 124,709
Proceeds from convertible note 30,000 -
Proceeds from issuance of common stock 10,000 -
Proceeds from exercise of stock options and warrants 384 503
Proceeds from employee stock purchase plan 1,198 -
Repayments of notes from stockholders 181 -
Principal payments on capital lease obligations (3,162) (570)
Principal payments on notes payable (1,429) (1,128)
--------- ---------
Net cash provided by financing activities 37,172 123,514
--------- ---------
Effect of foreign exchange rate changes on cash 47 -
--------- ---------
Net increase in cash and cash equivalents 23,261 33,917
Cash and cash equivalents, at beginning of period 19,552 5,400
--------- ---------
Cash and cash equivalents, at end of period $ 42,813 $ 39,317
========= =========
The accompanying notes are in integral part of these consolidated condensed
financial statements.
EXELIXIS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(UNAUDITED)
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
- ------------
Exelixis, Inc. ("Exelixis" or the "Company") is a genomics-based biotechnology
company focused on pharmaceutical product development through its expertise in
comparative genomics and model system genetics. Company scientists have
developed multiple fungal, nematode, insect, plant and vertebrate genetic
systems. Exelixis' proprietary model systems and comparative genomics
technologies address gene function by using biologically relevant functional
genomics information very early on in the process to rapidly, efficiently and
cost-effectively translate sequence data to knowledge about the function of
genes and the proteins that they encode. The Company also has a significant
internal cancer discovery and drug development program. Exelixis believes that
its technology is broadly applicable to all life science industries including
pharmaceutical, diagnostic, agricultural biotechnology and animal health. The
Company has active partnerships with Aventis CropScience, Bayer, Bristol-Myers
Squibb, Dow AgroSciences, Elan Pharmaceuticals, Pharmacia, Protein Design Labs
and Scios.
Basis of Presentation
- -----------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared by the Company in accordance with accounting principles generally
accepted in the United States of America for interim financial information and
pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of
the Securities and Exchange Commission ("SEC"). Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the Company's
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three- and nine-month periods ended September 30, 2001 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001, or for any future period. These financial statements and
notes should be read in conjunction with the consolidated financial statements
and notes thereto for the year ended December 31, 2000 included in the Company's
Annual Report on Form 10-K.
Net Loss per Share
- ---------------------
Basic and diluted net loss per share is computed by dividing the net loss for
the period by the weighted average number of shares of common stock outstanding
during the period. The calculation of diluted net loss per share excludes
potential common stock if their effect is antidilutive. Potential common stock
consists of common stock subject to repurchase, incremental common shares
issuable upon the exercise of stock options and warrants and shares issuable
upon conversion of the preferred stock and a convertible promissory note.
Comprehensive Income (Loss)
- -----------------------------
There are two components of other comprehensive income: unrealized gains on
available-for-sale securities and foreign currency translation adjustments. For
the three- and nine-month periods ended September 30, 2001, total comprehensive
loss amounted to approximately $16.0 million and $52.3 million, respectively.
For the three- and nine-month periods ended September 30, 2000, total
comprehensive loss amounted to $8.8 million and $27.0 million, respectively.
Foreign Currency Translation
- ------------------------------
The Company's German subsidiary, Artemis Pharmaceuticals GmbH ("Artemis"), uses
its local currency as its functional currency. Assets and liabilities are
translated at exchange rates in effect at the balance sheet date, and income and
expense amounts are translated at the average exchange rates during the period.
Resulting translation adjustments are recorded directly to a separate component
of stockholders' equity.
Reclassification
- ----------------
Certain prior period amounts have been reclassified to conform to the current
period presentation.
Recent Accounting Pronouncements
- ----------------------------------
In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations"
("SFAS No. 141"), which establishes financial accounting and reporting for
business combinations and supersedes APB Opinion No. 16, "Business
Combinations," and FASB Statement No. 38, "Accounting for Preacquisition
Contingencies of Purchased Enterprises." SFAS No. 141 requires that all business
combinations be accounted for using one method, the purchase method. The
provisions of SFAS No. 141 apply to all business combinations initiated after
June 30, 2001. The adoption of SFAS No. 141 had no material impact on financial
reporting and related disclosures of the Company.
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS No. 142") which establishes financial accounting and reporting
for acquired goodwill and other intangible assets and supersedes APB Opinion No.
17, "Intangible Assets." SFAS No. 142 addresses how intangible assets that are
acquired individually or with a group of other assets (but not those acquired in
a business combination) should be accounted for in financial statements upon
their acquisition and after they have been initially recognized in the financial
statements. The provisions of SFAS No. 142 are effective for fiscal years
beginning after December 15, 2001. Exelixis will adopt SFAS No. 142 during the
first quarter of fiscal 2002, and is in the process of evaluating the impact of
implementation on its financial position and results of operations.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS No. 144"), which is effective for fiscal
years beginning after December 15, 2001 and interim periods within those fiscal
periods. SFAS No. 144 supersedes SFAS No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" and parts of APB
Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions relating to extraordinary items", however,
SFAS No. 144 retains the requirement of Opinion 30 to report discontinued
operations separately from continuing operations and extends that reporting to a
component of an entity that either has been disposed of (by sale, by abandonment
or in a distribution to owners) or is classified as held for sale. SFAS 144
addresses financial accounting and reporting for the impairment of certain
long-lived assets and for long-lived assets to be disposed of. Management does
not expect the adoption of SFAS 144 to have a material impact on the Company's
financial position and results of operations.
NOTE 2. SALE OF VINIFERA OWNERSHIP INTEREST
On March 31, 2001, the Company reduced its ownership interest in Vinifera, Inc.
("Vinifera") to 19% by selling 3.0 million shares of Vinifera common stock back
to Vinifera in consideration for $2.1 million in interest bearing promissory
notes. The promissory notes bear an interest rate of prime plus 1% and are
payable in two installments of $400,000, due no later than September 30, 2001
and February 28, 2002, respectively, and one installment of $1.3 million, due on
February 28, 2006. The first installment payment due date has been extended to
December 31, 2001. Due to risks associated with collection, the Company has
reserved for $1.7 million of these promissory notes.
As a result of this transaction, the Company recorded the following amounts as
an adjustment to goodwill recorded in connection with the acquisition of
Agritope, Inc. (parent company of Vinifera), based on the operating results of
Vinifera through March 31, 2001: a write-down of the value of acquired developed
technology attributable to Vinifera, a gain on sale of Vinifera shares and the
promissory note reserve. The net adjustment was an increase to goodwill in the
amount of $675,000. Beginning April 1, 2001, the Company accounts for its
remaining investment in Vinifera using the cost method.
NOTE 3. ACQUISITION OF ARTEMIS PHARMACEUTICALS GMBH
In May 2001, Exelixis acquired a majority of the outstanding capital stock of
Artemis Pharmaceuticals GmbH ("Artemis"), a privately held genetics and
functional genomics company organized under the laws of Germany. The
transaction, which was accounted for under the purchase method of accounting,
was effected through the exchange of shares of Exelixis common stock for DEM
1.00 of nominal value of Artemis capital stock, using an exchange ratio of 4.064
to one. Approximately 1.6 million shares of Exelixis common stock were issued in
exchange for 78% of the outstanding capital stock of Artemis held by Artemis
stockholders. In addition, Exelixis received a call option (the "Call Option")
from, and issued a put option (the "Put Option") to, certain stockholders of
Artemis (the "Option Holders") for the issuance of approximately 480,000 shares
of Exelixis common stock in exchange for the remaining 22% of the outstanding
capital stock of Artemis held by the Artemis Option Holders. Exelixis may
exercise the Call Option at any time from May 14, 2001 through January 31, 2002,
and the Option Holders may exercise their rights under the Put Option at any
time from April 1, 2002 through May 15, 2002. The value of any shares issued
pursuant to exercising the Call Option or Put Option will be added to goodwill.
In connection with the acquisition of Artemis, Exelixis also issued fully vested
rights to purchase approximately 187,000 additional shares of Exelixis common
stock to Artemis employees in exchange for such employees' vested options
formerly representing the right to purchase shares of Artemis capital stock
pursuant to an Employee Phantom Stock Option Program.
The total consideration for the acquisition was approximately $22.3 million,
which consisted of Exelixis common stock and options valued at $21.4 million and
estimated Exelixis transaction costs of $900,000. Exelixis' transaction costs
include financial advisory, legal, accounting and other fees.
Based upon an independent valuation of the tangible and intangible assets
acquired, Exelixis management has completed an allocation of the total cost of
the acquisition to the assets acquired and liabilities assumed as follows (in
thousands):
Tangible assets acquired $6,848
In-process research and development 6,673
Developed technology 1,240
Assembled workforce 1,332
Goodwill 9,655
Patents/core technology 571
Liabilities assumed (4,016)
--------
$22,303
========
The Company will amortize the acquired intangible assets using the following
estimated useful lives:
Developed technology 5 years
Patents/core technology 15 years
Assembled workforce 3 years
Goodwill 15 years
The valuation of the purchased in-process research and development of $6.7
million was based upon the results of an independent valuation using the income
approach for each of the three significant in-process projects. The in-process
projects relate primarily to the development of technologies that use vertebrate
genetic model organisms, zebrafish and mice, to identify and functionally
validate novel genes in vivo. These genes can be used as novel screening
targets or as the basis for secreted proteins in clinically and commercially
relevant diseases. The in-process projects are expected to be completed over
the next 18 months. The income approach estimates the value of each acquired
in-process project based on its expected future cash flows. The valuation
analysis considered the contribution of the core technology as well as the
percent complete of each in-process research and development project. The
expected present value of the cash flows associated with the in-process research
and development projects was computed using a risk adjusted rate of return of
30%, which is considered commensurate with the overall risk and percent complete
of the in-process projects. The purchased in-process research and development
was not considered to have reached technological feasibility, and it has no
alternative future use, accordingly, it has been recorded as a component of
operating expense.
The revenues, expenses, cash flows and other assumptions underlying the
estimated fair value of the acquired in-process research and development involve
significant risks and uncertainties. The risks and uncertainties associated with
completing the acquired in-process projects include the ability to reach future
research milestones since the technologies being developed are unproven, the
ability to retain key personal, the ability to obtain licenses to key technology
and the ability to avoid infringing on patents and propriety rights of third
parties.
PRO FORMA RESULTS
The Company's historical consolidated condensed statements of operations include
the results of Artemis and Agritope, Inc. (now Exelixis Plant Sciences, Inc.)
subsequent to the acquisition dates of May 14, 2001 and December 8, 2000,
respectively. The following unaudited pro forma financial information presents
the consolidated results of the Company as if the acquisitions of Artemis and
Agritope had occurred at the beginning of each period presented. Nonrecurring
charges, such as acquired in-process research and development, are not reflected
in the following unaudited pro forma financial information. This unaudited pro
forma financial information is not intended to be indicative of future operating
results (in thousands, except per share data).
NINE MONTHS ENDED SEPTEMBER 30,
------------------------------
2001 2000
----------- ---------
Total revenues $ 28,469 $ 25,193
Net loss $(49,847) $(39,431)
Net loss per share, basic and diluted $ (1.07) $ (1.29)
NOTE 4. SUPPLEMENTAL STOCK OPTION PLAN
During April 2001, the Company granted approximately 545,000 supplemental stock
options ("Supplemental Options") under the 2000 Equity Incentive Plan to
employees (excluding officers and directors) who had stock options with exercise
prices greater than $16.00 per share under the 2000 Equity Incentive Plan. The
number of Supplemental Options granted were equal to 50% of the corresponding
original grant held by each employee, have an exercise price of $16.00, vest
monthly over a two-year period beginning April 1, 2001, and have a 27-month
term. The vesting on the corresponding original grants was halted and will
resume in April 2003 following the completion of vesting of the Supplemental
Options. This new grant constitutes a synthetic repricing as defined in FASB
Interpretation Number 44 "Accounting for Certain Transactions Involving Stock
Compensation" and will result in certain options being reported using the
variable plan method of accounting for stock compensation expense until they are
exercised, forfeited or expire. As of September 30, 2001, the Company has
recorded no compensation expense for the Supplemental Options for the current
fiscal year.
NOTE 5. COMMITMENTS
During April 2001, the Company entered into a master lease agreement with a
third-party lessor for an equipment lease line of credit of up to $12.0 million,
which expires on December 31, 2001. The master lease agreement provides for a
periodic delivery structure. Each delivery has a payment term of 36 or 48 months
depending on the type of the equipment purchased under the lease. At September
30, 2001, $5.6 million was remaining under the equipment lease line of credit.
Under the master lease agreement, the Company is subject to certain financial
covenants. As of September 30, 2001, the Company was in compliance with all such
covenants.
NOTE 6. COLLABORATION AGREEMENTS
On May 22, 2001, the Company and Protein Design Labs, Inc. ("PDL") entered into
a collaboration to discover and develop humanized antibodies for the diagnosis,
prevention and treatment of cancer. The collaboration will utilize Exelixis'
model organism genetics technology for the identification of new cancer drug
targets and PDL's antibody and clinical development expertise to create and
develop new antibody drug candidates. PDL will provide Exelixis with $4.0
million in annual research funding for two or more years and has purchased a
$30.0 million convertible note. The note bears interest at 5.75%, and the
interest thereon is payable annually. The note is convertible at PDL's option
any time after the first anniversary of the note. The note is convertible into
Exelixis common stock at a conversion price per share equal to the lower of (i)
$28.175 and (ii) 110% of the Fair Market Value (as defined in the note) of a
share of Exelixis common stock at the time of conversion.
On July 17, 2001, the Company and Bristol-Myers Squibb Company ("BMS") entered
into a collaboration involving three agreements: (a) a Stock Purchase Agreement;
(b) a Cancer Collaboration Agreement; and (c) a License Agreement. Under the
terms of the collaboration, BMS (i) purchased 600,600 shares of Exelixis common
stock in a private placement at a purchase price of $33.30 per share, for cash
proceeds to Exelixis of approximately $20.0 million; (ii) agreed to pay Exelixis
a $5.0 million upfront license fee and provide Exelixis with $3.0 million per
year in research funding for a minimum of three years; and (iii) granted to
Exelixis a worldwide, fully-paid, exclusive license to an analogue to
Rebeccamycin developed by BMS, which is currently in Phase I and Phase II
clinical studies for cancer. Due to risk and uncertainties with Rebeccamycin,
and because the analogue had not reached technological feasibility and has no
alternative use, the analogue was therefore assigned no value for financial
reporting purposes. Exelixis has agreed to provide BMS with exclusive rights to
certain potential small molecule compound drug targets in cancer identified
during the term of the research collaboration. The premium in excess of fair
market value of $10.0 million paid for the stock purchased by BMS is being
accounted for similar to an upfront license fee and is being recognized ratably
over the life of the contract.
On July 26, 2001, the Company announced the reacquisition, effective February
2002, of future rights to research programs in metabolism and alzheimer's
disease previously licensed exclusively to Pharmacia Corporation ("Pharmacia").
Pharmacia will retain rights to targets under the existing agreement selected
prior to the reacquisition date, subject to the payment of milestones for
certain of those targets selected and royalties for future development of
products against or using those targets, but will have no other obligations to
make payments to the Company, including approximately $9.0 million in annual
funding that would otherwise be payable for an additional two years if the
Company had not elected to reacquire rights to the research at this time. As a
result of this transaction, revenue recognition of upfront license fees and
milestone payments has accelerated over the remaining term of the agreement.
The result is an increase of approximately $1.0 million in incremental revenue
for the quarter ended September 30, 2001.
In August and October 2001, the Company entered into collaboration agreements
with Elan Pharmaceuticals, Inc. ("Elan") and Scios Inc. ("Scios"), respectively,
to jointly design custom high-throughput screening compound libraries that
Exelixis will synthesize and qualify. Both Elan and Scios will pay Exelixis a
per-compound fee and both have paid a $500,000 upfront technology access fee
that is creditable towards the future purchase of compounds. The upfront fees
have been deferred. Revenue under these collaboration agreements will be
recorded upon shipment of compounds. Each party retains rights to use the
compounds in its own unique drug discovery programs and in its collaborative
efforts with third parties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion and analysis should be read in conjunction with our financial
statements and accompanying notes included in this report and the 2000 audited
consolidated financial statements and notes thereto included in our Annual
Report on Form 10-K for the year ended December 31, 2000. Operating results are
not necessarily indicative of results that may occur in future periods.
The following discussion and analysis contains forward-looking statements.
These statements are based on our current expectations, assumptions, estimates
and projections about our business and our industry, and involve known and
unknown risks, uncertainties and other factors that may cause our or our
industry's results, levels of activity, performance or achievement to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied in or contemplated by the forward-looking
statements. Words such as "believe," "anticipate," "expect," "intend," "plan,"
"will," "may," "should," "estimate," "predict," "potential," "continue" or the
negative of such terms or other similar expressions, identify forward-looking
statements. In addition, any statements that refer to expectations, projections
or other characterizations of future events or circumstances are forward-looking
statements. Our actual results could differ materially from those anticipated in
such forward-looking statements as a result of several factors more fully
described under the caption "Risk Factors" as well as those discussed elsewhere
in this document and those discussed in our Annual Report on Form 10-K.
OVERVIEW
We believe that we are a leader in the discovery and validation of high-quality
novel targets for several major human diseases, and a leader in the discovery of
potential new drug therapies, specifically for cancer and other proliferative
diseases. Our mission is to develop proprietary cancer products by leveraging
our integrated discovery platform to increase the speed, efficiency and quality
of pharmaceutical and agricultural product discovery and development.
Through our expertise in comparative genomics and model system genetics, we are
able to find new drug targets that we believe would be difficult or impossible
to uncover using other experimental approaches. Our pharmaceutical research
identifies novel genes and proteins expressed by those genes that, when changed,
either decrease or increase the activity in a specific disease pathway in a
therapeutically relevant manner. These genes and proteins then represent either
potential product targets or drugs that may treat disease, or prevent disease
initiation or progression.
We have established commercial collaborations with Aventis CropScience, Bayer,
Bristol-Myers Squibb, Dow AgroSciences, Elan Pharmaceuticals, Pharmacia, Protein
Design Labs and Scios, which provide us with substantial funding, including
licensing fees, research funding and milestone payments when specific objectives
are met and royalties if our partners successfully develop and commercialize
products. In addition, many of these collaborations provide us with access to
strategic technologies and product development opportunities. Revenues from
these collaborations and a few small government grants were $28.2 million for
the nine months ended September 30, 2001, $24.8 million in fiscal year 2000,
$10.5 million in fiscal year 1999 and $2.3 million in fiscal year 1998. Our
sources of potential revenues for the next several years are likely to include
upfront license and other fees, funded research payments under existing and
possible future collaborative arrangements, compound deliveries and milestone
payments and royalties from our collaborators based on revenues received from
any products commercialized under those agreements.
We have a history of operating losses resulting principally from costs
associated with research and development activities, investment in core
technologies and general and administrative functions. As a result of planned
expenditures for future research and development activities, including
manufacturing and clinical development expenses for compounds in clinical
studies, Exelixis expects to incur additional operating losses for the
foreseeable future.
License, research commitment and other non-refundable payments received in
connection with research collaboration agreements are generally deferred and
recognized on a straight-line basis over the relevant periods specified in the
agreements, generally the research term. Exelixis recognizes contract research
revenues as services are performed in accordance with the terms of the
agreements. Any amounts received in advance of performance are recorded as
deferred revenue.
ACQUISITION OF ARTEMIS PHARMACEUTICALS
In May 2001, we acquired a majority of the outstanding capital stock of Artemis
Pharmaceuticals GmbH, a privately held genetics and functional genomics company
organized under the laws of Germany ("Artemis"). The transaction, which was
accounted for under the purchase method of accounting, was effected through the
exchange of shares of our common stock for DEM 1.00 of nominal value of Artemis
capital stock, using an exchange ratio of 4.064 to one. Approximately 1.6
million shares of our common stock was issued in exchange for 78% of the
outstanding capital stock of Artemis held by Artemis stockholders. In addition,
we received a call option (the "Call Option") from, and issued a put option (the
"Put Option") to, certain stockholders of Artemis (the "Option Holders") for the
issuance of approximately 480,000 shares of our common stock in exchange for the
remaining 22% of the outstanding capital stock of Artemis held by the Option
Holders. We may exercise the Call Option at any time from May 14, 2001 through
January 31, 2002, and the Option Holders may exercise their rights under the Put
Option at any time from April 1, 2002 through May 15, 2002. The value of any
shares issued pursuant to exercising the Call Option or Put Option will be added
to goodwill. In connection with the acquisition of Artemis, we also issued fully
vested rights to purchase approximately 187,000 additional shares of our common
stock to Artemis employees in exchange for such employees' vested options
formerly representing the right to purchase shares of Artemis capital stock
pursuant to an Employee Phantom Stock Option Program.
The purchase price, which for financial accounting purposes was valued at $22.3
million, was allocated to the assets acquired and the liabilities assumed based
on their estimated fair values at the date of acquisition, as determined by
management based upon an independent valuation. As a result of this
transaction, we recorded expense associated with the purchase of in-process
research and development of $6.7 million, net tangible assets of $2.8 million
and intangible assets (including goodwill) of $12.8 million, the majority of
which will be amortized over 15 years.
RESULTS OF OPERATIONS
REVENUES
Total revenues were $11.9 million and $28.2 million for the three- and
nine-month periods ended September 30, 2001, respectively, compared to $6.1
million and $17.7 million, respectively, for the comparable periods in 2000. The
increase in revenues over the 2000 levels was primarily due to new
collaborations formed with Bristol-Myers Squibb and Protein Design Labs,
additional contract revenues earned from our existing collaborations with Bayer,
Bristol-Myers Squibb, Pharmacia and Dow AgroSciences, revenues from Aventis
CropScience resulting from our December 2000 acquisition of Agritope, Inc., now
Exelixis Plant Sciences, Inc., and revenues from government grants resulting
from our May 2001 acquisition of Artemis. We expect revenues to continue to
increase during the remainder of 2001 as additional contract revenues are earned
from our existing collaborations.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses consist primarily of salaries and other
personnel-related expenses, facilities costs, supplies and depreciation of
facilities and laboratory equipment. Research and development expenses were
approximately $22.5 million and $59.8 million for the three- and nine-month
periods ended September 30, 2001, respectively, compared to $13.4 million and
$37.2 million, respectively, for the comparable periods in 2000. The increase
over the 2000 levels was due to the expansion of our research and development
organization to include Exelixis Plant Sciences and Artemis Pharmaceuticals as
well as to support growth in South San Francisco for new collaborations and the
continued expansion of our drug discovery organization. This increase was
partially offset by a decrease in non-cash stock compensation expense (as
described below). We expect to continue to devote substantial resources to
research and development. In addition, we expect that research and development
expenses will continue to increase in absolute dollar amounts in the future as
we assume the responsibility for manufacturing and clinical development of
compounds and as we continue to expand our proprietary drug development efforts.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist primarily of personnel costs to
support our worldwide activities, facilities costs and professional expenses,
such as legal fees. General and administrative expenses were $5.4 million and
$14.6 million for the three- and nine-month periods ended September 30, 2001,
respectively, compared to $3.8 million and $11.5 million, respectively, for the
comparable periods in 2000. General and administrative expenses increased
year-over-year due primarily to increased staffing and other personnel-related
costs required to support our expanding research and development operations,
partially offset by a decrease in non-cash stock compensation expense (as
described below). We expect that our general and administrative expenses will
increase in absolute dollar amounts in the future as we support a larger,
worldwide organization through expanding our administrative staff and adding
infrastructure to support our growing research and development efforts.
STOCK COMPENSATION EXPENSE
Deferred stock compensation for options granted to our employees is the
difference between the fair value for financial reporting purposes of our common
stock on the date such options were granted and their exercise price. Deferred
stock compensation for options granted to consultants has been determined in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), and is periodically
remeasured as the underlying options vest in accordance with Emerging Issues
Task Force No. 96-18, "Accounting for Equity Instruments that are Issued to
Other Than Employees for Acquiring, or in Conjunction with, Selling Goods or
Services." As of September 30, 2001, we have approximately $5.4 million of
remaining deferred stock compensation, net of amortization, related to stock
options granted to consultants and employees.
Stock compensation expense is being recognized in accordance with Financial
Accounting Standards Board ("FASB") Interpretation No. 28, "Accounting for Stock
Appreciation Rights and Other Variable Stock Option or Award Plans" ("FIN 28"),
over the vesting periods of the related options, generally four years. We
recognized stock compensation expense of $1.7 million and $5.9 million for the
three- and nine-month periods ended September 30, 2001, respectively, compared
to $3.5 million and $12.1 million, respectively, for the comparable periods in
2000. The decrease in stock compensation expense year-over-year primarily
results from the accelerated amortization method prescribed by FIN 28.
During April 2001, we granted approximately 545,000 supplemental stock options
("Supplemental Options") under the 2000 Equity Incentive Plan to certain
employees (excluding officers and directors) who had stock options with exercise
prices greater than $16.00 per share under the 2000 Equity Incentive Plan. The
number of Supplemental Options granted was equal to 50% of the corresponding
original grant held by each employee. The Supplemental Options have an exercise
price of $16.00, vest monthly over a two-year period beginning April 1, 2001,
and have a 27-month term. The vesting on the corresponding original stock
options was halted and will resume in April 2003 following the completion of
vesting of the Supplemental Options. This new grant constitutes a synthetic
repricing as defined in FASB Interpretation Number 44, "Accounting for Certain
Transactions Involving Stock Compensation" and will result in certain options
being reported using the variable plan method of accounting for stock
compensation expense until they are exercised, forfeited or expire. For the nine
months ended September 30, 2001, the cumulative compensation expense recorded
for the Supplemental Options was zero.
ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT
The valuation of the purchased in-process research and development related to
the Artemis acquisition of $6.7 million was determined by management based upon
the results of an independent valuation using the income approach for each of
the three significant in-process projects. The in-process projects relate
primarily to the development of technologies that use vertebrate genetic model
organisms, zebrafish and mice, to identify and functionally validate novel genes
in vivo. These genes can be used as novel screening targets or as the basis for
secreted proteins in clinically and commercially relevant diseases. The
in-process projects are expected to be completed over the next 18 months. The
income approach estimates the value of each acquired project in-process based on
its expected future cash flows. The valuation analysis considered the
contribution of the core technology as well as the percent complete of each
in-process research and development project. The expected present value of the
cash flows associated with the in-process research and development projects was
computed using a risk adjusted rate of return of 30%, which is considered
commensurate with the overall risk and percent complete of the in-process
projects. The purchased in-process technology was not considered to have reached
technological feasibility, and it has no alternative future use, accordingly, it
has been recorded as a component of operating expenses.
AMORTIZATION OF GOODWILL AND INTANGIBLES
Goodwill and intangibles result from our acquisitions of Artemis and Agritope,
now renamed Exelixis Plant Sciences, Inc. Amortization of goodwill and
intangibles was $1.4 million and $3.7 million for the three- and nine-month
periods ended September 30, 2001, respectively, compared to none for the
comparable periods in 2000.
OTHER INCOME (EXPENSE), NET
Other income (expense), net primarily consists of interest income earned on
cash, cash equivalents and short-term investments, partially offset by interest
expense incurred on notes payable and capital lease obligations. Net interest
income was $0.8 million and $3.6 million for the three- and nine-month periods
ended September 30, 2001, respectively, compared to $2.2 and $3.8 million for
the comparable periods in 2000. The decrease in the current quarter is primarily
the result of increased interest expense as a result of increasing capital lease
arrangements and a full quarter of interest expense associated with the
convertible note with PDL. In addition, there was a decrease in interest income
due to lower average cash and investment balances, as well as lower interest
rates on those balances. The decrease for the nine-month period ended September
30, 2001 as compared to the prior year relates to an increase in interest
expense as a result of increasing capital lease arrangements and the convertible
note with PDL, almost fully offset by higher interest income due to an increase
in average cash and investment balances in 2001.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have financed our operations primarily through private
placements of preferred stock, loans, convertible debt, equipment lease
financing and other loan facilities and payments from collaborators. In
addition, during the second quarter of 2000, we completed our initial public
offering raising $124.5 million in net cash proceeds. We intend to continue to
use the proceeds for research and development activities, capital expenditures,
working capital and other general corporate purposes. As of September 30, 2001,
we had approximately $132.3 million in cash, cash equivalents and short-term
investments.
Our operating activities used cash of $13.3 million for the nine months ended
September 30, 2001, compared to cash used of $4.7 million for the nine months
ended September 30, 2000. Cash used in operating activities related primarily to
funding net operating losses, partially offset by an increase in non-cash
charges related to depreciation and amortization of deferred stock compensation,
goodwill, in-process research and development, and other intangible assets.
Our investing activities used cash of $0.6 million for the nine months ended
September 30, 2001, compared to cash used of $84.9 million for the corresponding
period in 2000. During 2001, investing activities consisted primarily of
purchases of short-term investments and property and equipment, which were
partially offset by maturities of short-term investments. During 2000, our
investing activities consisted of purchases of property and equipment and
short-term investments. We expect to continue to make significant investments
in research and development and our administrative infrastructure, including the
purchase of property and equipment to support our expanding operations.
Our financing activities provided cash of $37.2 million and $123.5 million for
the nine months ended September 30, 2001 and 2000, respectively. The 2001
amounts consisted primarily of proceeds from a $30.0 million convertible note
entered into as part of our collaboration agreement with Protein Design Labs in
May 2001 and $10.0 million in proceeds from the issuance of common stock to
Bristol-Myers Squibb in July 2001. The 2000 amounts consisted primarily of
proceeds from our initial public offering in April 2000.
We believe that our current cash and cash equivalents, short-term investments
and committed funding to be received from collaborators will be sufficient to
satisfy our anticipated cash needs for at least the next two years. However, it
is possible that we will seek additional financing within this timeframe. We may
raise additional funds through public or private financings, collaborative
relationships, debt or other arrangements. In July 2001, we filed a registration
statement on Form S-3 to offer and sell up to $150.0 million of common stock.
We have no current commitments to offer or sell securities with respect to
shares that may be offered or sold pursuant to that filing. We cannot assure
you that additional funding, if sought, will be available or, even if available,
will be available on terms favorable to us. Further, any additional equity
financing may be dilutive to stockholders, and debt financing, if available, may
involve restrictive covenants. Our failure to raise capital when needed may harm
our business and operating results.
RECENT ACCOUNTING PRONOUNCEMENTS
In July 2001, the FASB issued SFAS No. 141 "Business Combinations" ("SFAS No.
141"), which establishes financial accounting and reporting for business
combinations and supersedes APB Opinion No. 16, "Business Combinations," and
FASB Statement No. 38, "Accounting for Preacquisition Contingencies of Purchased
Enterprises." SFAS No. 141 requires that all business combinations be accounted
for using one method, the purchase method. The provisions of SFAS No. 141 apply
to all business combinations initiated after June 30, 2001. The adoption of SFAS
No. 141 had no material impact on our financial reporting and related
disclosures.
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS No. 142"), which establishes financial accounting and reporting
for acquired goodwill and other intangible assets and supersedes APB Opinion No.
17, "Intangible Assets." SFAS No. 142 addresses how intangible assets that are
acquired individually or with a group of other assets (but not those acquired in
a business combination) should be accounted for in financial statements upon
their acquisition, and after they have been initially recognized in the
financial statements. The provisions of SFAS No. 142 are effective for fiscal
years beginning after December 15, 2001. Exelixis will adopt SFAS No. 142 during
the first quarter of fiscal 2002, and is in the process of evaluating the impact
of implementation on its financial position and results of operation.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS No. 144"), which is effective for fiscal
years beginning after December 15, 2001 and interim periods within those fiscal
periods. SFAS No. 144 supersedes SFAS No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" and parts of APB
Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions relating to extraordinary items", however,
SFAS No. 144 retains the requirement of Opinion 30 to report discontinued
operations separately from continuing operations and extends that reporting to a
component of an entity that either has been disposed of (by sale, by abandonment
or in a distribution to owners) or is classified as held for sale. SFAS 144
addresses financial accounting and reporting for the impairment of certain
long-lived assets and for long-lived assets to be disposed of. Management does
not expect the adoption of SFAS 144 to have a material impact on the Company's
financial position and results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our investments are subject to interest rate risk, and our interest income may
fluctuate due to changes in U.S. interest rates. By policy, we limit our
investments to money market instruments, debt securities of U.S. government
agencies and debt obligations of U.S. corporations. We manage market risk by our
diversification requirements, which limit the amount of our portfolio that can
be invested in a single issuer. We manage credit risk by limiting our purchases
to high quality issuers. Through our money manager, we maintain risk management
control systems to monitor interest rate risk. The risk management control
systems use analytical techniques, including sensitivity analysis. A
hypothetical 1% adverse move in interest rates along the entire interest rate
yield curve would cause an approximately $0.6 million decline in the fair value
of our financial instruments at September 30, 2001.
All highly liquid investments with an original maturity of three months or less
from the date of purchase are considered cash equivalents. Exelixis views its
available-for-sale portfolio as available for use in current operations.
Accordingly, we have classified all investments with an original maturity date
greater than three months as short-term, even though the stated maturity date
may be one year or more beyond the current balance sheet date.
Due to our German operations, we have market risk exposure to adverse changes in
foreign currency exchange rates. The revenues and expenses of our subsidiary,
Artemis, are denominated in Deutche Marks. At the end of each period, the
revenues and expenses of this subsidiary are translated into U.S. dollars using
the average currency rate in effect for the period, and assets and liabilities
are translated into U.S. dollars using the exchange rate in effect at the end of
the period. Fluctuations in exchange rates, therefore, impact our financial
condition and results of operations as reported in U.S. dollars. To date, we
have not experienced any significant negative impact as a result of fluctuations
in foreign currency markets. As a policy, we do not engage in speculative or
leveraged transactions, nor do we hold financial instruments for trading
purposes. We will periodically analyze our exposure to foreign currency
fluctuations and may adjust our policies to allow for financial hedging
techniques to minimize exchange rate risk.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) On July 17, 2001, Exelixis entered into a stock purchase agreement with
Bristol-Myers Squibb Company, a Delaware corporation ("BMS"). In connection
with a corporate collaboration and pursuant to the terms of the stock purchase
agreement, Exelixis issued 600,600 shares of its common stock (the "Shares") at
a purchase price of $33.30 per share to BMS in exchange for approximately
$20,000,000 in cash. Pursuant to the terms of the stock purchase agreement, BMS
has agreed not to offer or sell any of the Shares prior to July 17, 2002,
without the prior written consent of Exelixis.
The Shares were issued to BMS in a private placement pursuant to an exemption
from registration in reliance upon Section 4(2) and Rule 506 of Regulation D of
the Securities Act of 1933. BMS is an "accredited investor," as such term is
defined in Rule 501 of Regulation D.
On August 27, 2001, Exelixis filed a registration statement on Form S-3 (No.
333-68436) with the Securities and Exchange Commission to register the Shares
for resale. The registration statement was declared effective by the Securities
and Exchange Commission on October 26, 2001.
(d) In May 2000, we completed our initial public offering for aggregate proceeds
of approximately $136.0 million. In connection with the offering, We paid a
total of approximately $9.5 million in underwriting discounts and commissions
and $2.0 million in other offering costs and expenses. After deducting the
underwriting discounts and commissions and the offering costs and expenses, the
net proceeds from the offering were approximately $124.5 million.
From the time of receipt through September 30, 2001, the proceeds from our
initial public offering were used for research and development activities,
capital expenditures, working capital and other general corporate purposes. In
the future, Exelixis intends to use the net proceeds in a similar manner. As of
September 30, 2001, approximately $88.6 million of the proceeds remained
available and were primarily invested in short-term marketable securities.
ITEM 5. OTHER INFORMATION - RISK FACTORS
WE HAVE A HISTORY OF NET LOSSES. WE EXPECT TO CONTINUE TO INCUR NET LOSSES, AND
WE MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY.
We have incurred net losses each year since our inception, including a net loss
of approximately $52.9 million for the nine months ended September 30, 2001. As
of that date, we had an accumulated deficit of approximately $183.0 million. We
expect these losses to continue and anticipate negative cash flow for the
foreseeable future. The size of these net losses will depend, in part, on the
rate of growth, if any, in our license and contract revenues and on the level of
our expenses. Our research and development expenditures and general and
administrative costs have exceeded our revenues to date, and we expect to spend
significant additional amounts to fund research and development in order to
enhance our core technologies and undertake product development. As a result, we
expect that our operating expenses will increase significantly in the near term
and, consequently, we will need to generate significant additional revenues to
achieve profitability. Even if we do increase our revenues and achieve
profitability, we may not be able to sustain or increase profitability.
WE WILL NEED ADDITIONAL CAPITAL IN THE FUTURE, WHICH MAY NOT BE AVAILABLE TO US.
Our future capital requirements will be substantial, and will depend on many
factors including:
- payments received under collaborative agreements;
- the progress and scope of our collaborative and independent research
and development projects;
- our ability to successfully continue development of a recently
acquired cancer compound;
- our need to expand our other proprietary product development efforts
as well as develop manufacturing and marketing capabilities to
commercialize products; and
- the filing, prosecution and enforcement of patent claims.
We anticipate that our current cash and cash equivalents, short-term investments
and funding to be received from collaborators will enable us to maintain our
currently planned operations for at least the next two years. Changes to our
current operating plan may require us to consume available capital resources
significantly sooner than we expect. For example, our newly acquired cancer
product from our recent relationship with Bristol-Myers Squibb will require
significant resources for development that were not in our operational plans
prior to acquiring the cancer product. We may be unable to raise sufficient
additional capital when we need it, on favorable terms, or at all. If our
capital resources are insufficient to meet future capital requirements, we will
have to raise additional funds. The sale of equity or convertible debt
securities in the future may be dilutive to our stockholders, and debt financing
arrangements may require us to pledge certain assets and enter into covenants
that would restrict our ability to incur further indebtedness. If we are unable
to obtain adequate funds on reasonable terms, we may be required to curtail
operations significantly or to obtain funds by entering into financing, supply
or collaboration agreements on unattractive terms.
DIFFICULTIES WE MAY ENCOUNTER MANAGING OUR GROWTH MAY DIVERT RESOURCES AND LIMIT
OUR ABILITY TO SUCCESSFULLY EXPAND OUR OPERATIONS.
We have experienced a period of rapid and substantial growth that has placed,
and our anticipated growth in the future will continue to place, a strain on our
administrative and operational infrastructure. As our operations expand, we
expect that we will need to manage multiple locations, including additional
locations outside of the United States, and additional relationships with
various collaborative partners, suppliers and other third parties. Our ability
to manage our operations and growth effectively requires us to continue to
improve our operational, financial and management controls, reporting systems
and procedures. We may not be able to successfully implement improvements to our
management information and control systems in an efficient or timely manner and
may discover deficiencies in existing systems and controls. In addition,
acquisitions involve the integration of different financial and management
reporting systems. We may not be able to successfully integrate the
administrative and operational infrastructure without significant additional
improvements and investments in management systems and procedures.
WE ARE DEPENDENT ON OUR COLLABORATIONS WITH MAJOR COMPANIES. IF WE ARE UNABLE TO
ACHIEVE MILESTONES, DEVELOP PRODUCTS OR RENEW OR ENTER INTO NEW COLLABORATIONS,
OUR REVENUES MAY DECREASE AND OUR ACTIVITIES MAY FAIL TO LEAD TO COMMERCIALIZED
PRODUCTS.
Substantially all of our revenues to date have been derived from collaborative
research and development agreements. Revenues from research and development
collaborations depend upon continuation of the collaborations, the achievement
of milestones and royalties derived from future products developed from our
research. If we are unable to successfully achieve milestones or our
collaborators fail to develop successful products, we will not earn the revenues
contemplated under such collaborative agreements. In addition, some of our
collaborations are exclusive and preclude us from entering into additional
collaborative arrangements with other parties in the area or field of
exclusivity.
We currently have continuing collaborative research agreements with Bayer,
Bristol-Myers Squibb (two agreements), Dow AgroSciences, Aventis CropSciences,
Protein Design Labs, Elan Pharmaceuticals and Scios. Our current collaborative
agreement with Bayer is scheduled to expire in 2008, after which it will
automatically be extended for one-year terms unless terminated by either party
upon 12-month written notice. Our agreement permits Bayer to terminate our
collaborative activities prior to 2008 upon the occurrence of specified
conditions, such as the failure to agree on key strategic issues after a period
of years or the acquisition of Exelixis by certain specified third parties. In
addition, our agreements with Bayer are subject to termination at an earlier
date if two or more of our Chief Executive Officer, Chief Scientific Officer,
Agricultural Biotechnology Program Leader and Chief Informatics Officer cease to
have a relationship with us within six months of each other and we are unable to
find replacements acceptable to Bayer. The first of our collaborative
agreements with Bristol-Myers Squibb expires in September 2002. The funded
research term of the second collaborative arrangement, entered into in July
2001, expires in July 2005. Our collaborative agreement with Dow AgroSciences is
scheduled to expire in July 2003, after which Dow AgroSciences has the option to
renew on an annual basis. Our collaborative research arrangement with Aventis is
scheduled to expire in June 2004. Aventis has the right to terminate the
research arrangement prior to the expiration date, provided that it pays the
annual research funding amount due for the year following termination.
Thereafter, the arrangement renews annually unless Aventis terminates automatic
renewal prior to the scheduled date of renewal. The Aventis arrangement is
conducted through a limited liability company, Agrinomics, which is owned
equally by Aventis and Exelixis. Aventis may surrender its interest in
Agrinomics and terminate the related research collaboration prior to the
scheduled expiration upon the payment of the subsequent year's funding
commitment. Bayer and Aventis recently announced an agreement for Bayer to
acquire Aventis. The acquisition is expected to close during the first quarter
of 2002. At this time we are not able to predict the impact of the acquisition
of Aventis on our collaboration agreement. Our agreement with Protein Design
Labs is scheduled to expire in May 2003. Protein Design Labs has a unilateral
right to renew for additional twelve- and six-month periods thereafter. The
five-year term of the convertible promissory note entered into as part of this
arrangement is unaffected by whether or not Protein Design Labs renews. If these
existing agreements are not renewed or if we are unable to enter into new
collaborative agreements on commercially acceptable terms, our revenues and
product development efforts may be adversely affected. In August and October of
2002, we signed agreements to deliver high-throughput-screening compounds with
Elan Pharmaceuticals and Scios, respectively, which have terms of three and four
years, respectively. These agreements are subject to early termination if we
fail to achieve certain quality and quantity commitments.
We recently announced the reacquisition, effective February 2002, of future
rights to research programs in metabolism and Alzheimer's disease previously
licensed exclusively to Pharmacia Corporation. The existing agreement with
Pharmacia will terminate as of that date. Pharmacia will retain rights to
targets under the existing agreement selected prior to the reacquisition date,
subject to the payment of milestones for certain of those targets selected and
royalties for future development of products against or using those targets but
will have no other obligations to make payments to us, including approximately
$9.0 million in annual funding that would otherwise be payable for two years if
we had not elected to reacquire rights to the research at this time. Although
we anticipate entering into future collaborations involving either or both of
these programs, there can be no assurance that we will be able to enter into new
collaborative agreements or that such collaborations will provide revenues equal
to or exceeding those otherwise obtainable under the Pharmacia collaboration.
CONFLICTS WITH OUR COLLABORATORS COULD JEOPARDIZE THE OUTCOME OF OUR
COLLABORATIVE AGREEMENTS AND OUR ABILITY TO COMMERCIALIZE PRODUCTS.
We intend to conduct proprietary research programs in specific disease and
agricultural product areas that are not covered by our collaborative agreements.
Our pursuit of opportunities in agricultural and pharmaceutical markets could,
however, result in conflicts with our collaborators in the event that any of our
collaborators takes the position that our internal activities overlap with those
areas that are exclusive to our collaborative agreements, and we should be
precluded from such internal activities. Moreover, disagreements with our
collaborators could develop over rights to our intellectual property. In
addition, our collaborative agreements may have provisions that give rise to
disputes regarding the rights and obligations of the parties. Any conflict with
our collaborators could lead to the termination of our collaborative agreements,
delay collaborative activities, reduce our ability to renew agreements or obtain
future collaboration agreements or result in litigation or arbitration and would
negatively impact our relationship with existing collaborators.
We have limited or no control over the resources that our collaborators may
choose to devote to our joint efforts. Our collaborators may breach or terminate
their agreements with us or fail to perform their obligations thereunder.
Further, our collaborators may elect not to develop products arising out of our
collaborative arrangements or may fail to devote sufficient resources to the
development, manufacture, market or sale of such products. Certain of our
collaborators could also become our competitors in the future. If our
collaborators develop competing products, preclude us from entering into
collaborations with their competitors, fail to obtain necessary regulatory
approvals, terminate their agreements with us prematurely or fail to devote
sufficient resources to the development and commercialization of our products,
our product development efforts could be delayed and may fail to lead to
commercialized products.
WE ARE DEPLOYING UNPROVEN TECHNOLOGIES, AND WE MAY NOT BE ABLE TO DEVELOP
COMMERCIALLY SUCCESSFUL PRODUCTS.
You must evaluate us in light of the uncertainties and complexities affecting a
biotechnology company. Our technologies are still in the early stages of
development. Our research and operations thus far have allowed us to identify a
number of product targets for use by our collaborators and our own internal
development programs. We are not certain, however, of the commercial value of
any of our current or future targets, and we may not be successful in expanding
the scope of our research into new fields of pharmaceutical or pesticide
research, or other agricultural applications such as enhancing plant traits to
produce superior crop yields, disease resistance or increased nutritional
content. Significant research and development, financial resources and personnel
will be required to capitalize on our technology, develop commercially viable
products and obtain regulatory approval for such products.
WE HAVE NO EXPERIENCE IN DEVELOPING, MANUFACTURING AND MARKETING PRODUCTS AND
MAY BE UNABLE TO COMMERCIALIZE PROPRIETARY PRODUCTS.
We recently acquired a development compound, an analog to rebeccamycin
(Rebeccamycin), directed against cancer under our recent collaborative
arrangement with Bristol-Myers Squibb. Clinical development of Rebeccamycin to
date has been conducted by the National Cancer Institute, or the NCI, and
manufacturing of this product has been the responsibility of Bristol-Myers
Squibb. Rebeccamycin has recently completed Phase I clinical studies and is in
Phase I and early Phase II clinical trials being conducted by the NCI. We have
an agreement with the NCI to use the results of the clinical studies they have
conducted and are conducting in order to determine what additional studies, if
any, will be conducted by the NCI or us. There can be no assurance that we will
successfully agree upon further development plans, the respective rights and
obligations of the parties to conduct additional clinical studies or the timing
of such studies. In addition, there can be no assurance that the clinical
studies conducted to date will support further clinical development or be
accepted by the Food and Drug Administration, or FDA, in conjunction with any
application for product approval submitted to the FDA for Rebeccamycin.
Moreover, although Bristol-Myers Squibb has provided the NCI with sufficient
quantities of Rebeccamycin to complete the existing Phase I and II clinical
studies, development necessary for further clinical studies and product approval
will require us to either develop internal manufacturing capabilities or retain
a third party to manufacture the product. In addition, we have recently hired a
new Senior Vice President responsible for clinical development of this product,
as well as any new potential products that we may develop. As a result, we have
limited experience in clinical development and no experience in manufacturing
potential drug products. Accordingly, the development of Rebeccamycin is
subject to significant risk and uncertainty, particularly with respect to our
ability to successfully develop, manufacture and market Rebeccamycin as a
product.
With respect to products developed against our proprietary drug targets, we will
rely on our collaborators to develop and commercialize products based on our
research and development efforts. We have limited or no experience in using the
targets that we identify to develop our own proprietary products. Our recent
success in applying our drug development capabilities to our proprietary targets
in cancer are subject to significant risk and uncertainty, particularly with
respect to our ability to meet currently estimated timelines and goals for
completing preclinical development efforts and filing an Investigational New
Drug Application, or IND, for compounds developed. In order for us to
commercialize products, we would need to significantly enhance our capabilities
with respect to product development, and establish manufacturing and marketing
capabilities, either directly or through outsourcing or licensing arrangements.
We may not be able to enter into such outsourcing or licensing agreements on
commercially reasonable terms, or at all.
SINCE OUR TECHNOLOGIES HAVE MANY POTENTIAL APPLICATIONS AND WE HAVE LIMITED
RESOURCES, OUR FOCUS ON A PARTICULAR AREA MAY RESULT IN OUR FAILURE TO
CAPITALIZE ON MORE PROFITABLE AREAS.
We have limited financial and managerial resources. This requires us to focus on
product candidates in specific industries and forego opportunities with regard
to other products and industries. For example, depending on our ability to
allocate resources, a decision to concentrate on a particular agricultural
program may mean that we will not have resources available to apply the same
technology to a pharmaceutical project. While our technologies may permit us to
work in both areas, resource commitments may require trade-offs resulting in
delays in the development of certain programs or research areas, which may place
us at a competitive disadvantage. Our decisions impacting resource allocation
may not lead to the development of viable commercial products and may divert
resources from more profitable market opportunities. Moreover, our recent
acquisition of Rebeccamycin will require that resources and management time be
directed to clinical development and manufacturing of this potential product.
There can be no assurance that allocating resources and time to these efforts
will allow us to remain competitive in existing programs and potential areas of
future research. The resources dedicated to the development of Rebeccamycin may
limit or hinder our ability to meet currently estimated timelines and goals for
completing preclinical development efforts and filing an IND for our proprietary
compounds.
OUR COMPETITORS MAY DEVELOP PRODUCTS AND TECHNOLOGIES THAT MAKE OURS OBSOLETE.
The biotechnology industry is highly fragmented and is characterized by rapid
technological change. In particular, the area of gene research is a rapidly
evolving field. We face, and will continue to face, intense competition from
large biotechnology and pharmaceutical companies, as well as academic research
institutions, clinical reference laboratories and government agencies that are
pursuing research activities similar to ours. Some of our competitors have
entered into collaborations with leading companies within our target markets,
including some of our existing collaborators. Our future success will depend on
our ability to maintain a competitive position with respect to technological
advances.
Any products that are developed through our technologies will compete in highly
competitive markets. Further, our competitors may be more effective at using
their technologies to develop commercial products. Many of the organizations
competing with us have greater capital resources, larger research and
development staffs and facilities, more experience in obtaining regulatory
approvals and more extensive product manufacturing and marketing capabilities.
As a result, our competitors may be able to more easily develop technologies and
products that would render our technologies and products, and those of our
collaborators, obsolete and noncompetitive.
IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY, THIRD PARTIES
MAY BE ABLE TO USE OUR TECHNOLOGY, WHICH COULD ADVERSELY AFFECT OUR ABILITY TO
COMPETE IN THE MARKET.
Our success will depend in part on our ability to obtain patents and maintain
adequate protection of the intellectual property related to our technologies and
products. The patent positions of biotechnology companies, including our patent
position, are generally uncertain and involve complex legal and factual
questions. We will be able to protect our intellectual property rights from
unauthorized use by third parties only to the extent that our technologies are
covered by valid and enforceable patents or are effectively maintained as trade
secrets. The laws of some foreign countries do not protect intellectual property
rights to the same extent as the laws of the U.S., and many companies have
encountered significant problems in protecting and defending such rights in
foreign jurisdictions. We will continue to apply for patents covering our
technologies and products as and when we deem appropriate. However, these
applications may be challenged or may fail to result in issued patents. Our
existing patents and any future patents we obtain may not be sufficiently broad
to prevent others from practicing our technologies or from developing competing
products. Furthermore, others may independently develop similar or alternative
technologies or design around our patents. In addition, our patents may be
challenged, invalidated or fail to provide us with any competitive advantages.
We rely on trade secret protection for our confidential and proprietary
information. We have taken security measures to protect our proprietary
information and trade secrets, but these measures may not provide adequate
protection. While we seek to protect our proprietary information by entering
into confidentiality agreements with employees, collaborators and consultants,
we cannot assure you that our proprietary information will not be disclosed, or
that we can meaningfully protect our trade secrets. In addition, our competitors
may independently develop substantially equivalent proprietary information or
may otherwise gain access to our trade secrets.
LITIGATION OR THIRD PARTY CLAIMS OF INTELLECTUAL PROPERTY INFRINGEMENT COULD
REQUIRE US TO SPEND SUBSTANTIAL TIME AND MONEY AND ADVERSELY AFFECT OUR ABILITY
TO DEVELOP AND COMMERCIALIZE PRODUCTS.
Our commercial success depends in part on our ability to avoid infringing
patents and proprietary rights of third parties, and not breaching any licenses
that we have entered into with regard to our technologies. Other parties have
filed, and in the future are likely to file, patent applications covering genes
and gene fragments, techniques and methodologies relating to model systems, and
products and technologies that we have developed or intend to develop. If
patents covering technologies required by our operations are issued to others,
we may have to rely on licenses from third parties, which may not be available
on commercially reasonable terms, or at all.
Third parties may accuse us of employing their proprietary technology without
authorization. In addition, third parties may obtain patents that relate to our
technologies and claim that use of such technologies infringes these patents.
Regardless of their merit, such claims could require us to incur substantial
costs, including the diversion of management and technical personnel, in
defending ourselves against any such claims or enforcing our patents. In the
event that a successful claim of infringement is brought against us, we may be
required to pay damages and obtain one or more licenses from third parties. We
may not be able to obtain these licenses at a reasonable cost, or at all.
Defense of any lawsuit or failure to obtain any of these licenses could
adversely affect our ability to develop and commercialize products.
THE LOSS OF KEY PERSONNEL OR THE INABILITY TO ATTRACT AND RETAIN ADDITIONAL
PERSONNEL COULD IMPAIR OUR ABILITY TO EXPAND OUR OPERATIONS.
We are highly dependent on the principal members of our management and
scientific staff, the loss of whose services might adversely impact the
achievement of our objectives and the continuation of existing collaborations.
In addition, recruiting and retaining qualified scientific personnel to perform
future research and development work will be critical to our success. We do not
currently have sufficient executive management and technical personnel to fully
execute our business plan. There is currently a shortage of skilled executives
and employees with technical expertise, and this shortage is likely to continue.
As a result, competition for skilled personnel is intense and turnover rates are
high. Although we believe we will be successful in attracting and retaining
qualified personnel, competition for experienced scientists from numerous
companies, academic and other research institutions may limit our ability to do
so.
Our business operations will require additional expertise in specific industries
and areas applicable to products identified and developed through our
technologies. These activities will require the addition of new personnel,
including management and technical personnel and the development of additional
expertise by existing employees. The inability to attract such personnel or to
develop this expertise could prevent us from expanding our operations in a
timely manner, or at all.
OUR COLLABORATIONS WITH OUTSIDE SCIENTISTS MAY BE SUBJECT TO RESTRICTION AND
CHANGE.
We work with scientific advisors and collaborators at academic and other
institutions that assist us in our research and development efforts. These
scientists are not our employees and may have other commitments that would limit
their availability to us. Although our scientific advisors and collaborators
generally agree not to do competing work, if a conflict of interest between
their work for us and their work for another entity arises, we may lose their
services. In addition, although our scientific advisors and collaborators sign
agreements not to disclose our confidential information, it is possible that
valuable proprietary knowledge may become publicly known through them.
OUR POTENTIAL THERAPEUTIC PRODUCTS ARE SUBJECT TO A LENGTHY AND UNCERTAIN
REGULATORY PROCESS THAT MAY NOT RESULT IN THE NECESSARY REGULATORY APPROVALS,
WHICH COULD ADVERSELY AFFECT OUR ABILITY TO COMMERCIALIZE PRODUCTS.
The FDA must approve any drug or biologic product before it can be marketed in
the U.S. Any products resulting from our research and development efforts must
also be approved by the regulatory agencies of foreign governments before the
product can be sold outside the U.S. Before a new drug application or biologics
license application can be filed with the FDA, the product candidate must
undergo extensive clinical trials, which can take many years and may require
substantial expenditures. The regulatory process also requires preclinical
testing. Data obtained from preclinical and clinical activities are susceptible
to varying interpretations, which could delay, limit or prevent regulatory
approval. In addition, delays or rejections may be encountered based upon
changes in regulatory policy for product approval during the period of product
development and regulatory agency review. The clinical development and
regulatory approval process is expensive and time consuming. Any failure to
obtain regulatory approval could delay or prevent us from commercializing
products.
Our efforts to date have been primarily limited to identifying targets.
Significant research and development efforts will be necessary before any
products resulting from such targets can be commercialized. If regulatory
approval is granted to any of our products, this approval may impose limitations
on the uses for which a product may be marketed. Further, once regulatory
approval is obtained, a marketed product and its manufacturer are subject to
continual review, and discovery of previously unknown problems with a product or
manufacturer may result in restrictions and sanctions with respect to the
product, manufacturer and relevant manufacturing facility, including withdrawal
of the product from the market.
SOCIAL ISSUES MAY LIMIT THE PUBLIC ACCEPTANCE OF GENETICALLY ENGINEERED
PRODUCTS, WHICH COULD REDUCE DEMAND FOR OUR PRODUCTS.
Although our technology is not dependent on genetic engineering, genetic
engineering plays a prominent role in our approach to product development. For
example, research efforts focusing on plant traits may involve either selective
breeding or modification of existing genes in the plant under study. Public
attitudes may be influenced by claims that genetically engineered products are
unsafe for consumption or pose a danger to the environment. Such claims may
prevent our genetically engineered products from gaining public acceptance. The
commercial success of our future products will depend, in part, on public
acceptance of the use of genetically engineered products including drugs and
plant and animal products.
The subject of genetically modified organisms has received negative publicity,
which has aroused public debate. For example, certain countries in Europe are
considering regulations that may ban products or require express labeling of
products that contain genetic modifications or are "genetically modified."
Adverse publicity has resulted in greater regulation internationally and trade
restrictions on imports of genetically altered products. If similar action is
taken in the U.S., genetic research and genetically engineered products could be
subject to greater domestic regulation, including stricter labeling
requirements. To date, our business has not been hampered by these activities.
However, such publicity in the future may prevent any products resulting from
our research from gaining market acceptance and reduce demand for our products.
LAWS AND REGULATIONS MAY REDUCE OUR ABILITY TO SELL GENETICALLY ENGINEERED
PRODUCTS THAT OUR COLLABORATORS OR WE DEVELOP IN THE FUTURE.
Our collaborators or we may develop genetically engineered agricultural and
animal products. The field-testing, production and marketing of genetically
engineered products are subject to regulation by federal, state, local and
foreign governments. Regulatory agencies administering existing or future
regulations or legislation may prevent us from producing and marketing
genetically engineered products in a timely manner or under technically or
commercially feasible conditions. In addition, regulatory action or private
litigation could result in expenses, delays or other impediments to our product
development programs and the commercialization of products.
The FDA has released a policy statement stating that it will apply the same
regulatory standards to foods developed through genetic engineering as it
applies to foods developed through traditional plant breeding. Genetically
engineered food products will be subject to premarket review, however, if these
products raise safety questions or are deemed to be food additives. Our products
may be subject to lengthy FDA reviews and unfavorable FDA determinations if they
raise questions regarding safety or our products are deemed to be food
additives.
The FDA has also announced that it will not require genetically engineered
agricultural products to be labeled as such, provided that these products are as
safe and have the same nutritional characteristics as conventionally developed
products. The FDA may reconsider or change its policies, and local or state
authorities may enact labeling requirements, either of which could have a
material adverse effect on our ability or the ability of our collaborators to
develop and market products resulting from our efforts.
WE USE HAZARDOUS CHEMICALS AND RADIOACTIVE AND BIOLOGICAL MATERIALS IN OUR
BUSINESS. ANY CLAIMS RELATING TO IMPROPER HANDLING, STORAGE OR DISPOSAL OF THESE
MATERIALS COULD BE TIME CONSUMING AND COSTLY.
Our research and development processes involve the controlled use of hazardous
materials, including chemicals, radioactive and biological materials. Our
operations produce hazardous waste products. We cannot eliminate the risk of
accidental contamination or discharge and any resultant injury from these
materials. Federal, state and local laws and regulations govern the use,
manufacture, storage, handling and disposal of hazardous materials. We may be
sued for any injury or contamination that results from our use or the use by
third parties of these materials, and our liability may exceed our insurance
coverage and our total assets. Compliance with environmental laws and
regulations may be expensive, and current or future environmental regulations
may impair our research, development and production efforts.
In addition, our collaborators may use hazardous materials in connection with
our collaborative efforts. To our knowledge, their work is performed in
accordance with applicable biosafety regulations. In the event of a lawsuit or
investigation, however, we could be held responsible for any injury caused to
persons or property by exposure to, or release of, these hazardous materials use
by these parties. Further, we may be required to indemnify our collaborators
against all damages and other liabilities arising out of our development
activities or products produced in connection with these collaborations.
WE EXPECT THAT OUR QUARTERLY RESULTS OF OPERATIONS WILL FLUCTUATE, AND THIS
FLUCTUATION COULD CAUSE OUR STOCK PRICE TO DECLINE, CAUSING INVESTOR LOSSES.
Our quarterly operating results have fluctuated in the past and are likely to
fluctuate in the future. A number of factors, many of which we cannot control,
could subject our operating results and stock price to volatility, including:
- recognition of license, milestone or other fees;
- payments of licensing fees to third parties;
- acceptance of our technologies and platforms;
- the success rate of our discovery efforts leading to milestones and
royalties;
- the introduction of new technologies or products by our competitors;
- the timing and willingness of collaborators to commercialize our
products;
- our ability to enter into new collaborative relationships;
- the termination or non-renewal of existing collaborations;
- general and industry-specific economic conditions that may affect our
collaborators' research and development expenditures; and
- exposure to fluctuations in foreign currency.
A large portion of our expenses, including expenses for facilities, equipment
and personnel, are relatively fixed in the short term. In addition, we expect
operating expenses to increase significantly during the next year. Accordingly,
if our revenues decline or do not grow as anticipated due to the expiration of
existing contracts or our failure to obtain new contracts, our inability to meet
milestones or other factors, we may not be able to correspondingly reduce our
operating expenses. Failure to achieve anticipated levels of revenues could
therefore significantly harm our operating results for a particular fiscal
period.
Due to the possibility of fluctuations in our revenues and expenses, we believe
that quarter-to-quarter comparisons of our operating results are not a good
indication of our future performance. As a result, in some future quarters, our
operating results may not meet the expectations of stock market analysts and
investors, which could result in a decline in the price of our stock.
OUR STOCK PRICE MAY BE EXTREMELY VOLATILE.
We believe the trading price of our common stock will remain highly volatile and
may fluctuate substantially due to factors such as the following:
- the announcement of new products or services by us or our competitors;
- quarterly variations in our or our competitors' results of operations;
- failure to achieve operating results projected by securities analysts;
- changes in earnings estimates or recommendations by securities
analysts;
- developments in the biotechnology industry;
- acquisitions of other companies or technologies; and
- general market conditions and other factors, including factors
unrelated to our operating performance or the operating performance of
our competitors.
These factors and fluctuations, as well as general economic, political and
market conditions, may materially adversely affect the market price of our
common stock.
In the past, following periods of volatility in the market price of a company's
securities, securities class action litigation has often been instituted. A
securities class action suit against us could result in substantial costs and
divert management's attention and resources, which could have a material and
adverse effect on our business.
WE ARE EXPOSED TO RISKS ASSOCIATED WITH ACQUISITIONS.
We have made, and may in the future make, acquisitions of, or significant
investments in, businesses with complementary products, services and/or
technologies. Acquisitions involve numerous risks, including, but not limited
to:
- difficulties and increased costs in connection with integration of the
personnel, operations, technologies and products of acquired
companies;
- diversion of management's attention from other operational matters;
- the potential loss of key employees of acquired companies;
- the potential loss of key collaborators of the acquired companies;
- lack of synergy, or the inability to realize expected synergies,
resulting from the acquisition;
- exposure to fluctuations in foreign currency;
- differences in foreign laws, business practices, statutes, regulations
and tax provisions; and
- acquired intangible assets becoming impaired as a result of
technological advancements or worse-than-expected performance of the
acquired company.
Mergers and acquisitions are inherently risky, and the inability to effectively
manage these risks could materially and adversely affect our business, financial
condition and results of operations.
IF PRODUCT LIABILITY LAWSUITS ARE SUCCESSFULLY BROUGHT AGAINST US, WE COULD FACE
SUBSTANTIAL LIABILITIES THAT EXCEED OUR RESOURCES.
We may be held liable if any product our collaborators or we develop causes
injury or is found otherwise unsuitable during product testing, manufacturing,
marketing or sale. Although we intend to obtain general liability and product
liability insurance, this insurance may be prohibitively expensive, or may not
fully cover our potential liabilities. Inability to obtain sufficient insurance
coverage at an acceptable cost or to otherwise protect ourselves against
potential product liability claims could prevent or inhibit the
commercialization of products developed by our collaborators or us.
OUR HEADQUARTERS' FACILITIES ARE LOCATED NEAR KNOWN EARTHQUAKE FAULT ZONES, AND
THE OCCURRENCE OF AN EARTHQUAKE OR OTHER CATASTROPHIC DISASTER COULD CAUSE
DAMAGE TO OUR FACILITIES AND EQUIPMENT, WHICH COULD REQUIRE US TO CEASE OR
CURTAIL OPERATIONS.
Given the location of our headquarters in South San Francisco, California, those
facilities are vulnerable to damage from earthquakes. In addition, all of our
facilities are also vulnerable to damage from other types of disasters,
including fire, floods, power loss, communications failures and similar events.
If any disaster were to occur, our ability to operate our business at our
facilities would be seriously, or potentially completely, impaired. In addition,
the unique nature of our research activities could cause significant delays in
our programs and make it difficult for us to recover from a disaster. The
insurance we maintain may not be adequate to cover our losses resulting from
disasters or other business interruptions. Accordingly, an earthquake or other
disaster could materially and adversely harm our ability to conduct business.
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.
If our stockholders sell substantial amounts of our common stock (including
shares issued upon the exercise of outstanding options and warrants) in the
public market, the market price of our common stock could fall. These sales
also might make it more difficult for us to sell equity or equity-related
securities in the future at a time and price that we deemed appropriate. In
October 2000, a significant number of shares of our common stock held by
existing stockholders became freely tradable, subject in some instances to the
volume and other limitations of Rule 144. In addition, in connection with our
recent acquisitions and corporate collaborations, we issued and registered for
sale a significant number of shares of common stock. Sales of these shares and
other shares of common stock held by existing stockholders could cause the
market price of our common stock to decline.
SOME OF OUR EXISTING STOCKHOLDERS CAN EXERT CONTROL OVER US, AND MAY NOT MAKE
DECISIONS THAT ARE IN THE BEST INTERESTS OF ALL STOCKHOLDERS.
Due to their combined stock holdings, our officers, directors and principal
stockholders (stockholders holding more than 5% of our common stock) acting
together, may be able to exert significant influence over all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions. In addition, this concentration of ownership
may delay or prevent a change in control of our company, even when a change may
be in the best interests of our stockholders. In addition, the interests of
these stockholders may not always coincide with our interests as a company or
the interests of other stockholders. Accordingly, these stockholders could cause
us to enter into transactions or agreements that you would not approve.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits listed on the accompanying index to exhibits are filed or
incorporated by reference (as stated therein) as part of this Quarterly
Report on Form 10-Q.
(b) Reports on Form 8-K
On July 18, 2001, the Company filed an Item 5 Current Report on Form 8-K
announcing the signing of a collaboration agreement with Bristol-Myers
Squibb.
On July 26, 2001, the Company filed an Item 5 Current Report on Form 8-K
announcing the reacquisition, effective February 2002, of future rights to
research programs in metabolism and alzheimer's disease previously licensed
exclusively to Pharmacia Corporation.
On August 9, 2001, the Company filed a Reg FD, Item 9 Current Report on
Form 8-K, in connection with the announcement of the Company's second
quarter financial results.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 14, 2001
EXELIXIS, INC.
/s/ Glen Y. Sato
-------------------
Glen Y. Sato
Chief Financial Officer, Vice President of
Legal Affairs and Secretary
(Principal Financial and Accounting Officer)
INDEX TO EXHIBITS
Exhibit
Number Description of Document
- ------ -------------------------
3.1 Amended and Restated Certificate of Incorporation (1)
3.2 Amended and Restated Bylaws (1)
4.1 Specimen Common Stock Certificate (1)
10.29 Form of Stock Purchase Agreement, dated as of July 17, 2001, by and
between Exelixis, Inc. and Bristol-Myers Squibb Company (2)
10.30* Cancer Collaboration Agreement, dated July 17, 2001, by and between
Exelixis, Inc. and Bristol-Myers Squibb Company
10.31* License Agreement, dated July 17, 2001, by and between Exelixis, Inc.
and Bristol-Myers Squibb Company
_____________________
(1) Filed with Exelixis' Registration Statement on Form S-1, as amended (No.
333-96335), declared effective by the Securities and Exchange Commission on
April 10, 2000, and incorporated herein by reference.
(2) Filed with Exelixis' Registration Statement on Form S-3, as filed on August
27, 2001(No. 333-68436) and incorporated by reference.
* Confidential treatment requested for certain portions of this exhibit.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
EXHIBIT 10.30
CANCER COLLABORATION AGREEMENT
THIS CANCER COLLABORATION AGREEMENT (the "Agreement") is made and entered into
as of July 17, 2001 (the "Effective Date") by and between EXELIXIS, INC., a
Delaware corporation having its principal place of business at 170 Harbor Way,
P.O. Box 511, South San Francisco, California 94083 ("Exelixis"), and
BRISTOL-MYERS SQUIBB COMPANY, a Delaware corporation having its principal place
of business at Route 206 and Province Line Road, Princeton, NJ 08543 ("BMS").
Exelixis and BMS are sometimes referred to herein individually as a "Party" and
collectively as the "Parties."
RECITALS
A. BMS is a multinational health care company that has expertise and
capability in developing and marketing human pharmaceuticals and has research
and development programs.
B. Exelixis is a multinational biotechnology company that has expertise and
proprietary technology relating to genetic model systems, functional genomics
and computational biology and is applying such technology to discover and
validate targets for drug discovery in a variety of disease areas.
C. BMS and Exelixis desire to establish a collaboration to apply such
Exelixis technology and expertise to the identification and characterization of
biochemical pathways and targets in specific research areas relevant to cell
growth and proliferation, to generate small molecule therapeutic or prophylactic
compounds directed against such targets, and to provide for the development and
commercialization of novel therapeutic and prophylactic products based on such
research.
NOW, THEREFORE, the Parties agree as follows:
1. DEFINITIONS
The following terms shall have the following meanings as used in this Agreement:
1.1 "ABANDONED TARGET" means [ * ]
1.2 "AFFILIATE" means, with respect to a particular Party, a person,
corporation, partnership, or other entity that controls, is controlled by or is
under common control with such Party. For the purposes of the definition in this
Section 1.2, the word "control" (including, with correlative meaning, the terms
"controlled by" or "under the common control with") means the actual power,
either directly or indirectly through one or more intermediaries, to direct or
cause the direction of the management and policies of such entity, whether by
the ownership of at least fifty percent (50%) of the voting stock of such
entity, or by contract or otherwise.
1.3 "ASSAY" means [ * ].
1.4 "BACK-UP COMPOUND" means [ * ].
1.5 "BMS COLLABORATION PRODUCT" means [ * ].
1.6 "BMS KNOW-HOW" means all Information Controlled by BMS (other than BMS
Patents) and its Affiliates during the term of the Agreement that is necessary
or reasonably useful for Exelixis to exercise the rights licensed or granted to
it under Sections 5.3 and 5.5 hereof and/or to perform its obligations to the
Collaboration under this Agreement.
1.7 "BMS PATENTS" means all Patents Controlled by BMS and its Affiliates,
including Patents Controlled jointly with Exelixis, during the term of this
Agreement that are necessary or reasonably useful for Exelixis to exercise the
rights licensed or granted to it under Section 5.3 (or which may be acquired by
it under Section 5.5 hereof) and/or to perform its obligations to the
Collaboration under this Agreement.
1.8 "BMS PRODUCT" means [ * ].
1.9 "BMS SELECTED TARGET" means [ * ].
1.10 "BMS SOLE PRODUCT" means [ * ].
1.11 "COLLABORATION" means all the activities performed by or on behalf of
Exelixis or BMS in the course of performing work contemplated in Article 2 or
Section 3.1 or 3.5.
1.12 "COLLABORATION COMPOUND" means [ * ].
For clarity, any compound licensed in by BMS from Third Parties for activity
against a BMS Selected Target shall not be deemed to be a Collaboration Compound
for milestone and royalty purposes hereunder unless such compound is (A)
acquired as a result of the use or subsequently developed through the use, to
any material extent, of any Information relating to such BMS Selected Target
that Remained Confidential to Exelixis at the time of use or (B) developed in a
manner or acquired as a result of activity that would otherwise have infringed a
claim of an issued or published (and subsequently issued) Exelixis Patent.
BMS shall not have any development or commercialization license rights under
Section 5.1(a)(iv) with respect to any compound that fails to meet the
definition of a Collaboration Compound. The preceding sentence shall not be
interpreted as preventing BMS from developing or commercializing, on account of
its ability to modulate a target other than a BMS Selected Target, a derivative
of a Lead Compound or a Back-up Compound wherein such derivative (A) was made by
BMS pursuant to its license in Section 5.1(a)(iv), (B) is not a Collaboration
Compound and (C) (1) for which the manufacture and use of such derivative would
not infringe an EXEL Patent and (2) is not manufactured, developed or
commercialized through the use of EXEL Know-How that Remains Confidential at the
time of use.
1.13 "CONTROLLED" means, with respect to any gene, protein, compound,
material, Information or intellectual property right, that the Party owns or has
a license to such gene, protein, compound, material, Information or intellectual
property right and has the ability to grant to the other Party access, a license
or a sublicense (as applicable) to such gene, protein, compound, material,
Information or intellectual property right as provided for herein without
violating the terms of any agreement or other arrangements with any Third Party
existing at the time such Party would be first required hereunder to grant the
other Party such access, license or sublicense.
1.14 "DEVELOPMENT FIELD" means [ * ].
1.15 "DILIGENT EFFORTS" means [ * ].
1.16 "DECISION POINT 1 (DP1) APPROVAL" means [ * ].
1.17 "DP1 ORTHOLOGUE" means [ * ].
1.18 "DRAFT TARGET POOL" means [ * ].
1.19 "ELIGIBLE TARGET" means [ * ].
1.20 "EXEL COMPOUND" means [ * ].
1.21 "EXEL KNOW-HOW" means all Information Controlled by Exelixis (other
than EXEL Patents or Target Inventions invented solely or jointly by BMS) and
its Affiliates during the term of the Agreement that is necessary or reasonably
useful for BMS to exercise the rights licensed or granted to it under Sections
5.1 and 5.2 hereof and/or to perform its obligations to the Collaboration under
this Agreement.
1.22 "EXEL PATENTS" means all Patents Controlled by Exelixis and its
Affiliates (other than Patents claiming Target Inventions invented solely by BMS
or jointly by BMS with Exelixis, but including Patent claiming Target Inventions
invented solely by Exelixis), including Patents Controlled jointly with BMS,
during the term of the Agreement that are necessary or reasonably useful for BMS
to exercise the rights licensed or granted to it under Section 5.1 hereof (or
which may be acquired by it under Sections 5.2(b) and 5.5 hereof) and/or to
perform its obligations to the Collaboration under this Agreement.
1.23 "EXEL PRODUCT" means [ * ].
1.24 "EXEL SELECTED TARGET" means [ * ].
1.25 "GENETIC ENTRY POINT" means [ * ].
1.26 "GENETIC SCREEN" means [ * ].
1.27 "INFORMATION" means information, results and data of any type
whatsoever, in any tangible or intangible form whatsoever, including without
limitation, databases, practices, methods, techniques, specifications,
formulations, formulae, knowledge, know-how, skill, experience, test data
including pharmacological, biological, chemical, biochemical, toxicological and
clinical test data, analytical and quality control data, stability data, studies
and procedures, and patent and other legal information or descriptions.
1.28 "INVENTION" means [ * ].
1.29 "JOINT INVENTION" means [ * ].
1.30 "JOINT MANAGEMENT TEAM" or "JMT" means the committee described in
Section 2.3.
1.31 "JOINT SCIENTIFIC COMMITTEE" or "JSC" means the committee described in
Section 2.4.
1.32 "LEAD COMPOUND" means [ * ].
1.33 "MAJOR MARKET" means [ * ].
1.34 "MOA AGREEMENT" means the Research Collaboration and Technology
Transfer Agreement between Exelixis and BMS dated September 14, 1999, as
heretofore amended and as may be amended from time to time hereafter.
1.35 "MODEL SYSTEM TARGET" means [ * ].
1.36 "NDA" means a New Drug Application filed with the United States Food
and Drug Administration in conformance with applicable laws and regulations, or
the foreign equivalent of any such application in any other country.
1.37 "NET SALES" means [ * ].
In the event a Product or Pharmacogenomic Product is sold as an end-user product
consisting of a combination of active functional elements or as a combined
product and/or service, Net Sales, for purposes of determining royalty payments
on such Product or Pharmacogenomic Product, shall be calculated by multiplying
the Net Sales of the end-user product and/or service by the fraction A over A+B,
in which A is the gross selling price of the Product or Pharmacogenomic Product
portion of the end-user product and/or service when such Product or
Pharmacogenomic Product is sold separately during the applicable accounting
period in which the sales of the end-user product were made, and B is the gross
selling price of the other active elements and/or service, as the case may be,
of the end-user product and/or service sold separately during the accounting
period in question. All gross selling prices of the elements of such end-user
product and/or service shall be calculated as the average gross selling price of
the said elements during the applicable accounting period for which the Net
Sales are being calculated. In the event that, in any country or countries, no
separate sale of either such above-designated Product or Pharmacogenomic Product
or such above designated elements of the end-user product and/or service are
made during the accounting period in which the sale was made or if gross retail
selling price for an active functional element, component or service, as the
case may be, cannot be determined for an accounting period, Net Sales allocable
to the Product or Pharmacogenomic Product in each such country shall be
determined by mutual agreement reached in good faith by the Parties prior to the
end of the accounting period in question based on an equitable method of
determining same that takes into account, on a country by country basis,
variations in potency, the relative contribution of each active agent, component
or service, as the case may be, in the combination, and relative value to the
end user of each active agent, component or service, as the case may be.
Notwithstanding the foregoing, it is agreed that drug delivery vehicles,
adjuvants, and excipients shall not be deemed to be "active ingredients" or
"active functional elements," the presence of which in a Product or
Pharmacogenomic Product would be deemed to create a combination product subject
to the terms of the preceding paragraph.
1.38 "PATENT" means (a) unexpired letters patent (including inventor's
certificates) which have not been held invalid or unenforceable by a court of
competent jurisdiction from which no appeal can be taken or has been taken
within the required time period (and which have not been admitted to be invalid
or unenforceable through reissue, disclaimer or otherwise, or been abandoned in
accordance with or as permitted by the terms of this Agreement or by mutual
written agreement), including without limitation any substitution, extension,
registration, confirmation, reissue, re-examination, supplementary protection
certificates, confirmation patents, patent of additions, renewal or any like
filing thereof and (b) pending applications for letters patent which have not
been canceled, withdrawn from consideration, finally determined to be
unallowable by the applicable governmental authority for whatever reason (and
from which no appeal is or can be taken), and/or abandoned in accordance with or
as permitted by the terms of this Agreement or by mutual written consent,
including without limitation any continuation, division or continuation-in-part
thereof and any provisional applications.
1.39 "PHARMACOGENOMIC PRODUCT" means [ * ].
1.40 "PHASE I CLINICAL TRIAL" means a trial on sufficient numbers of normal
volunteers and patients that is designed to establish that a pharmaceutical
product is safe for its intended use, and to support its continued testing in
Phase II Clinical Trials.
1.41 "PHASE II CLINICAL TRIAL" means a trial on sufficient numbers of
patients that is designed to establish the safety and biological activity of a
pharmaceutical product for its intended use, and to define warnings, precautions
and adverse reactions that are associated with the pharmaceutical product in the
dosage range to be prescribed.
1.42 "PHASE III CLINICAL TRIAL" means a trial on sufficient numbers of
patients that is designed to establish that a pharmaceutical product is safe and
efficacious for its intended use, and to define warnings, precautions and
adverse reactions that are associated with the pharmaceutical product in the
dosage range to be prescribed, and to support Regulatory Approval of such
pharmaceutical product or label expansion of such pharmaceutical product.
1.43 "PHENOTYPIC SCREEN" means [ * ].
1.44 "PRODUCT" means [ * ].
1.45 "PTP" means [ * ].
1.46 "REGULATORY APPROVAL" means any and all approvals (including
supplements, amendments, pre- and post-approvals, pricing and reimbursement
approvals), licenses, registrations or authorizations of any national,
supra-national (e.g., the European Commission or the Council of the European
Union), regional, state or local regulatory agency, department, bureau,
commission, council or other governmental entity, that are necessary for the
manufacture, distribution, use or sale of a Product in a regulatory
jurisdiction.
1.47 "REMAINS CONFIDENTIAL" means, with respect to Information generated
pursuant to the Collaboration that is used by or on behalf of a Party or its
Affiliate or sublicensee, that such Information, at the time of such use, was
not then in the public domain and was not then known to a Party or any of its
Affiliates or licensees as a result of disclosure by a Third Party entitled to
disclose same without restriction as to confidentiality.
1.48 "RESEARCH FIELD" means cancer research [ * ].
1.49 "RESEARCH PLAN" shall have the meaning set forth in Section 2.7.
1.50 "RESEARCH TERM" shall have the duration set forth in Section 2.6.
1.51 "REVERTED TARGET" shall have the meaning set forth in Section 3.1.
1.52 "SELECTED TARGET" means [ * ].
1.53 "SOLE INVENTION" means [ * ].
1.54 "TARGET" means [ * ].
1.55 "TARGET INVENTION" means [ * ].
1.56 "THIRD PARTY" means any entity other than (i) Exelixis, (ii) BMS or
(iii) an Affiliate of either Party.
1.57 "THRESHOLD BMS PRODUCT" means [ * ].
1.58 "VALID CLAIM" means (a) a claim in an issued Patent, as described in
Section 1.38(a), which has not (i) expired or been canceled, (ii) been declared
invalid by an unreversed and unappealable decision of a court or other
appropriate body of competent jurisdiction, (iii) been admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise, or (iv) been abandoned
in accordance with or as permitted by the terms of this Agreement or by mutual
written agreement, or (b) a claim under a pending application for a Patent, as
described in Section 1.38(b), that has been pending five (5) years or less from
its date of filing, and which have not been canceled, withdrawn from
consideration, finally determined to be unallowable by the applicable
governmental authority for whatever reason (and from which no appeal is or can
be taken), or abandoned.
2. RESEARCH PROGRAM
2.1 OVERVIEW. The general goals and intent of the Collaboration are to
apply the Exelixis technology to discovering Eligible Targets that may be useful
for the discovery and development of small molecule drugs for the prevention,
treatment or cure of cancer. [ * ]. The genes arising from such research shall
be used to identify human genes which encode proteins likely to be suitable for
the development of a small molecule therapeutic or prophylactic products for the
treatment of cancer. As set forth in more detail in Section 3.3, each Party
shall [ * ] choose those human genes that qualify as Eligible Targets for
development of a small molecule cancer drug.
2.2 MANAGEMENT STRUCTURE. The Parties agree to establish a multi-level
committee structure to manage and direct the Collaboration and the relationship
of the Parties in pursuing the research and development goals of this Agreement.
The committee structure is intended to facilitate decision making and management
of the various Collaboration activities of the Parties, and each Party agrees to
use good faith, cooperative efforts to facilitate and assist the efforts of such
committees. The overall management of the Collaboration with respect to work
performed by the Parties under the Research Plan shall be vested in the Joint
Management Team (the "JMT"), with responsibility, as further discussed in
Section 2.3, for establishing the strategic direction of the Collaboration and
for managing and directing the research efforts of the Parties under the
Collaboration. The day-to-day management and direction of the Research Program
shall be managed by the Joint Scientific Committee (the "JSC"), which shall
report to and be managed by the JMT. [ * ]. Any dispute that cannot be
resolved by the JSC for matters that come before it shall be resolved by the
JMT.
2.3 JOINT MANAGEMENT TEAM.
(A) MEMBERSHIP. The Joint Management Team (the "JMT") shall be
composed of four members, two members appointed by each Party. [ * ], each
Party shall appoint two representatives from its senior management team to the
JMT. Each Party may replace its JMT representatives at any time upon written
notice to the other Party. Exelixis shall designate one of its representatives
as Chairperson for the period from the Effective Date until the first
anniversary of the Effective Date. Thereafter, the Parties shall alternately
designate a Chairperson of the JMT for each subsequent contract year. The
Chairperson shall be responsible for scheduling meetings, preparing and
circulating an agenda in advance of each meeting, and preparing and issuing
minutes of each meeting within thirty (30) days thereafter. Any JMT member may
add topics to the draft agenda.
(B) RESPONSIBILITIES. During [ * ], the JMT shall meet a minimum of
[ * ] as provided in Section 2.5; thereafter, the JMT shall meet at the request
of either Party, which request may be made by each Party not more than [ * ],
unless otherwise agreed to by [ * ]. The JMT shall supervise and direct the JSC,
evaluate the progress of research under the Research Plan and monitor compliance
with the diligence provisions set forth in Sections 2.7 and 3.4, and it will
make the final decisions regarding [ * ]. To the extent necessary to carry out
its responsibilities, a Party's JMT members shall be granted access to the other
Party's Confidential Information relevant to any decision required to be made by
the JMT. Thus, it may be that members of the JMT, in assessing modifications to
the Research Plan, assessing the results generated in the course of carrying out
the Research Plan, or making determinations as required in this Section 2.3, may
need to be granted access to higher levels of the proprietary or Confidential
Information of the other Party than is provided to the JSC or to the employees
of such Party working on the Collaboration. The JMT shall discuss in good faith
and agree on the level of such access that is needed to achieve the goals and
intent of the Parties.
2.4 JOINT SCIENTIFIC COMMITTEE
(A) MEMBERSHIP. The Joint Scientific Committee (the "JSC") shall be
composed of four members. Each Party may invite, with the approval of the other
Party (which shall not be unreasonably withheld), additional employees or
consultants (provided such employees and consultants have contractual
confidentiality obligations to such Party that are at least as stringent as
those set forth in this Agreement) to attend one or more meetings of the JSC as
ad hoc, non-voting guests. [ * ] each Party shall appoint two representatives
to the JSC, one such representative being the individual at the Party with
primary responsibility for the day-to-day management and execution of the
Research Plan. The JSC will report directly to the JMT and shall take its
direction from the JMT. Each Party may replace its appointed JSC
representatives at any time upon written notice to the other Party. Exelixis
shall designate one of its representatives as Chairperson of the JSC. The
Chairperson shall be responsible for scheduling meetings, preparing and
circulating an agenda in advance of each meeting, and preparing and issuing
minutes of each meeting within thirty (30) days thereafter. Any JSC member may
add topics to the draft agenda.
(B) RESPONSIBILITIES. During [ * ] the JSC shall meet at a minimum
[ * ]. Except for decisions made by the BMS members of the JSC pursuant to
Section 1.19(c), the JSC shall operate by [ * ]. It shall be responsible for the
planning and execution of the Research Program. At its meetings, the JSC shall
evaluate the data generated by the Parties in the course of carrying out the
Research Plan, shall prioritize the Genetic Entry Points, shall perform those
activities specifically described in this Article 2 and Article 3 and may
consider modifying the Research Plan. At the next JMT meeting, the JSC shall
summarize for the JMT the progress in carrying out the Research Plan since the
last JMT meeting, bring to the attention of the JMT any overarching issues or
significant changes in a Research Plan, and address any issues raised by the JMT
at its previous meeting. The JSC shall also prioritize projects within the
Research Plan. To the extent necessary to carry out its responsibilities, a
Party's JSC members shall be granted access to the other Party's Confidential
Information relevant to any decision required to be made by the JSC.
2.5 MEETINGS. The Parties shall endeavor to schedule meetings of the JMT
and the JSC [ * ]. Meetings for the JSC shall be held on an alternating basis in
New Jersey and in San Francisco. When possible, the meeting of the JMT should
occur at the same location as the JSC meeting, with the JMT meeting occurring
after the meeting of the JSC. With the consent of the representatives of each
Party serving on a particular committee, other representatives of each Party may
attend meetings of that committee as nonvoting observers. A meeting of a
committee may be held by audio or video teleconference with the consent of each
Party, provided that at least half of the minimum number of meetings for that
committee shall be held in person. Meetings of a committee shall be effective
only if at least one representative of each Party is present or participating.
Each Party shall be responsible for all of its own expenses of participating in
the committee meetings.
2.6 RESEARCH TERM.
(A) The Research Term shall commence on the Effective Date and shall
continue, unless the Agreement is terminated pursuant to Section 10.2 or the
Research Term is terminated pursuant to Section 2.6(b), until at least the third
anniversary of the Effective Date. The Research Term shall automatically extend
beyond the third anniversary of the Effective Date, in one-year increments,
unless a Party provides written notice, [ * ]. The research funding commitment
of BMS set forth in Section 7.2 shall remain in force until the termination of
the Research Term.
(B) If, during [ * ], Exelixis or any Exelixis Affiliate controlling
Exelixis, [ * ]
(C) For purposes of this Agreement, [ * ].
2.7 RESEARCH PLAN. The Parties have agreed in writing upon a detailed
plan for the research to be carried out by the Parties during [ * ] and prior to
the selection of each Eligible Target as a Selected Target (the "Research
Plan"). The JSC shall review the Research Plan [ * ] and may propose to the JMT
revised versions of the Research Plan that are consistent with the terms of this
Agreement. The JMT shall review, revise (if necessary) and approve all such
proposals for revising the Research Plan. Once approved by the JMT, such
revised Research Plan shall replace the prior Research Plan. During [ * ], each
Party shall use Diligent Efforts to perform the tasks assigned to it in the
Research Plan then in effect. The Parties acknowledge and understand that the
Research Plan can only be changed to add new Genetic Entry Points if the
procedures set forth in Section 2.8 have been carried out.
2.8 GENETIC ENTRY POINTS. The Genetic Entry Points on which research may be
conducted by Exelixis during the Research Term are listed on Exhibit 1.25.
Additional Genetic Entry Points may be designated as set forth in this Section
2.8. Prioritization of work on the Genetic Entry Points shall be determined by
the JSC. [ * ], the JSC shall review the Genetic Entry Points [ * ] and shall
determine when a Genetic Entry Point should be re-prioritized, or removed from
further research, under the Research Plan. At its sole discretion, Exelixis may
designate new Genetic Entry Points in the Research Field upon which Exelixis
shall commence research pursuant to the Collaboration, if consistent with the
relative priority given such new Genetic Entry point by the JSC. [ * ].
2.9 IDENTIFICATION OF MODEL SYSTEM TARGETS. During [ * ], Exelixis shall
use Diligent Efforts to identify, in accordance with the Research Plan, Model
System Targets [ * ].
2.10 IDENTIFICATION OF HUMAN ORTHOLOGUES OF MODEL SYSTEM TARGETS.
(A) Exelixis shall conduct a good faith search of publicly available
databases for mammalian orthologues of each Model System Target it identifies
pursuant to Section 2.9. [ * ], Exelixis shall present to the BMS members of
the JSC a list of all human orthologues newly identified by Exelixis pursuant to
the preceding sentence. [ * ]
(B) At each JSC meeting, for each human orthologue [ * ] Exelixis
shall present to the JSC the sequence of and a summary of the data [ * ].
(C) If no human orthologue has been identified for a Model System
Target at the time Exelixis presents such Model system Target to the JSC, then
the JSC shall decide whether further research should be done during the Research
Term [ * ].
(D) Upon termination of the Research Term (other than due to
termination of the Agreement), if any Model System Target for which no human
orthologue has been identified remain, then either Party may at its own
discretion and expense perform, [ * ] research intended to identify one or more
human orthologues of such Model System Target. [ * ].
(E) [ * ].
(F) [ * ].
(G) [ * ].
2.11 IDENTIFICATION OF ELIGIBLE TARGETS.
(A) The Parties will use reasonable efforts to mutually agree [ * ].
[ * ] shall bear the costs it incurs in the course of performing the
responsibilities allocated to it. [ * ] shall share all resulting information
from such work will be shared with the other Party at or prior to the next
meeting of the JSC. Upon completion of the work reasonably necessary to
determine whether a human orthologue meets the Eligible Target criteria, [ * ]
shall promptly decide and record in writing whether each such human orthologue
qualifies as an Eligible Target. [ * ].
(B) [ * ].
2.12 INTERACTION WITH MOA AGREEMENT.
(A) After the Effective Date, BMS agrees that it will not provide any
oncology compounds to Exelixis pursuant to the MOA Agreement or this Agreement.
[ * ].
(B)
(I) [ * ]
(II) [ * ]
(III) [ * ]
(C) [ * ]
(D) [ * ]
(E) The agreements of the Parties set forth in this Section 2.12 shall
bind the Parties with respect to this Agreement and the MOA Agreement. If the
Parties decide that it would be helpful to execute a formal amendment of the MOA
Agreement that reflects any of these agreements, then the Parties shall draft
and execute such amendment in good faith and such amendment shall be consistent
with the terms of this Section 2.12.
2.13 OBLIGATIONS OF PARTIES. Exelixis and BMS shall provide the JSC
and its authorized representatives with [ * ].
2.14 COLLABORATION GUIDELINES. Subject to the terms of this Agreement, the
activities and resources of each Party shall be managed by such Party, acting
independently and in its individual capacity. The relationship between Exelixis
and BMS is that of independent contractors, and neither Party shall have the
power to bind or obligate the other Party in any manner, other than as is
expressly set forth in this Agreement.
2.15 CONDUCT OF RESEARCH. The Parties shall use Diligent Efforts to conduct
their respective tasks throughout the Collaboration and shall conduct the
Collaboration in good scientific manner, and in compliance in all material
respects with the requirements of applicable laws, rules and regulations and all
applicable good laboratory practices to attempt to achieve their objectives as
efficiently and expeditiously as reasonably practicable.
2.16 RECORDS. Each Party shall maintain complete and accurate records of
all work conducted under the Collaboration and all results, data and
developments made pursuant to its efforts under the Collaboration. Such records
shall be complete and accurate and shall fully and properly reflect all work
done and results achieved in the performance of the Collaboration in sufficient
detail and in good scientific manner appropriate for patent and regulatory
purposes.
2.17 REPORTS. During [ * ] each Party shall report to the JSC no less than
[ * ] and will submit to the other Party and the JSC a [ * ] written progress
report summarizing the work performed under the Research Program. If reasonably
necessary for a Party to perform its work under the Collaboration or to exercise
its rights under the Agreement, such Party may request that the other Party
provide more detailed information and data regarding such results reported by
such other Party, and such other Party shall promptly provide the requesting
Party with information and data as is reasonably related to such request. All
such reports shall be considered Confidential Information of the Party providing
same.
2.18 NON-SOLICITATION. During [ * ], each Party and its Affiliates shall
not: [ * ].
2.19 TARGETS PREVIOUSLY PURSUED BY ENTITY ACQUIRED BY A PARTY.
Subject to Section 3.3(d):
(A) The provisions set forth in this Section 2.19 shall apply in the
event that either Party (the "Acquiring Party") or an Affiliate of an Acquiring
Party acquires or merges with another company (the "Acquired Entity") [ * ]
3. SELECTION, PURSUIT AND ABANDONMENT OF TARGETS
3.1 DRAFT TARGET POOL. Subject to Section 2.12, each Eligible Target
shall be added to the Draft Target Pool upon its designation as an Eligible
Target by the JSC [ * ].
3.2 DISCLOSURE OF DATA PRIOR TO DRAFT CHOICE.
(A) To ensure that each Party has access to all pertinent data being
developed by the other Party relating to each Eligible Target in sufficient time
to enable each Party to evaluate such Eligible Target before a JSC meeting in
which such Eligible Target can be selected pursuant to Section 3.3, each Party
shall provide a written, reasonably detailed summary of primary data arising
from its research on such Eligible Target in the performance of its obligations
to the Collaboration [ * ] to the other Party's JSC members at least [ * ]
before such JSC meeting. [ * ].
(B) [ * ]
3.3 DRAFT CHOICE PROCEDURES.
(A) At each JSC meeting [ * ] the Parties shall, subject to Section
2.10(g), select Eligible Targets from the Draft Target Pool as Selected Targets.
[ * ].
(B) [ * ]
(C) [ * ]
(D) If BMS decides to deem, as an Eligible Target, a human orthologue
of a Model System Target that would not otherwise qualify as an Eligible Target
solely on account of Exelixis' previous grant of an non-exclusive license of the
scope described in Section 1.19(c), and BMS selects such Eligible Target as a
BMS Selected Target pursuant to Section 3.3, then BMS shall have all of the
rights and obligations set forth in this Agreement with respect to BMS Selected
Targets, except that all exclusive licenses granted by Exelixis under Section
5.1 with respect to such BMS Selected Target shall, except for the grant under
Section 5.1(a)(iii), become non-exclusive (although Exelixis shall endeavor
thereafter not to grant, subject to Article 6, additional rights with respect to
small molecule modulators of such BMS Selected Target in the Development Field).
[ * ]
(E) At the JSC meeting [ * ] the Parties shall select any remaining
Eligible Targets from the Draft Target Pool or Validation Pool as Selected
Targets. [ * ]
(F) The Parties may modify, by mutual written agreement, the draft
choice procedures set forth in this Section 3.3.
3.4 PURSUIT OF SELECTED TARGETS.
(A) GENERAL DILIGENCE. For each Selected Target selected by a
particular Party, such Party shall use good faith Diligent Efforts [ * ]
(B) SPECIFIC DILIGENCE. If a Party or its sublicensee [ * ] then such
Party shall be deemed to have demonstrated Diligent Efforts with respect to [ *
] The foregoing shall not be construed to limit or preclude any other showing of
Diligent Efforts by a Party based on actual facts and circumstances.
(C) BREACH OF DILIGENCE. Breach of the diligence obligations set forth
in this Section 3.4 shall not constitute a breach of this Agreement. The sole
remedy available to each Party upon the other Party's breach of the diligence
obligations is that the relevant Target ceases to be a Selected Target and
becomes an Abandoned Target.
3.5 EXELIXIS PARTICIPATION IN DEVELOPMENT OF BMS PRODUCTS.
(A) During [ * ], BMS may request in writing that Exelixis develop a
high throughput assay to assess the activity of small molecule compounds with
respect to a Selected Target chosen by BMS. Such request shall specify (i) the
desired formatting criteria for the assay and all other material specifications
for the assay and (ii) the date by which delivery, even if (i) is met, would be
too late for BMS' needs (the "Assay Delivery Date"). If Exelixis wishes to
develop such an assay, it shall notify BMS in writing [ * ] and shall indicate
the date on which Exelixis anticipates commencing such work. The Parties shall
agree in writing on the specific formatting criteria for the assay and all other
material specifications for the assay (including without limitation, if
appropriate, the acceptance period and a range of variances that is mutually
agreed upon by the Parties). Unless otherwise set forth in such writing, the
Assay Delivery Date shall be the date originally requested by BMS. Exelixis
shall use good faith Diligent Efforts to develop such an assay and deliver it to
BMS within [ * ] of the Assay Delivery Date.
(I) If, prior to the Assay Delivery Date, Exelixis notifies BMS
that it will not be able to deliver the assay within [ * ] of the Assay Delivery
Date and identifies a new date by which it intends to deliver the assay (the
"Substitute Delivery Date"), then BMS shall have [ * ] to notify Exelixis in
writing if it wants Exelixis to terminate development of the assay. If BMS does
not so notify Exelixis, then BMS shall not reject the assay or refuse to make
the milestone payment set forth in Section 7.3(b) due to the fact that the assay
was not delivered within [ * ] of the Assay Delivery Date. BMS may nevertheless
reject such assay if it is not delivered within [ * ] of the Substitute Delivery
Date.
(II) BMS shall have [ * ] following Exelixis' delivery of an
assay pursuant to this Section 3.5(a), to notify Exelixis in writing if BMS has
determined that the delivered assay does not meet the specifications mutually
agreed by the Parties pursuant to Section 3.5(a). If BMS does not so notify
Exelixis within such [ * ] period, then the assay will be considered accepted
and shall be deemed an "Assay" and BMS shall make the milestone payment set
forth in Section 7.3(b) with respect to such Assay.
(III) Any and all disagreements between the Parties regarding
whether a particular assay delivered by Exelixis meets the specifications
mutually agreed by the Parties pursuant to Section 3.5(a) shall be handled
[ * ].
(IV) Exelixis covenants that it will not [ * ]. The foregoing
covenant shall not be interpreted to restrict Exelixis' ability to use
Information it generated in the development of an Assay for the purposes of
developing other assays, [ * ]
(B) During [ * ] BMS may request in writing that Exelixis perform high
throughput screening of EXEL Compounds in one or more assays (whether developed
by BMS or EXEL) that assess the activity of such compounds with respect to a
Selected Target chosen by BMS and subsequently conduct lead optimization of EXEL
Compounds until Exelixis identifies an analog or derivative of such compound
that qualifies as a Lead Compound. Such request shall specify the assay(s) to
be used, whether the entire Exelixis library or certain subsets thereof should
be screened, and the criteria (including without limitation, if appropriate, a
range of variances that is mutually agreed upon by the Parties) that an EXEL
Compound must meet in order to be considered either a Lead Compound or a Back-up
Compound for such Lead Compound. If Exelixis wishes to perform such work, it
shall present BMS with a proposed detailed work plan (including specific
deliverables, timetable and date on which Exelixis anticipates commencing work,
and acceptance procedures) and budget for such work plan (including payment
schedules) within [ * ] of BMS' request. If BMS wishes Exelixis to perform such
work pursuant to such budget, it shall notify Exelixis within [ * ] of receipt
of such budget. The final detailed work plan and budget for such work plan (the
"Work Plan") shall be signed by both Parties before any work is undertaken.
Exelixis shall use good faith Diligent Efforts to complete the work set forth in
the Work Plan; provided, that any payment that is conditioned on the performance
or delivery of certain deliverables and/or performance by a certain date must be
met before payment will be owed, whether or not Exelixis shall have used good
faith Diligent Efforts. If such work results in the development of a Lead
Compound, Exelixis shall deliver to BMS such Lead Compounds and all Back-up
Compounds for such Lead Compound. In addition to all payments made by BMS
pursuant to any budget agreed upon in accordance with this Section 3.5(b) (such
payments shall be noncreditable and nonrefundable), BMS shall make the milestone
payment set forth in Sections 7.3(c), (e) and (f) upon occurrence of the events
specified therein and BMS shall make royalty payments in accordance with Section
7.4. Exelixis covenants that, with respect to each BMS Selected Target against
which Exelixis screens its libraries pursuant to this Section 3.5(b), Exelixis
will not [ * ].
3.6 TARGET ABANDONMENT.
(A) A Selected Target will become an Abandoned Target if any of the
following circumstances arise: [ * ].
(B) If BMS [ * ].
(C) Each Target that becomes an Abandoned Target [ * ].
3.7 TARGETS OTHER THAN SELECTED TARGETS. Exelixis has no obligations to
BMS with respect to and grants no licenses to BMS with respect to [ * ]. All
such targets shall not be subject to any terms of this Agreement except for
Section 5.2(a)(ii) (with respect to [ * ] and Section 3.1 (with respect to
[ * ]).
3.8 RECORDS. Each Party shall maintain complete and accurate records of all
scientific and development work conducted on its Selected Targets, Collaboration
Compounds and Products and all results, data and developments made pursuant to
its research and development efforts under this Agreement. Such records shall
be complete and accurate and shall fully and properly reflect all work done and
results achieved in sufficient detail and in good scientific manner appropriate
for patent and regulatory purposes.
3.9 REPORTS. Every [ * ], each Party will submit to the other Party a
written progress report summarizing the research and development work performed
by such Party on its Selected Targets.
3.10 EXPENSES. Except as set forth in Sections 3.5 and 7.2, [ * ] shall
bear [ * ] associated with performing the research, development and
commercialization described in Articles 2 and 3.
4. ADDITIONAL CONSIDERATION
4.1 STOCK PURCHASE AGREEMENT. BMS shall make an equity investment in
Exelixis equal to a total of twenty million dollars ($20,000,000) in accordance
with the terms set forth in the Stock Purchase Agreement between the Parties of
even date herewith.
4.2 REBECCAMYCIN ANALOG LICENSE AGREEMENT. BMS shall grant Exelixis an
exclusive license to the rebeccamycin analog ("Rebeccamycin Analog") known as
BMY-027557 (with the CAS Identification No. CAS-119673-08-4) in accordance with
the terms set forth in the License Agreement between the Parties of even date
herewith.
5. LICENSES AND RELATED RIGHTS
5.1 LICENSES TO BMS.
(A) EXEL KNOW-HOW AND EXEL PATENTS. Subject to the terms of this
Agreement (including without limitation Section 5.2 and Article 6):
(I) RESEARCH. Exelixis hereby grants BMS a non-exclusive,
worldwide, royalty-free license (with the right to sublicense to its Affiliates,
but without the right to sublicense to Third Parties except with prior written
consent of Exelixis), under any EXEL Know-How and EXEL Patents solely (A) to
perform the research tasks assigned to it pursuant to Sections 2.10(c), 2.11 and
3.1(a), and (B) to perform research, during [ * ] and in accordance with
Sections 2.10(d) and 2.11, upon mammalian orthologues of certain Model System
Targets.
(II) BMS SELECTED TARGETS. Exelixis hereby grants BMS an
exclusive, worldwide, royalty-bearing (solely to the extent provided in Section
7.4) license (with the right to sublicense), under any EXEL Know-How and EXEL
Patents covering the composition, manufacture, or use of one or more BMS
Selected Targets, to make and use each such BMS Selected Target (A) to perform
research within the Research Field upon each such BMS Selected Target, including
using such BMS Selected Target to search for Collaboration Compounds, (B) to
develop, and make or have made for use in the Development Field, BMS Products
comprising or incorporating Collaboration Compounds, (C) to develop, following
the commencement of a clinical trial of a BMS Product in the Development Field,
such BMS Product for any human indication, and (D) to make, have made, use,
import, sell, offer to sell and have sold BMS Products.
(III) ASSAYS. Exelixis hereby grants BMS an exclusive, worldwide,
royalty-bearing (solely to the extent provided in Section 7.4) license (with the
right to sublicense), under any EXEL Know-How and EXEL Patents covering the
composition or use of one or more Assays, (A) to make and have made such Assay,
(B) to use each such Assay to search for, make and have made (1) Collaboration
Compounds with activity against the BMS Selected Target for which such Assay was
developed, and (2) compounds that lack activity against the BMS Selected Target
for which such Assay was developed, (C) to develop, and make or have made, for
use in the Development Field (and in any defined field licensed by BMS under
Section 5.2(b)(iii)), BMS Collaboration Products, and (D) to develop, following
the commencement of a clinical trial of a BMS Collaboration Product in the
Development Field, such BMS Collaboration Product for any human indication.
Such license shall convert to a non-exclusive license, on an Assay-by-Assay
basis, on the earlier of (x) the date that is [ * ] after the end of the
Research Term, or (y) the BMS Selected Target relating to such Assay becomes an
Abandoned Target and is selected by Exelixis as an EXEL Selected Target.
(IV) LEAD COMPOUNDS/BACK-UP COMPOUNDS. Exelixis hereby grants BMS
a worldwide, royalty-bearing (solely to the extent provided in Section 7.4)
license (with the right to sublicense), under any EXEL Know-How and EXEL Patents
during the term of this Agreement covering the composition, manufacture, or use
of a Lead Compound delivered to BMS pursuant to Section 3.5(b) or a Back-up
Compound for such Lead Compound, (A) to make derivatives of such Lead Compounds
and Back-up Compounds, (B) to research, develop, and make or have made for use
in the Development Field, BMS Collaboration Products comprising or incorporating
such a Lead Compound or Back-up Compound or derivative thereof, (C) to develop,
following commencement of a clinical trial of such a BMS Collaboration Product
in the Development Field, such BMS Collaboration Product for any human
indication, and (D) to make, have made, use, import, sell, offer to sell and
have sold such BMS Collaboration Products. The foregoing license shall be (x)
exclusive with respect to Lead Compound and Back-up Compounds delivered to BMS
pursuant to Section 3.5(b) and BMS Collaboration Products containing such Lead
Compounds or Back-up Compounds and (y) non-exclusive with respect to derivatives
of Lead Compounds and Back-up Compounds delivered to BMS pursuant to Section
3.5(b) and BMS Collaboration Products containing derivatives of such Lead
Compounds and Back-up Compounds. [ * ].
(V) PHARMACOGENOMIC USES. Exelixis hereby grants BMS a
non-exclusive, worldwide, royalty-bearing (solely to the extent provided in
Section 7.4) license (with the right to sublicense), under the EXEL Know-How and
EXEL Patents covering the composition, manufacture or use of any Selected Target
of either Party, to use such Selected Target in the research, development,
manufacture, use, import, sale and offer for sale of a Pharmacogenomic Product
for use (A) in connection with the research, development, manufacture, use,
import, sale and offer for sale, for any indication, of a (i) BMS Product or
(ii) a product that modulates the same Selected Target as such BMS Product via
substantially the same molecular mechanism of action (a "Target Product"), and
(B) in the labeling, promotion, and registration of any BMS Product or Target
Product for any indication. Such license for a particular Pharmacogenomic
Product shall be sublicensable solely (x) together with a sublicense under
Section 5.1(a)(ii) with respect to a related BMS Product or (y) by BMS or its
sublicensee, for the purpose of developing or commercializing a Pharmacogenomic
Product for use in conjunction with a related BMS Product that BMS or its
sublicensee is developing or commercializing. Provided that a sublicense is
granted in accordance with the restrictions set forth in the previous sentence
and such sublicense does not further limit the scope of the sublicensee's
practice of the EXEL Know-How and EXEL Patents, such sublicensee may practice
the full extent of the license set forth in this Section 5.1(a)(v), including
making, providing, and selling Pharmacogenomic Products for use with Target
Products. [ * ].
(VI) NEGATIVE SCREENING USING EXEL TARGETS. Exelixis hereby
grants to BMS a non-exclusive, worldwide, non-royalty bearing license (without
the right to sublicense except to its Affiliates) under any EXEL Patents and
EXEL Know-How covering the composition, manufacture, or use of an EXEL Selected
Target, to use such EXEL Selected Target solely in secondary screening assays
developed by or for BMS to identify, research and develop Collaboration
Compounds and BMS Products that lack the ability to inhibit, activate or
otherwise modulate the activity of such EXEL Selected Target. The foregoing
license does not include the right of BMS to use any assays developed by or on
behalf of Exelixis with respect to EXEL Selected Targets. [ * ].
(VII) EXELIXIS VALIDATION PROTOCOLS AND REAGENTS. Exelixis hereby
grants to BMS a non-exclusive, worldwide, royalty-free license (without the
right to sublicense except to its Affiliates) under the EXEL Know-How and EXEL
Patents relating to (A) the Exelixis validation protocols and reagents listed on
Exhibit 5.1(a)(vii) (as updated from time to time by the JSC) and (B) all
validation protocols and reagents that are developed by Exelixis in the course
of performing its duties under the Research Plan, to use same for all purposes.
(VIII) IMPROVEMENTS TO BMS VALIDATION PROTOCOLS AND REAGENTS. Exelixis hereby
grants to BMS a non-exclusive, worldwide, royalty-free license (with the right
to sublicense) under the EXEL Know-How and EXEL Patents to use for all purposes,
all improvements to the validation protocols and reagents licensed by BMS under
Section 5.3(d) that incorporate or contain any of such validation protocols and
reagents licensed by BMS.
(B) TARGET INVENTIONS.
(I) Subject to the terms of this Agreement, Exelixis hereby
grants BMS an exclusive, worldwide, royalty-free license (with the right to
sublicense), under the Target Inventions invented solely by BMS and all Patents
Controlled by Exelixis that claim such Target Inventions, to use such Target
Inventions for all purposes other than those for which Exelixis has exclusive
rights pursuant to Section 5.3.
(II) Subject to the terms of this Agreement, Exelixis hereby
grants BMS a worldwide, royalty-free license (with the right to sublicense),
under the Target Inventions invented jointly by BMS and Exelixis and all Patents
Controlled by Exelixis that claim such Target Inventions, to use, without any
accounting or obligation to, or consent required of, Exelixis, such Target
Inventions for all purposes other than those for which Exelixis has exclusive
rights pursuant to Section 5.3. The foregoing license is exclusive, with respect
to BMS Selected Targets, for those purposes for which BMS has exclusive rights
pursuant to Section 5.1(a)(ii); such license is co-exclusive for all other
permitted purposes.
(III) The license rights to a Target Invention (or Patent
obtained thereon) granted under 5.1(b)(i) and (b)(ii) above shall last until the
expiration of the last to expire Patent claiming a Target Invention or, if no
Patent is obtained thereon, for the useful life thereof.
5.2 LICENSE LIMITATIONS AND OPTION.
(A) LICENSE LIMITATIONS.
(I) BMS hereby covenants that it will not use any EXEL Know-How
(to the extent the same Remains Confidential to Exelixis at the time of use by
BMS), Target Invention or EXEL Patents for a purpose other than that expressly
permitted in Section 5.1. [ * ].
(II) Subject to Section 6.2, for each BMS Selected Target,
Exelixis hereby covenants [ * ].
(III) For purposes of Sections 5.1(a)(ii), 5.1(a)(v) and
5.1(a)(vi), EXEL Know-How shall be limited to Information developed by or on
behalf of Exelixis prior to the Effective Date or in the performance of the
Collaboration and prior to the first selection by either Party of such Target as
a Selected Target, and the EXEL Patents shall be limited to those that cover
Inventions made by or on behalf of Exelixis prior to the Effective Date or in
the performance of the Collaboration and prior to the first selection by either
Party of such Target as a Selected Target. For purposes of Section 5.1(a)(i) and
5.1(a)(vii)(B), the EXEL Know-How shall be limited to Information developed by
or on behalf of Exelixis prior to the Effective Date or in the performance of
the Collaboration and prior to the end of the Research Term, and the EXEL
Patents shall be limited to those that cover Inventions made by or on behalf of
Exelixis prior to the Effective Date or in the performance of the Collaboration
and prior to the end of the Research Term. For purposes of Section 5.1(a)(iii),
the EXEL Know-How shall be limited to that Information developed by Exelixis in
the performance of the Collaboration and prior to delivery of the Assay to BMS,
and the EXEL Patents shall be limited to those that cover Inventions made in the
performance of the Collaboration and prior to the delivery of the Assay to BMS.
With respect solely to the derivatives non-exclusively licensed under Section
5.1(a)(iv), the EXEL Know-How so licensed shall be limited to Information
developed by Exelixis in the performance of the Collaboration and prior to
delivery of the relevant Lead Compound or Back-Up Compound to BMS, and the EXEL
Patents so licensed shall be limited to those that cover Inventions made in the
performance of the Collaboration and prior to the delivery of the relevant Lead
Compound or Back-Up Compound to BMS.
(IV) Each sublicense granted by BMS, pursuant to Section 5.1(a),
to a party who is an Affiliate at the time such license is granted shall
terminate immediately upon such party ceasing to be an Affiliate.
(B) OPTION FOR NON-EXCLUSIVE LICENSE.
(I) [ * ]
5.3 LICENSES TO EXELIXIS. Subject to the terms of this Agreement
(including without limitation Section 5.4):
(A) RESEARCH. BMS hereby grants Exelixis a non-exclusive, worldwide,
royalty-free license (with the right to sublicense to Affiliates, but without
the right to sublicense to Third Parties except with prior written consent of
BMS) under the BMS Know-How and BMS Patents, solely (A) to perform research
during the Research Term in accordance with Articles 2 and 3, and (B) to perform
research, during [ * ] and in accordance with Sections 2.10(d) and 2.11, upon
mammalian orthologues of certain Model System Targets.
(B) EXEL SELECTED TARGETS. BMS hereby grants Exelixis an exclusive,
worldwide, royalty-free license (with the right to sublicense), under the BMS
Know-How and BMS Patents covering the composition, manufacture, or use of one or
more EXEL Selected Targets, to make and use each such EXEL Selected Targets (A)
to perform research within or outside the Research Field upon each EXEL Selected
Target, including using such EXEL Selected Target to search for Collaboration
Compounds, and (B) to research, develop, make, have made, use, import, sell,
offer to sell and have sold, for use within or outside the Development Field,
EXEL Products comprising or incorporating such Collaboration Compounds. Such
license shall be subject to a retained right in BMS (sublicensable to its
Affiliates only) to use and practice same for research outside the Research
Field upon such EXEL Selected Target and to make and have made, and to use same,
to develop BMS compounds for use outside the Development Field.
(C) TARGETS. BMS hereby grants to Exelixis a worldwide, royalty-free
license (with the right to sublicense) under the BMS Know-How and BMS Patents
covering the composition, manufacture, or use of a Target, to make and use each
such Target: [ * ]. Such licenses shall be exclusive for purposes of subparts
(i)-(iii) and non-exclusive for purposes of subpart (iv), and [ * ]. Such
licenses in subparts (i) and (iv), to the extent they apply to Sole Inventions
of BMS, shall be sublicensable to a Third Party for a given BMS Selected Target
only if the Third Party grants or agrees to grant to Exelixis a worldwide
license (with the right to sublicense), under such Third Party's know-how and
patents covering the composition, manufacture, or use in oncology of such BMS
Selected Target, to make and use each such BMS Selected Target to research,
develop, make, have made, use, sell, offer to sell, have sold and import, for
use within the Development Field, products containing small molecule modulators
of such BMS Selected Target. The foregoing sublicensing limitation shall not
apply to sublicensing of BMS Know-How and BMS Patents that are not Sole
Inventions of BMS.
(D) VALIDATION PROTOCOLS AND REAGENTS.
(I) BMS hereby grants to Exelixis a non-exclusive, worldwide,
royalty-free license (without the right to sublicense except to its Affiliates)
under the BMS Know-How and BMS Patents directly relating to: (A) the BMS
validation protocols and reagents listed on Exhibit 5.3(d), as updated from time
to time by the JSC, and (B) all validation protocols and reagents that are
developed by BMS in the performance of its duties under the Research Plan to use
same for all purposes.
(II) BMS hereby grants to Exelixis a non-exclusive, worldwide,
royalty-free license (with the right to sublicense) under the BMS Know-How and
BMS Patents to use for all purposes, all improvements to the validation
protocols and reagents licensed by Exelixis under Section 5.1(a)(vii) that
incorporate or contain any of such validation protocols and reagents licensed by
Exelixis.
(E) ASSAYS. So long as BMS' rights under Section 5.1(a)(iii) remain
exclusive, BMS hereby grants Exelixis a non-exclusive, worldwide royalty-free
license (without the right to sublicense except to its Affiliates), under the
EXEL Know-How and EXEL Patents covering the composition or use of a given Assay
solely to use such Assay pursuant to a Work Plan agreed to by BMS and Exelixis
under Section 3.5(b) where Exelixis will use such Assay to perform high
throughput screening to identify compounds which have or lack activity against
the Selected Target for which such Assay was developed.
(F) NEGATIVE SCREENING USING BMS TARGETS. BMS hereby grants to
Exelixis a non-exclusive, worldwide, non-royalty bearing, license (without the
right to sublicense except to its Affiliates) under any BMS Patents and BMS
Know-How covering the composition, manufacture, or use of an BMS Selected
Target, to use such BMS Selected Target solely in secondary screening assays to
identify, research and develop Collaboration Compounds that lack the ability to
inhibit, activate or otherwise modulate the activity of such BMS Selected
Target. The foregoing license does not include the right of Exelixis to use any
assays developed by or on behalf of BMS with respect to BMS Selected Targets.
[ * ].
(G) PHARMACOGENOMIC USES. BMS hereby grants Exelixis a non-exclusive,
worldwide, royalty-free license (with the right to sublicense), under the BMS
Know-How and BMS Patents covering composition, manufacture, or use of all the
Selected Targets of either Party, to use such Selected Target in the research,
development, manufacture, use, import, sale and offer for sale of a
Pharmacogenomic Product for use (A) in connection with the research,
development, manufacture, use, import, sale and offer for sale, for any
indication, of an (i) EXEL Product or (ii) a Target Product, and (B) in the
labeling, promotion, and registration of any EXEL Product or Target Product for
any indication. Such license for a particular Pharmacogenomic Product shall be
sublicensable solely (x) together with a sublicense under Section 5.3(b) with
respect to a related EXEL Product or (y) by Exelixis or its sublicensee, for the
purpose of developing or commercializing a Pharmacogenomic Product for use in
conjunction with a related EXEL Product that Exelixis or its sublicensee is
developing or commercializing. Provided that a sublicense is granted in
accordance with the restrictions set forth in the previous sentence and such
sublicense does not further limit the scope of the sublicensee's practice of the
BMS Know-How and BMS Patents, such sublicensee may practice the full extent of
the license set forth in this Section 5.3(g), including making, developing and
selling Pharmacogenomic Products for use with Target Products. [ * ].
5.4 LICENSE LIMITATIONS.
(A) For purposes of Sections 5.3(b), 5.3(c), 5.3(f) and 5.3(g), the
BMS Know-How shall be limited to that Information developed by or on behalf of
BMS in the performance of the Collaboration and prior to the first selection by
either Party of such Target as a Selected Target, and the BMS Patents shall be
limited to those that cover Inventions made by or on behalf of BMS in the
performance of the Collaboration and prior to the first selection by either
Party of such Target as a Selected Target). For purposes of Section 5.3(a) and
5.3(d)(i)(B), the BMS Know-How shall be limited to Information developed by or
on behalf of BMS in the performance of the Collaboration prior to the end of the
Research Term, and the BMS Patents shall be limited to those that cover
Inventions made by or on behalf of BMS in the performance of the Collaboration
prior to the end of the Research Term.
(B) Exelixis hereby covenants that it will not use any BMS Know-How
(to the extent the same Remains Confidential to BMS at the time of use by
Exelixis) or BMS Patents for a purpose other than that expressly permitted in
Section 5.3.
(C) Each sublicense granted by Exelixis, pursuant to Section 5.3, to a
party who is an Affiliate at the time such license is granted shall terminate
immediately upon such party ceasing to be an Affiliate.
5.5 RIGHTS OF FIRST NEGOTIATION.
(A) BMS RIGHT OF FIRST NEGOTIATION. [ * ].
(B) EXELIXIS RIGHT OF FIRST NEGOTIATION. [ * ].
(C) [ * ].
(D) [ * ].
(E) [ * ].
6. EXCLUSIVITY
6.1 EXELIXIS. During [ * ] (unless this Agreement is terminated sooner
by Exelixis for material breach by BMS), Exelixis shall not [ * ]. Those EXEL
Products arising from Exelixis' sole work (without any involvement of a Third
Party collaborator or sublicensee) on EXEL Selected Targets shall be subject to
the right of first negotiation set forth in Section 5.5(a). Those EXEL Products
that are Controlled by Exelixis shall be subject to the right of first
negotiation set forth in Section 5.5(a) and the foreign right of first
negotiation in Section 5.5(d).
6.2 INDEPENDENT RESEARCH.
(A) Exelixis shall use Diligent Efforts to maintain exclusivity with
respect to the individual elements of data and Inventions that Exelixis
generates, delivers and licenses to BMS under this Agreement. Notwithstanding
the foregoing, the exclusivity of any licenses granted to BMS under Sections
5.1(a)(ii) and 5.1(a)(iv) shall be subject to rights granted by Exelixis to
Third Parties or retained by Exelixis for internal use, as a result of research
that performed by Exelixis under the following circumstances:
(I) Subject to Section 2.12(d), Exelixis may be engaged by a
Third Party to identify the target of a compound. Exelixis may reveal the
identity of the target to the Third Party and grant the Third Party a license to
such target under intellectual property rights Controlled by Exelixis, and the
Third Party may be entitled to use the target and research results pertaining
thereto for any purpose (the scope of the license depending on the terms of
Exelixis' agreement with the Third Party under which it performed such work). If
the target is an Eligible Target or a BMS Selected Target, Exelixis will inform
the Third Party that, on account of its exclusivity obligations to another
party, Exelixis is unable to perform further work on this target.
(II) Exelixis may be engaged by a Third Party to identify targets
in a molecular field (the "Other Field") other than the Research Field. Such
research may result in the identification of targets that are Eligible Targets
or Selected Targets. Exelixis may study the role of such targets in the Other
Field and may grant such Third Party licenses to use such targets in appropriate
indications, which may overlap with the Development Field. [ * ].
(III) Exelixis may be engaged by a Third Party to perform
chemistry work upon a target that, at the time Exelixis enters into the
agreement with the Third Party that governs such work, is not a BMS Selected
Target. Exelixis may continue such work even if the target subsequently becomes
a BMS Selected Target and Exelixis may grant such Third Party a license to use
compounds arising from such work for any purpose, including indications in the
Development Field.
(B) Subject to Section 6.1, Exelixis may use, in research
described in Section 6.2(a), the following Information generated pursuant to the
Collaboration, provided that Exelixis does not INITIATE such research using: [ *
]. Exelixis may petition BMS at any time during the term of this Agreement to
add certain Information generated pursuant to the Collaboration to the foregoing
list. Such addition shall only be made upon the mutual written agreement of the
Parties. For the purposes of this Section 6.2(b), the Parties acknowledge and
agree that Exelixis' use of any Information specified in this Section 6.2(b)
shall not be considered use in "initiating" research if, prior to the use of
such Information, [ * ]. The foregoing shall not be interpreted as a limitation
on Exelixis' right to use Information generated pursuant to the Collaboration in
a manner that does not conflict with Section 6.1 and, to the extent that such
Information is generated by BMS in the course of the Collaboration, the licenses
granted to Exelixis in Section 5.3.
(C) Upon request of the JSC, Exelixis shall consult with the JSC from
time to time regarding its procedures for seeking to avoid overlapping research
activities on behalf of multiple Third Parties.
6.3 OTHER RESEARCH.
(A) Subject to Sections 5.1 and 5.5(a)(iv), the Parties understand and
agree that Exelixis may use Information [ * ]. Since the foregoing is not
independent research (as described in Section 6.2), Exelixis may initiate such
research using such Information.
(B) Exelixis shall disclose to BMS all target identification and
validation Information [ * ]. Such Information is included in the license
granted to BMS in Section 5.1(a)(ii) and BMS may use such Information in
accordance with such license. Similarly, Exelixis may disclose to [ * ] the
target identification and validation Information [ * ]
7. COMPENSATION
7.1 LICENSE FEE. BMS shall pay Exelixis a license fee of five million
dollars ($5,000,000) [ * ]. All license fee payments made by BMS to Exelixis
pursuant to this Section 7.1 shall be noncreditable and nonrefundable.
7.2 RESEARCH SUPPORT. On the Effective Date, BMS will make a research
support payment to Exelixis equal to [ * ]. On or prior to the commencement of
each [ * ] during the Research Term, BMS will make a research support payment to
Exelixis equal to [ * ]; provided that, [ * ]. All research support payments
made by BMS to Exelixis hereunder shall be noncreditable and nonrefundable.
7.3 MILESTONE PAYMENTS. All milestone payments made by BMS to Exelixis
hereunder shall be noncreditable and nonrefundable. Subject to the terms of
this Agreement:
(A) SELECTED TARGETS. BMS shall make a milestone payment to Exelixis
of [ * ] after BMS' selection, pursuant to Section 3.3 or 5.5(e), of (i) the
sixth BMS Selected Target and (ii) each subsequent sixth BMS Selected Target
(wherein the counting of BMS Selected Targets restarts at one after each group
of six). Upon the last JSC meeting after the end of the Research Term, BMS
shall make a milestone payment to Exelixis equal to [ * ].
(B) ASSAY DEVELOPMENT. For each Assay, BMS shall make a milestone
payment to Exelixis of [ * ] after BMS' acceptance of such Assay pursuant to
Section 3.5(a).
(C) PTP. For each approval by the BMS Lead Discovery Operating
Committee or its successor of a PTP for a BMS Selected Target, BMS shall make a
milestone payment to Exelixis of [ * ] after such approval.
(D) MILESTONE PAYMENT DATES [ * ].
(I) Each milestone payment set forth in subsections (a) and (c)
of this Section 7.3 shall accrue at the time of the specified event and shall be
paid within [ * ] after such event (the "Payment Due Date") [ * ]
(E) DEVELOPMENT OF LEAD COMPOUND. For each Lead Compound developed by
Exelixis pursuant to Section 3.5(b), BMS shall make a milestone payment to
Exelixis of [ * ] after BMS' acceptance of such Lead Compound.
(F) BMS PRODUCTS. For each BMS Product, BMS shall make the milestone
payments set forth below to Exelixis within [ * ] after the achievement of each
of the following events, subject to Section 7.3(g):
(I) [ * ] upon first administration of such BMS Product in a
Phase I Clinical Trial;
(II) [ * ] upon first administration of such BMS Product in a
Phase II Clinical Trial;
(III) [ * ] upon first administration of such BMS Product in a
Phase III Clinical Trial;
(IV) [ * ] upon first acceptance of an NDA filing for such BMS
Product in a Major Market; and
(V) [ * ] upon first receipt of Regulatory Approval for such BMS
Product in a Major Market. Each milestone payment set forth in this Section
7.3(f) will be paid only once with respect to a given BMS Product, regardless of
the number of indications sought or approved for such BMS Product.
(G) ADJUSTMENTS TO PRODUCT MILESTONES. If the NDA filing described in
Section 7.3(f)(iv) and/or the Regulatory Approval described in Section 7.3(f)(v)
for a particular BMS Product is for [ * ] then the amounts set forth in Section
7.3(f)(iv) and Section 7.3(f)(v) shall be [ * ].
(H) MILESTONE PAYMENTS FOR SECONDARY PRODUCTS. Subject to Section
5.2(b)(iii), for each Secondary Product that is in development by BMS (or its
Affiliate or sublicensee), BMS shall only be obliged to make to Exelixis any
applicable milestone payments set forth in Section 7.3(f) that were not made to
Exelixis with respect to the Parent Product of such Secondary Product. However,
if the Parent Product (as defined herein), with respect to a particular
Secondary Product, achieves Regulatory Approval, and BMS (or its Affiliate or
sublicensee) continues thereafter to conduct development of such Secondary
Product, then such Secondary Product shall thereafter be deemed a Second
Generation Product, for which milestone payments shall be owed as provided in
Section 7.3(i). For purposes of this subsection 7.3(h), a "Secondary Product"
means, with respect to a BMS Product containing a particular Collaboration
Compound (the "Parent Product"), any other BMS Product containing a different
Collaboration Compound or Back-up Compound, respectively, that is intended to
modulate the same Selected Target as the Collaboration Compound in such Parent
Product, and that is developed by or on behalf of BMS or its Affiliates or
sublicensee as a potential replacement for the Parent Product if the development
of the Parent Product does not result in Regulatory Approval for the Parent
Product. For clarity, it is understood that the term "Secondary Product" shall
not include new formulations, presentations, excipients, salts, or modes of
delivery of the Collaboration Compound contained in the Parent Product.
(I) SECOND GENERATION PRODUCTS. For each Second Generation Product
that is developed by BMS (or its Affiliate or sublicensee), BMS shall not be
obliged to make any milestone payments to Exelixis under Section 7.3(f) unless
and until the first Regulatory Approval of such Second Generation Product in any
Major Market. Upon any such Regulatory Approval of the Second Generation
Product, BMS shall, subject to Section 7.3(g) hereof, pay to Exelixis the sum of
all milestone payments owed under Section 7.3(f) for milestone events achieved
by such Second Generation Product, within [ * ] of such Regulatory Approval,
that, in the absence of this Section 7.3(i), BMS would have been obliged to make
to Exelixis prior to or upon such first Regulatory Approval of such Second
Generation Product (and without interest on the deferred milestone payments);
provided, however, that if the Original BMS Product is no longer being marketed,
due to safety problems, at the time the Second Generation Product receives such
Regulatory Approval in any such Major Market, then such milestones need not be
paid. For purposes of this Section 7.3, a "Second Generation Product means, with
respect to a particular BMS Product that has achieved Regulatory Approval
in a Major Market (the "Original BMS Product"), any BMS Product containing a
Collaboration Compound that (i) is not the Collaboration Compound in the
Original BMS Product, and (ii) modulates the same BMS Selected Target as the
Collaboration Compound in such Original BMS Product. For clarity, it is
understood that "Second Generation Product" shall not include new formulations,
presentations, excipients, salts, or modes of delivery of the active ingredient
contained in the Original BMS Product.
(J) BYPASSED MILESTONE PAYMENTS. Subject to Section 7.3(h), if an
event which triggers a milestone payment set forth in Section 7.3(f) occurs,
with respect to a particular Product, at a time prior to payment, with respect
to such Product, of any of the previous milestone payments set forth in Section
7.3(f), then BMS shall pay Exelixis within [ * ] of such event both the
milestone payment triggered by such event and all unpaid previous milestone
payments.
(K) HYBRID BMS SELECTED TARGETS. For Hybrid BMS Selected Targets, the
milestone payments under subsections (b)-(j) of this Section 7.3 shall only be
paid with respect to those compounds that modulate the Hybrid BMS Selected
Target where the clinical trial, regulatory filing or regulatory approval is for
an indication in oncology or a defined field for which BMS took a license from
Exelixis pursuant to Section 5.2(b).
7.4 ROYALTY PAYMENTS. BMS shall pay Exelixis royalties on Net Sales of
BMS Products at the royalty rates stated below. All royalty payments made by
BMS to Exelixis hereunder shall be noncreditable and nonrefundable, except in
the event that an audit confirms that BMS had overpaid royalties to Exelixis, in
which case such overpayment will be credited against future royalties due to
Exelixis, or refunded to BMS after the end of the royalty term.
(A) BMS SOLE PRODUCTS. BMS shall pay royalties to Exelixis at the rate
of [ * ] of Net Sales of each BMS Sole Product.
(B) BMS COLLABORATION PRODUCTS.
(I) For each BMS Collaboration Product that contains a
Collaboration Compound with activity against a BMS Selected Target for which
Exelixis developed an Assay pursuant to Section 3.5(a) but did not deliver a
Lead Compound pursuant to Section 3.5(b), BMS shall pay royalties to Exelixis at
the rate of [ * ] of Net Sales of such BMS Collaboration Product.
(II) For each BMS Collaboration Product for which Exelixis
delivered, pursuant to Section 3.5(b), a Lead Compound or Back-up Compound that
(A) is the Collaboration Compound contained in such product, (B) is an Analogue
of the Collaboration Compound contained in such product or (C) was used in the
discovery or development of such Collaboration Compound, BMS will pay royalties
to Exelixis at the rate of [ * ] of Net Sales of such BMS Collaboration Product.
(C) PHARMACOGENOMIC PRODUCTS. BMS shall pay royalties to Exelixis at
the rate of [ * ] of Net Sales of each Pharmacogenomic Product.
7.5 ROYALTY ADJUSTMENTS.
(A) Subject to Section 7.5(e), BMS may deduct from the royalties it
would otherwise owe pursuant to Section 7.4 for a particular BMS Product, [ * ].
BMS shall limit its deductions of Third Party royalty payments with respect to
Patents that claim the use of a BMS Selected Target in oncology [ * ], to
payments made on account of sales reasonably attributable to use in such fields.
(B) Subject to Section 7.5(e), BMS may deduct, from the royalties it
would otherwise owe pursuant to Section 7.4(b)(ii) for a particular BMS
Collaboration Product containing a Lead Compound or Back-up Compound provided by
Exelixis pursuant to Section 3.5(b), [ * ]. BMS shall limit its deductions of
Third Party royalty payments with respect to Patents that claim the use of a
Lead Compound or Back-up Compound in oncology [ * ], to payments made on account
of sales reasonably attributable to use in such fields.
(C) Subject to Section 7.5(e), BMS may reduce the applicable royalty
rate set forth in Section 7.4 by [ * ].
(D) Subject to Section 7.5(e), BMS may reduce the applicable royalty
rate set forth in Section 7.4 by [ * ].
(E) Regardless of the number of royalty deductions or royalty
rate reductions set forth in this Section 7.5 that may apply to a particular BMS
Product, the minimum royalty rate paid by BMS pursuant to this Agreement shall
be [ * ].
(F) For each BMS Product with activity against a Hybrid BMS
Selected Target, the royalty payments under Section 7.4 (and any deductions or
adjustments thereto permitted under this Section 7.5) shall be based solely on
Net Sales of such product in oncology [ * ]. Prior to the first commercial sale
of a particular BMS Product with activity against a Hybrid BMS Selected Target,
the Parties shall agree in writing upon the methodology to be used to allocate
the Net Sales of such product between (i) the Net Sales attributable to use in
oncology [ * ] and (ii) the Net Sales attributable to use in the principle
indication(s) specified in the DP1 Approval for such Hybrid BMS Selected Target.
7.6 QUARTERLY PAYMENTS. All royalties due under Section 7.4 shall be
paid quarterly, on a country-by-country basis, within [ * ] of the end of the
relevant quarter for which royalties are due.
7.7 TERM OF ROYALTIES. Exelixis' right to receive royalties under Section
7.4 shall expire on a country-by-country basis upon the later of (i) [ * ] from
the first commercial sale of such BMS Product in such country, or (ii)
expiration of the last to expire patent or patent application in such country
Controlled by Exelixis or BMS claiming the BMS Product or Collaboration Compound
contained therein or the manufacture, use or sale of such BMS Product or
Collaboration Compound.
7.8 ROYALTY PAYMENT REPORTS. Each royalty payment shall be accompanied by a
statement stating the number, description, and aggregate Net Sales, by country,
of each Product sold during the relevant calendar quarter.
7.9 PAYMENT METHOD. All payments due under this Agreement to Exelixis shall
be made by bank wire transfer in immediately available funds to an account
designated by Exelixis. All payments hereunder shall be made in U.S. dollars.
7.10 TAXES. Exelixis shall pay any and all taxes levied on account of all
payments it receives under this Agreement. If laws or regulations require that
taxes be withheld, BMS will (i) deduct those taxes from the remittable payment,
(ii) pay the taxes to the proper taxing authority, and (iii) send evidence of
the obligation together with proof of tax payment to Exelixis within [ * ]
following that tax payment.
7.11 BLOCKED CURRENCY. In each country where the local currency is blocked
and cannot be removed from the country, royalties accrued in that country shall
be paid to Exelixis in the country in local currency by deposit in a local bank
designated by Exelixis, unless the Parties otherwise agree.
7.12 SUBLICENSES. In the event BMS grants licenses or sublicenses to others
to sell Products which are subject to royalties under Section 7.4, such licenses
or sublicenses shall include an obligation for the licensee or sublicensee to
account for and report its sales of Products on the same basis as if such sales
were Net Sales by BMS, and BMS shall pay, or shall ensure that sublicensee shall
pay, to Exelixis, with respect to such sales, royalties as if such sales of the
licensee or sublicensee were Net Sales of BMS.
7.13 FOREIGN EXCHANGE. Conversion of sales recorded in local currencies to
U.S. dollars will be performed in a manner consistent with BMS' normal practices
used to prepare its audited financial statements for internal and external
reporting purposes, which uses a widely accepted source of published exchange
rates.
7.14 RECORDS; INSPECTION. BMS shall keep complete, true and accurate books
of account and records for the purpose of determining the payments to be made
under this Agreement. Such books and records shall be kept for at least [ * ]
following the end of the calendar quarter to which they pertain. Such records
will open for inspection during such [ * ] period by independent accountants,
solely for the purpose of verifying payment statements hereunder. Such
inspections shall be made no more than once each calendar year, at reasonable
time and on reasonable notice. Inspections conducted under this Section 7.14
shall be at the expense of Exelixis, unless a variation or error producing an
increase exceeding [ * ] of the royalty amount stated for any period covered by
the inspection is established in the course of such inspection, whereupon all
costs relating to the inspection for such period and any unpaid amounts (plus
interest) that are discovered will be paid promptly by BMS.
7.15 INTEREST. If BMS fails to make any payment due to Exelixis under this
Agreement, then interest shall accrue on a daily basis at the greater of a rate
equal to [ * ]
8. INTELLECTUAL PROPERTY
8.1 OWNERSHIP.
(A) Inventorship of all Target Inventions, Sole Inventions and Joint
Inventions will be determined under the patent laws of the United States.
(B) Exelixis shall own the entire right, title and interest in and to
any and all Target Inventions and Patents and other intellectual property rights
claiming or covering or appurtenant to such Target Inventions. BMS shall and
hereby transfers and assigns to Exelixis any and all right, title and interest
to all Target Inventions and Patents and other intellectual property rights
claiming or covering or appurtenant to such Target Inventions. Once a Patent
issues covering a Target Invention, the Parties patent counsel will discuss
[ * ].
(C) Each Party shall own the entire right, title and interest in and
to any and all of its Sole Inventions, and Patents covering such Sole
Inventions. BMS and Exelixis shall each own an undivided one-half interest in
and to any and all Joint Inventions and Patents and other intellectual property
rights claiming or covering or appurtenant to such Joint Inventions. BMS and
Exelixis as joint owner each shall have the right to exploit and to grant
licenses under such Joint Inventions (without an accounting or obligation to, or
consent required from, the other Party), unless otherwise specified in this
Agreement.
8.2 DISCLOSURE. Each Party shall submit a written report to the JMT
within [ * ] of the end of each quarter describing any Target Invention, Sole
Invention or Joint Invention arising during the prior quarter in the course of
the Collaboration which it believes may be patentable. The JMT shall decide
whether to file a patent application for a Joint Invention, as discussed in
Section 8.3(a).
8.3 PATENT PROSECUTION AND MAINTENANCE; ABANDONMENT.
(A) The JMT shall establish the patent strategy for all Joint
Inventions arising from the Collaboration, taking into consideration Exelixis'
good faith obligations to BMS and Third Parties relating to patent strategy for
Targets and Model System Targets. [ * ] shall direct the filing, prosecution
(including any interferences, reissue proceedings and reexaminations) and
maintenance of all Patents covering Target Inventions ("Target Patents"). Each
Party shall direct the filing, prosecution (including any interferences, reissue
proceedings and reexaminations) and maintenance of all Patents covering its Sole
Inventions. The JMT shall supervise, and shall assign, on a Joint
Invention-by-Joint Invention basis, one Party to be responsible for, the filing,
prosecution (including any interferences, reissue proceedings and
reexaminations) and maintenance of all Patents covering such Joint Invention
consistent with such strategy. The JMT shall provide each Party with (i) drafts
of any new patent application that covers a Joint Invention prior to filing that
application, allowing adequate time for review and comment by the Party if
possible; provided, however, the JMT shall not be obligated to delay the filing
of any patent application; and (ii) copies of all correspondence from any and
all patent offices concerning patent applications covering Joint Inventions and
an opportunity to comment on any proposed responses, voluntary amendments and
submissions of any kind to be made to any and all such patent offices. The
Party that, pursuant to this Section 8.3(a), has the right to direct the filing,
prosecution and maintenance of a Patent covering a Sole Invention or Target
Invention shall also have the right to select the in-house or outside counsel
(who shall be reasonably acceptable to the other Party) who will perform the
aforementioned filing, prosecution and maintenance-associated activities. The
Parties shall mutually agree on the in-house or outside counsel who will perform
the filing, prosecution and maintenance of Joint Inventions.
(B) BMS shall bear [ * ] associated with the filing, prosecution
(including any interferences, reissue proceedings and reexaminations) and
maintenance of Patents covering (1) its Sole Inventions (other than those
exclusively licensed to Exelixis under Section 5.3(b)), (2) the Sole Inventions
of Exelixis that are exclusively licensed to BMS under any of Sections
5.1(a)(ii)-(iv), (3) the Joint Inventions that are exclusively licensed to BMS
under any of Sections 5.1(a)(ii)-(iv), and (4) the Target Inventions that are
exclusively or co-exclusively licensed to BMS under any of Sections
5.1(a)(ii)-(iv) or 5.1(b); provided that:
(I) if Exelixis or a Third Party licensee of Exelixis is
practicing (A) a particular Exelixis Sole Invention or Joint Invention outside
the scope of any of the licenses set forth in any of Sections 5.1(a)(ii)-(iv),
(B) a particular BMS Sole Invention inside the scope of the license set forth in
Section 5.3(c), (C) a particular Exelixis Sole Invention inside the scope of the
licenses set forth in Sections 5.1(a)(ii) or 5.1(a)(iv) (where expressly
permitted by this Agreement), or (D) a particular Target Invention outside the
scope of any of the licenses set forth in any of Sections 5.1(a)(ii)-(iv) or
5.1(b) or within the scope of a co-exclusive license retained by it under
Section 5.1(b)(ii), and such Invention is covered by a Patent for which BMS
would otherwise bear [ * ], then, subject to (b)(ii) below, Exelixis and BMS
shall [ * ]; and
(II) if any Target Invention, Sole Invention of Exelixis or Joint
Invention covered by (b) above is part of a patent application or patent that
covers other inventions that are not subject to (b) above and that are not
licensed to BMS under any of Sections 5.1(a)(ii)-(iv) or 5.1(b), then the
Parties shall [ * ].
(C) Exelixis and BMS shall [ * ].
(D) Exelixis shall bear [ * ] associated with the filing, prosecution
(including any interferences, reissue proceedings and reexaminations) and
maintenance of Patents covering (1) its Sole Inventions (other than those
exclusively licensed to BMS under any of Sections 5.1(a)(ii)-(iv)), (2) the Sole
Inventions of BMS exclusively licensed to Exelixis under Section 5.3(b), (3) the
Joint Inventions exclusively licensed to Exelixis under Section 5.3(b), and (4)
the Target Inventions (other than those exclusively or co-exclusively licensed
to BMS under any of Sections 5.1(a)(ii)-(iv) or 5.1(b)); provided that:
(I) if BMS or a Third Party licensee of BMS is practicing a
particular BMS Sole Invention or Joint Invention outside the scope of the
licenses set forth in Section 5.3, then Exelixis and such Invention is covered
by a Patent for which Exelixis would otherwise bear [ * ], then, subject to
(d)(ii) below, the Parties shall [ * ]; and
(II) if any Target Invention, Sole Invention of BMS or Joint
Invention covered by (d) above is part of a patent application or patent that
covers other inventions that are not subject to (d) above and that are not
licensed to Exelixis under Section 5.3(b), then the Parties shall [ * ].
(E) (1) If a Party elects not to [ * ], such Party shall inform
the other Party in writing not less than [ * ] before any relevant deadline (or,
in the event of a shorter period in which to respond to a patent office, as soon
as reasonably practicable), and, if the other Party assumes [ * ], then the
assuming Party will [ * ].
(II) If a Party is the assignee or owner of a Patent (other than
a Joint Patent) that is licensed to the other Party under any of Sections
5.1(a)(ii)-(iv), 5.1(b), 5.3(b) or 5.3(c), and such owning Party does not wish
to [ * ], such owning Party shall inform the other Party in writing not less
than [ * ] before any relevant deadline (or, in the event of a shorter period in
which to respond to a patent office, as soon as reasonably practicable). If the
other Party assumes [ * ], then the assuming Party will [ * ].
(III) If a Party is the licensee of a Patent (other than a Joint
Patent) under any of Sections 5.1(a)(ii)-(iv), 5.1(b), 5.3(b) or 5.3(c), and
such Party does not wish to [ * ], such Party shall inform the other Party in
writing not less than [ * ] before any relevant deadline (or, in the event of a
shorter period in which to respond to a patent office, as soon as reasonably
practicable), and shall [ * ].
(F) Each Party shall provide to the other Party, on a semi-annual
basis, a patent report that includes the serial number, docket number and status
of each Patent for which, pursuant to Section 8.3(a), such Party has the right
to direct the filing, prosecution and maintenance and which covers a Sole
Invention, Joint Invention or Target Invention. At the same time, each Party
shall provide to the other a reasonably detailed estimate of [ * ]. The Parties
through their patent counsel will discuss [ * ].
8.4 ENFORCEMENT OF PATENT RIGHTS.
(A) ENFORCEMENT OF BMS SOLE PATENTS.
(I) ENFORCEMENT BY EXELIXIS. In the event that in-house counsel
for either Party becomes aware of a suspected infringement of any Patent
claiming a Sole Invention of BMS [ * ] such Party shall notify the other Party
promptly, and following such notification, the Parties shall confer. Each Party
shall provide the same level of disclosure to its in-house counsel concerning
suspected infringement of a BMS Sole Patent as such Party would provide with
respect to suspected infringement of its own issued Patent or an exclusively
licensed issued Patent claiming a product it is developing or commercializing
independent of this Agreement. Subject to the rights of any Third Party
licensees of such Patent, Exelixis shall have the right, but shall not be
obligated, to bring an infringement action or to defend such proceedings at its
own expense, in its own name and entirely under its own direction and control.
BMS will reasonably assist Exelixis [ * ] in such actions or proceedings if so
requested, and will lend its name to such actions or proceedings if requested by
Exelixis or required by law, and [ * ]. BMS shall have the right to participate
and be represented in any such suit by its own counsel at its own expense. No
settlement of any such action or defense which restricts the scope, or adversely
affects the enforceability, of a BMS Sole Patent may be entered into by Exelixis
without the prior consent of BMS, which consent shall not be unreasonably
withheld.
(II) ENFORCEMENT BY BMS. If Exelixis elects not to bring any
action for infringement or to defend any proceeding described in Section
8.4(a)(i) and so notifies BMS, then BMS may bring such action or defend such
proceeding at its own expense, in its own name and entirely under its own
direction and control. Exelixis will reasonably assist BMS [ * ] in any action
or proceeding being prosecuted or defended by BMS, if so requested by BMS or
required by law, and [ * ]. Exelixis shall have the right to participate and be
represented in any such suit by its own counsel at its own expense. No
settlement of any such action or defense which restricts the scope, or adversely
affects the enforceability, of any such BMS Sole Patent may be entered into by
BMS without the prior consent of Exelixis, which consent shall not be
unreasonably withheld.
(B) ENFORCEMENT OF EXELIXIS SOLE PATENTS.
(I) ENFORCEMENT BY BMS. In the event that in-house counsel for
either Party becomes aware of a suspected infringement, by a Third of a Patent
claiming a Sole Invention of Exelixis [ * ] such Party shall notify the other
Party promptly, and following such notification, the Parties shall confer. Each
Party shall provide the same level of disclosure to its in-house counsel
concerning suspected infringement of a Exelixis Sole Patent as such Party would
provide with respect to suspected infringement of its own issued Patent or an
exclusively licensed issued Patent claiming a product it is developing or
commercializing independent of this Agreement. Where such suspected infringement
involves such Third Party's development, manufacture, use or sale of a small
molecule oncology product against such BMS Selected Target, BMS shall have the
right, but shall not be obligated, to bring an infringement action against any
such Third Party or to defend such proceedings at its own expense, in its own
name and entirely under its own direction and control; provided, that this right
shall not apply to utility patents in a defined field to which BMS exercised an
option under Section 5.2(b). Exelixis will reasonably assist BMS [ * ] in such
actions or proceedings if so requested, and will lend its name to such actions
or proceedings if requested by BMS or required by law, and [ * ]. Exelixis
shall have the right to participate and be represented in any such suit by its
own counsel at its own expense. No settlement of any such action or defense
which restricts the scope, or adversely affects the enforceability, of any such
Exelixis Sole Patent may be entered into by BMS without the prior consent of
Exelixis, which consent shall not be unreasonably withheld.
(II) ENFORCEMENT BY EXELIXIS. If BMS elects not to bring any
action for infringement or to defend any proceeding described in Section
8.4(b)(i) and so notifies Exelixis, or if such suspected infringement of an
Exelixis Sole Patent does not involve a Third Party developing, using, making or
selling a small molecule oncology product against such BMS Selected Target then,
Exelixis may bring such action or defend such proceeding at its own expense, in
its own name and entirely under its own direction and control. BMS will
reasonably assist Exelixis [ * ] in any action or proceeding being prosecuted or
defended by Exelixis, if so requested by Exelixis or required by law, and [ * ].
BMS shall have the right to participate and be represented in any such suit by
its own counsel at its own expense. No settlement of any such action or defense
which restricts the scope, or adversely affects the enforceability, with respect
to small molecules, of an Exelixis Sole Patent may be entered into by Exelixis
without the prior consent of BMS, which consent shall not be unreasonably
withheld.
(C) ENFORCEMENT OF TARGET PATENTS.
(I) BMS TARGET PATENTS
(1) ENFORCEMENT BY BMS. In the event that in-house counsel
of either Party becomes aware of a suspected infringement of a Patent claiming a
Target Invention [ * ] such Party shall notify the other Party promptly, and
following such notification, the Parties shall confer. Each Party shall provide
the same level of disclosure to its in-house counsel concerning suspected
infringement of a BMS Target Patent as such Party would provide with respect to
suspected infringement of its own issued Patent or an exclusively licensed
issued Patent claiming a product it is developing or commercializing independent
of this Agreement. Where such suspected infringement involves such Third Party's
development, manufacture, use or sale of a small molecule oncology product
against such BMS Selected Target, BMS shall have the right, but shall not be
obligated, to bring an infringement action against such Third Party or to defend
such proceedings at its own expense, in its own name and entirely under its own
direction and control. Exelixis will reasonably assist BMS [ * ] in such
actions or proceedings if so requested, and will lend its name to such actions
or proceedings if requested by BMS or required by law, and [ * ]. Exelixis
shall have the right to participate and be represented in any such suit by its
own counsel at its own expense. No settlement of any such action or defense
which restricts the scope, or adversely affects the enforceability, of a BMS
Target Patent may be entered into by BMS without the prior consent of Exelixis,
which consent shall not be unreasonably withheld.
(2) ENFORCEMENT BY EXELIXIS. If BMS elects not to bring any
action for infringement or to defend any proceeding described in Section
8.4(c)(i)(1) and so notifies Exelixis, or if such suspected infringement of a
BMS Target Patent does not involve a Third Party developing, using, making or
selling a small molecule oncology product against such BMS Selected Target, then
Exelixis may bring such action or defend such proceeding at its own expense, in
its own name and entirely under its own direction and control. BMS will
reasonably assist Exelixis [ * ] in any action or proceeding being prosecuted or
defended by Exelixis, if so requested by Exelixis or required by law, and
Exelixis will [ * ]. BMS shall have the right to participate and be represented
in any such suit by its own counsel at its own expense. No settlement of any
such action or defense which restricts the scope, or adversely affects the
enforceability, with respect to small molecules, of a BMS Target Patent may be
entered into by Exelixis without the prior consent of BMS, which consent shall
not be unreasonably withheld. This Section 8.4(c)(i)(2) shall not apply to any
BMS Target Patent that does not have any claim that pertains to the areas in
which Exelixis has rights pursuant to Section 5.3.
(II) EXEL TARGET PATENTS
(1) ENFORCEMENT BY EXELIXIS. In the event that in-house
counsel of either Party becomes aware of a suspected infringement of a Patent
claiming a Target Invention [ * ] such Party shall notify the other Party
promptly, and following such notification, the Parties shall confer. Each Party
shall provide the same level of disclosure to its in-house counsel concerning
suspected infringement of a EXEL Sole Patent as such Party would provide with
respect to suspected infringement of its own issued Patent or an exclusively
licensed issued Patent claiming a product it is developing or commercializing
independent of this Agreement. Exelixis shall have the right, but shall not be
obligated, to bring an infringement action or to defend such proceedings at its
own expense, in its own name and entirely under its own direction and control.
BMS will reasonably assist Exelixis [ * ] in such actions or proceedings if so
requested, and will lend its name to such actions or proceedings if requested by
Exelixis or required by law, and Exelixis will [ * ]. BMS shall have the right
to participate and be represented in any such suit by its own counsel at its own
expense. No settlement of any such action or defense which restricts the scope,
or adversely affects the enforceability, of an EXEL Target Patent may be entered
into by Exelixis without the prior consent of BMS, which consent shall not be
unreasonably withheld.
(2) ENFORCEMENT BY BMS. If Exelixis elects not to bring any
action for infringement or to defend any proceeding described in Section
8.4(c)(ii)(1) and so notifies BMS, then, subject to the rights of any Third
Party licensors of such Patent to Exelixis, BMS may bring such action or defend
such proceeding at its own expense, in its own name and entirely under its own
direction and control. Exelixis will reasonably assist BMS [ * ] in any action
or proceeding being prosecuted or defended by BMS, if so requested by BMS or
required by law, and BMS will [ * ]. Exelixis shall have the right to
participate and be represented in any such suit by its own counsel at its own
expense. No settlement of any such action or defense which restricts the scope,
or adversely affects the enforceability of, an EXEL Target Patent may be entered
into by BMS without the prior consent of Exelixis, which consent shall not be
unreasonably withheld. This Section 8.4(c)(ii)(2) shall not apply to any EXEL
Target Patent that does not have any claim that pertains to the areas in which
BMS has rights pursuant to Section 5.1.
(III) OTHER TARGET PATENTS.
(1) ENFORCEMENT BY EXELIXIS. In the event that in-house
counsel of either Party becomes aware of a suspected infringement of a Patent
that claims a Target Invention but is not a BMS Target Patent or an EXEL Target
Patent (for purposes of this Section 8.4 only, an "Other Target Patent"), such
Party shall notify the other Party promptly, and following such notification,
the Parties shall confer. Each Party shall provide the same level of disclosure
to its in-house counsel concerning suspected infringement of an Other Target
Patent as such Party would provide with respect to suspected infringement of its
own issued Patent or an exclusively licensed issued Patent claiming a product it
is developing or commercializing independent of this Agreement. Exelixis shall
have the right, but shall not be obligated, to bring an infringement action or
to defend such proceedings at its own expense, in its own name and entirely
under its own direction and control. BMS will reasonably assist Exelixis [ * ]
in such actions or proceedings if so requested, and will lend its name to such
actions or proceedings if requested by Exelixis or required by law, and Exelixis
will [ * ]. BMS shall have the right to participate and be represented in any
such suit by its own counsel at its own expense.
(2) ENFORCEMENT BY BMS. If Exelixis elects not to bring any
action for infringement or to defend any proceeding described in Section
8.4(c)(iii)(1) and so notifies BMS, then BMS may bring such action or defend
such proceeding at its own expense, in its own name and entirely under its own
direction and control. Exelixis will reasonably assist BMS [ * ] in any action
or proceeding being prosecuted or defended by BMS, if so requested by BMS or
required by law, and BMS will [ * ]. Exelixis shall have the right to
participate and be represented in any such suit by its own counsel at its own
expense. No settlement of any such action or defense which restricts the scope
or adversely affects the enforceability of an Other Target Patent may be entered
into by BMS without the prior consent of Exelixis, which consent shall not be
unreasonably withheld.
(D) ENFORCEMENT OF JOINT PATENTS.
(I) BMS JOINT PATENTS.
(1) ENFORCEMENT BY BMS. In the event that management or
in-house counsel for either Party becomes aware of a suspected infringement of a
Patent claiming a Joint Invention [ * ] such Party shall notify the other Party
promptly, and following such notification, the Parties shall confer. Each Party
shall provide the same level of disclosure to its in-house counsel concerning
suspected infringement of a BMS Joint Patent as such Party would provide with
respect to suspected infringement of its own issued Patent or an exclusively
licensed issued Patent claiming a product it is developing or commercializing
independent of this Agreement. BMS shall have the right, but shall not be
obligated, to bring an infringement action or to defend such proceedings at its
own expense, in its own name and entirely under its own direction and control.
Exelixis will reasonably assist BMS [ * ] in such actions or proceedings if so
requested, and will lend its name to such actions or proceedings if requested by
BMS or required by law, and BMS will [ * ]. Exelixis shall have the right to
participate and be represented in any such suit by its own counsel at its own
expense. No settlement of any such action or defense which restricts the scope
or affects the enforceability of a BMS Joint Patent may be entered into by BMS
without the prior consent of Exelixis, which consent shall not be unreasonably
withheld.
(2) ENFORCEMENT BY EXELIXIS. If BMS elects not to bring any
action for infringement or to defend any proceeding described in Section
8.4(d)(i)(1) and so notifies Exelixis, then Exelixis may bring such action or
defend such proceeding at its own expense, in its own name and entirely under
its own direction and control. BMS will reasonably assist Exelixis [ * ] in any
action or proceeding being prosecuted or defended by Exelixis, if so requested
by Exelixis or required by law, and Exelixis will [ * ]. BMS shall have the
right to participate and be represented in any such suit by its own counsel at
its own expense. No settlement of any such action or defense which restricts the
scope or affects the enforceability of a BMS Joint Patent may be entered into by
Exelixis without the prior consent of BMS, which consent shall not be
unreasonably withheld.
(II) EXEL JOINT PATENTS.
(1) ENFORCEMENT BY EXELIXIS. In the event that management or
in-house counsel for either Party becomes aware of a suspected infringement of a
Patent claiming a Joint Invention [ * ] such Party shall notify the other Party
promptly, and following such notification, the Parties shall confer. Each Party
shall provide the same level of disclosure to its in-house counsel concerning
suspected infringement of an EXEL Joint Patent as such Party would provide with
respect to suspected infringement of its own issued Patent or an exclusively
licensed issued Patent claiming a product it is developing or commercializing
independent of this Agreement. Exelixis shall have the right, but shall not be
obligated, to bring an infringement action or to defend such proceedings at its
own expense, in its own name and entirely under its own direction and control.
BMS will reasonably assist Exelixis [ * ] in such actions or proceedings if so
requested, and will lend its name to such actions or proceedings if requested by
Exelixis or required by law, and Exelixis will [ * ]. BMS shall have the right
to participate and be represented in any such suit by its own counsel at its own
expense. No settlement of any such action or defense which restricts the scope
or affects the enforceability of an EXEL Joint Patent may be entered into by
Exelixis without the prior consent of BMS, which consent shall not be
unreasonably withheld.
(2) ENFORCEMENT BY BMS. If Exelixis elects not to bring any
action for infringement or to defend any proceeding described in Section
8.4(d)(ii)(1) and so notifies BMS, then, subject to the rights of any Third
Party licensors of such Patent to Exelixis, BMS may bring such action or defend
such proceeding at its own expense, in its own name and entirely under its own
direction and control. Exelixis will reasonably assist BMS [ * ] in any action
or proceeding being prosecuted or defended by BMS, if so requested by BMS or
required by law, and BMS will [ * ]. Exelixis shall have the right to
participate and be represented in any such suit by its own counsel at its own
expense. No settlement of any such action or defense which restricts the scope
or affects the enforceability of an EXEL Joint Patent may be entered into by BMS
without the prior consent of Exelixis, which consent shall not be unreasonably
withheld.
(III) OTHER JOINT PATENTS.
(1) ENFORCEMENT BY BMS. In the event that in-house counsel
for either Party becomes aware of a suspected infringement of a Patent that
claims a Joint Invention but is not a BMS Joint Patent or an EXEL Joint Patent
(for purposes of this Section 8.4 only, an "Other Joint Patent"), such Party
shall notify the other Party promptly, and following such notification, the
Parties shall confer. Each Party shall provide the same level of disclosure to
its in-house counsel concerning suspected infringement of an Other Joint Patent
as such Party would provide with respect to suspected infringement of its own
issued Patent or an exclusively licensed issued Patent claiming a product it is
developing or commercializing independent of this Agreement. BMS shall have the
right, but shall not be obligated, to prosecute an infringement action or to
defend such proceedings at its own expense, in its own name and entirely under
its own direction and control. Exelixis will reasonably assist BMS [ * ] in such
actions or proceedings if so requested, and will lend its name to such actions
or proceedings if requested by BMS or required by law, and BMS will [ * ].
Exelixis shall have the right to participate and be represented in any such suit
by its own counsel at its own expense. No settlement of any such action or
defense which restricts the scope or affects the enforceability of an Other
Joint Patent may be entered into by BMS without the prior consent of Exelixis,
which consent shall not be unreasonably withheld.
(2) ENFORCEMENT BY EXELIXIS. If BMS elects not to bring any
action for infringement or to defend any proceeding described in Section
8.4(d)(iii)(1) and so notifies Exelixis, then Exelixis may bring such action or
defend such proceeding at its own expense, in its own name and entirely under
its own direction and control. BMS will reasonably assist Exelixis [ * ] in any
action or proceeding being prosecuted or defended by Exelixis, if so requested
by Exelixis or required by law, and Exelixis will [ * ]. BMS shall have the
right to participate and be represented in any such suit by its own counsel at
its own expense. No settlement of any such action or defense which restricts the
scope or affects the enforceability of an Other Joint Patent may be entered into
by Exelixis without the prior consent of BMS, which consent shall not be
unreasonably withheld.
(E) GENERAL PROVISIONS RELATING TO ENFORCEMENT OF PATENTS.
(I) WITHDRAWAL. If either Party brings such an action or defends
such a proceeding under this Section 8.4 and subsequently ceases to pursue or
withdraws from such action or proceeding, it shall promptly notify the other
Party and the other Party may substitute itself for the withdrawing Party under
the terms of this Section 8.4 at its own expense.
(II) RECOVERIES. In the event either Party exercises the rights
conferred in this Section 8.4 and recovers any damages or other sums in such
action, suit or proceeding or in settlement thereof, such damages or other sums
recovered shall first be applied to all out-of-pocket costs and expenses
incurred by the Parties in connection therewith, including attorneys fees. If
such recovery is insufficient to cover all such costs and expenses of both
Parties, it shall be shared [ * ]. If after such reimbursement any funds shall
remain from such damages or other sums recovered, and such funds shall be [ * ].
8.5 DEFENSE OF THIRD PARTY CLAIMS.
(A) If a claim is brought by a Third Party that any activity
related to work performed by a Party under the Collaboration infringes the
intellectual property rights of such Third Party, each Party will give prompt
written notice to the other Party of such claim. If the Third Party claim arises
from Exelixis' activities under the Collaboration, Exelixis shall control and
bear the expense of its own defense and, except as set forth in Section 8.5(b),
Exelixis shall [ * ]. Exelixis shall not enter into a settlement agreement with
such Third Party without the written consent of BMS, which shall not be
unreasonably withheld. If the Third Party claim arises from BMS' activities
under the Collaboration, BMS shall control and bear the expense of its own
defense and, except as set forth in Section 8.5(b), BMS shall [ * ]. BMS shall
not enter into a settlement agreement with such Third Party without the written
consent of Exelixis, which shall not be unreasonably withheld.
(B) The [ * ] of Exelixis under Section 8.5(a) shall not apply to
alleged infringement of Third Party technology rights by Exelixis in the course
of performing work under this Agreement where (i) prior to the conduct of such
work Exelixis submitted to the JMT a written description of the Third Party
technology in question and the work that Exelixis proposed to conduct, (ii) the
JMT approved Exelixis' conduct of such work, and (iii) the alleged infringement
arose by reason of such work. The [ * ] of BMS under Section 8.5(a) shall not
apply to alleged infringement of Third Party technology rights by BMS in the
course of performing work under this Agreement where (i) prior to the conduct of
such work BMS submitted to the JMT a written description of the Third Party
technology in question and the work that BMS proposed to conduct, (ii) the JMT
approved BMS' conduct of such work, and (iii) the alleged infringement arose by
reason of such work. In either such case, each Party shall [ * ]. In any event,
neither Party shall be required to conduct any work under this Agreement which
it believes may infringe Third Party rights.
8.6 COPYRIGHT REGISTRATIONS. Copyrights and copyright registrations on
copyrightable subject matter shall be filed, prosecuted, defended, and
maintained, and the Parties shall have the right to pursue infringers of any
copyrights owned or Controlled by it, in substantially the same manner as the
Parties have allocated such responsibilities, and the expenses therefor, for
patent rights under this Article 8.
9. CONFIDENTIALITY
9.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. All Information
disclosed by one Party to the other Party pursuant to this Agreement shall be
"Confidential Information" for all purposes hereunder. The Parties agree that
for a period of [ * ] after the end of the Research Term or [ * ] after receipt
of such Confidential Information (whichever period is longer), a Party receiving
Confidential Information of the other Party will (i) use commercially reasonable
efforts to maintain in confidence such Confidential Information (but not less
than those efforts as such Party uses to maintain in confidence its own
proprietary industrial information of similar kind and value) and not to
disclose such Confidential Information to any Third Party without prior written
consent of the other Party, except for disclosures made in confidence to any
Third Party under terms consistent with this Agreement and made in furtherance
of this Agreement or of rights granted to a Party hereunder, and (ii) not use
such other Party's Confidential Information for any purpose except those
permitted by this Agreement (it being understood that this subsection (ii) shall
not create or imply any rights or licenses not expressly granted under Article 5
hereof).
9.2 EXCEPTIONS. The obligations in Section 9.1 shall not apply with respect
to any portion of the Confidential Information that the receiving Party can show
by competent written proof:
(A) Is publicly disclosed by the disclosing Party, either before or
after it is disclosed to the receiving Party hereunder; or
(B) Was known to the receiving Party or any of its Affiliates, without
obligation to keep it confidential, prior to disclosure by the disclosing Party;
or
(C) Is subsequently disclosed to the receiving Party or any of its
Affiliates by a Third Party lawfully in possession thereof and without
obligation to keep it confidential; or
(D) Is published by a Third Party or otherwise becomes publicly
available or enters the public domain, either before or after it is disclosed to
the receiving Party; or
(E) Has been independently developed by employees or contractors of
the receiving Party or any of its Affiliates without the aid, application or use
of Confidential Information.
9.3 AUTHORIZED DISCLOSURE. A Party may disclose the Confidential
Information belonging to the other Party to the extent such disclosure is
reasonably necessary in the following instances:
(A) Filing or prosecuting Patents relating to Target Inventions, Sole
Inventions, Joint Inventions or Products;
(B) Regulatory filings;
(C) Prosecuting or defending litigation;
(D) Complying with applicable governmental regulations; and
(E) Disclosure, in connection with the performance of this Agreement,
to Affiliates, potential collaborators, partners, and licensees (including
potential co-marketing and copromotion contractors), research collaborators,
potential investment bankers, investors, lenders, and investors, employees,
consultants, or agents, each of whom prior to disclosure must be bound by
similar obligations of confidentiality and non-use at least equivalent in scope
to those set forth in this Article 9. The Parties acknowledge that the terms of
this Agreement shall be treated as Confidential Information of both Parties.
Such terms may be disclosed by a Party to individuals or entities covered by
9.3(e) above, each of whom prior to disclosure must be bound by similar
obligations of confidentiality and non-use at least equivalent in scope to those
set forth in this Article 9. In addition, a copy of this Agreement may be filed
by either Party with the Securities and Exchange Commission in connection with
any public offering of such Party's securities. In connection with any such
filing, such Party shall endeavor to obtain confidential treatment of economic
and trade secret information. In any event, the Parties agree to take all
reasonable action to avoid disclosure of Confidential Information except as
permitted hereunder.
9.4 TERMINATION OF PRIOR AGREEMENTS. This Agreement supersedes the
Mutual Confidential Disclosure Agreement between Exelixis and BMS dated December
5, 2000 and the amendments thereto dated January 11, 2001 and February 7, 2001.
All Information exchanged between the Parties under such earlier Agreement shall
be deemed Confidential Information and shall be subject to the terms of this
Article 9.
9.5 PUBLICITY. The Parties agree that the public announcement of the
execution of this Agreement shall be substantially in the form of the press
release attached as Exhibit 9.5. Any other publication, news release or other
public announcement relating to this Agreement or to the performance hereunder,
shall first be reviewed and approved by both Parties; provided, however, that
any disclosure which is required by law as advised by the disclosing Party's
counsel may be made without the prior consent of the other Party, although the
other Party shall be given prompt notice of any such legally required disclosure
and to the extent practicable shall provide the other Party an opportunity to
comment on the proposed disclosure.
9.6 PUBLICATIONS. Neither Party shall publish or present the results of
studies carried out under this Agreement without the opportunity for prior
review by the other Party. Subject to Section 9.3, each Party agrees to provide
the other Party the opportunity to review any proposed abstracts, manuscripts or
presentations (including verbal presentations) which relate to any Selected
Target at least [ * ] prior to its intended submission for publication and
agrees, upon request, not to submit any such abstract or manuscript for
publication until the other Party is given a reasonable period of time to secure
patent protection for any material in such publication which it believes to be
patentable. Both Parties understand that a reasonable commercial strategy may
require delay of publication of information or filing of patent applications.
The Parties agree to review and consider delay of publication and filing of
patent applications under certain circumstances. The JMT will review such
requests and recommend subsequent action. Neither Party shall have the right to
publish or present Confidential Information of the other Party which is subject
to Section 9.1. Nothing contained in this Section 9.6 shall prohibit the
inclusion of Confidential Information of the nonfiling Party necessary for a
patent application, provided the nonfiling Party is given a reasonable
opportunity to review the extent and necessity for its Confidential Information
to be included prior to submission of such patent application. Any disputes
between the Parties regarding delaying a publication or presentation to permit
the filing of a patent application shall be referred to the JMT.
10. TERM AND TERMINATION
10.1 TERM. This Agreement shall become effective on the Effective Date
and shall remain in effect until terminated in accordance with Section 10.2 or
by mutual written agreement, or until the expiration of the last royalty payment
obligation with respect to any Product, as provided in Section 7.4. Termination
of the Research Term shall not constitute termination of this Agreement;
termination of this Agreement shall result in termination of the Research Term.
10.2 TERMINATION FOR MATERIAL BREACH.
(A) If either Party believes that the other is in material breach of
this Agreement (including without limitation any material breach of a
representation or warranty made in this Agreement), then the non-breaching Party
may deliver notice of such breach to the other Party. In such notice the
non-breaching Party shall identify the actions or conduct that such Party would
consider to be an acceptable cure of such breach. For all breaches other than a
failure to make a payment set forth in Article 7, the allegedly breaching Party
shall have [ * ] to either cure such breach or, if cure cannot be reasonably
effected within such [ * ] period, to deliver to the other Party a plan for
curing such breach which is reasonably sufficient to effect a cure. Such a plan
shall set forth a program for achieving cure as rapidly as practicable.
Following delivery of such plan, the breaching Party shall use Diligent Efforts
to carry out the plan and cure the breach. For any breach arising from a
failure to make a payment set forth in Article 7, the allegedly breaching Party
shall have [ * ] to cure such breach.
(B) If the Party receiving notice of breach fails to cure such breach
within the [ * ] (as applicable), or the Party providing the notice reasonably
determines that the proposed corrective plan or the actions being taken to carry
it out is not commercially practicable, the Party originally delivering the
notice may terminate this Agreement upon [ * ] advance written notice, provided,
that if the breach applies only to a given Selected Target, a given Product,
Pharmacogenomic Product, a given Lead Compound/Back-Up Compound, or to the
license rights granted to a Party under any of subsections 5.1(a)(iv)-(v),
5.1(a)(vii)-(viii), 5.3(d), or 5.3(g), the non-breaching Party may only
terminate the breaching Party's rights with respect to such Selected Target,
Product, Pharmacogenomic Product, Lead Compound/Back-Up Compound, or the license
rights granted to a Party under such subsection. Notwithstanding the foregoing,
a Party may terminate this Agreement upon the third or any subsequent such
termination of the other Party's rights with respect to a given Selected Target,
a given Product, Pharmacogenomic Product, a given Lead Compound/Back-Up
Compound, or the license rights granted to the other Party under any of
subsections 5.1(a)(iv)-(v), 5.1(a)(vii)-(viii), 5.3(d), or 5.3(g).
(C) If a Party gives notice of termination under this Section 10.2 and
the other Party disputes whether such notice was proper, then the issue of
whether this Agreement has been terminated shall be resolved in accordance with
Section 13.1. If as a result of such dispute resolution process it is determined
that the notice of termination was proper, then such termination shall be deemed
to have been effective if the breaching Party fails thereafter to cure such
breach in accordance with the determination made in the resolution process under
Section 13.1 within the time period set forth in Section 10.2(a) for the
applicable breach following such determination. If as a result of such dispute
resolution process it is determined that the notice of termination was improper,
then no termination shall have occurred and this Agreement shall have remained
in effect.
10.3 EFFECT OF TERMINATION; SURVIVAL.
(A) In the event of termination of this Agreement for any reason other
than material breach pursuant to Section 10.2 or by mutual agreement, the
following provisions of this Agreement shall survive: Articles 1, 4, 9, 12 and
13, and Sections 2.16, 2.18, 3.8, 3.10, 5.1, 5.2(a), 5.3, 5.4, 6.2(a) (except
for the last sentence of 6.2(a)(ii)), 6.2(b), 6.3(a), 7.14, 7.15, 8.1, 8.3, 8.4,
8.5, 10.3, and 11.3.
(B) In the event of termination of this Agreement pursuant to Section
10.2, the provisions of this Agreement referenced in Section 10.3(a) shall
survive (except that Sections 8.3 and 8.4 shall survive only with respect to
Joint Inventions); provided, however, that any licenses granted under this
Agreement in favor of the breaching Party shall terminate, other than (A) the
license rights granted to BMS under Section 5.1(b) (which shall survive even if
Exelixis is the terminating Party, unless such termination is due to BMS' breach
of such license), (B) the license rights granted to BMS under Section
5.1(a)(viii) (which shall survive even if Exelixis is the terminating Party,
unless such termination is due to BMS' breach of such license), and (C) the
license rights granted to Exelixis under Section 5.3(d)(ii) (which shall survive
even if BMS is the terminating Party, unless such termination is due to
Exelixis' breach of such license). In such case, the non-breaching Party shall
continue to hold the licenses granted hereunder, subject to the milestone and
royalties set forth herein (which relevant provisions shall survive
termination). If BMS terminates this Agreement pursuant to Section 10.2 on
account of Exelixis' breach, then Section 5.2(b)(v) shall survive such
termination, subject to the milestone and royalties set forth herein.
(C) In any event, termination of this Agreement shall not relieve the
Parties of any liability which accrued hereunder prior to the effective date of
such termination nor preclude either Party from pursuing all rights and remedies
it may have hereunder or at law or in equity with respect to any breach of this
Agreement nor prejudice either Party's right to obtain performance of any
obligation.
11. REPRESENTATIONS AND COVENANTS
11.1 MUTUAL AUTHORITY. Exelixis and BMS each represents and warrants
to the other that: (i) it has the authority and right to enter into and perform
this Agreement, (ii) this Agreement is a legal and valid obligation binding upon
it and is enforceable in accordance with its terms, subject to applicable
limitations on such enforcement based on bankruptcy laws and other debtors'
rights, and (iii) its execution, delivery and performance of this Agreement will
not conflict in any material fashion with the terms of any other agreement or
instrument to which it is or becomes a party or by which it is or becomes bound,
nor violate any law or regulation of any court, governmental body or
administrative or other agency having authority over it.
11.2 RIGHTS IN TECHNOLOGY. During [ * ], each Party will use commercially
reasonable efforts to maintain (but without an obligation to renew) and not to
breach any agreements with Third Parties that provide a grant of rights from
such Third Party to a Party that are Controlled by such Party and are licensed
or become subject to a license from such Party to the other Party under Article
5 or 6. Each Party agrees to provide promptly the other Party with notice of
any such alleged breach. As of the Effective Date, each Party is in compliance
in all material respects with any aforementioned agreements with Third Parties.
11.3 PERFORMANCE BY AFFILIATES. The Parties recognize that each may perform
some or all of its obligations under this Agreement through Affiliates,
provided, however, that each Party shall remain responsible and be guarantor of
the performance by its Affiliates and shall cause its Affiliates to comply with
the provisions of this Agreement in connection with such performance. In
particular, if any Affiliate of a Party participates in research under this
Agreement or with respect to Collaboration Compounds, (i) the restrictions of
this Agreement which apply to the activities of a Party with respect to Selected
Targets and Collaboration Compounds shall apply equally to the activities of
such Affiliate, and (ii) the Party affiliated with such Affiliate shall assure,
and hereby guarantees, that any intellectual property developed by such
Affiliate shall be governed by the provisions of this Agreement (and subject to
the licenses set forth in Article 5) as if such intellectual property had been
developed by the Party.
11.4 THIRD PARTY RIGHTS.
(A) Except as already disclosed, each Party represents and warrants to
the other Party that, to its knowledge as of the Effective Date, its performance
of work under the Collaboration as contemplated by this Agreement shall not
infringe the patent, trade secret or other intellectual property rights of any
Third Party. Each Party represents and warrants to the other Party that, to its
knowledge as of the Effective Date, it will not violate a contractual or
fiduciary obligation owed to such Third Party (including without limitation
misappropriation of trade secrets) to perform its work under the Collaboration
as contemplated by this Agreement.
(B) Except as already disclosed, Exelixis represents and warrants to
BMS that, to its knowledge as of the Effective Date, the research conducted by
it to identify the Targets listed in Exhibit 1.28 did not infringe the patent,
trade secret or other intellectual property rights of any Third Party. Exelixis
represents and warrants to BMS that, to its knowledge as of the Effective Date,
it did not violate a contractual or fiduciary obligation owed to such Third
Party (including without limitation misappropriation of trade secrets) in
conducting its research to identify the Targets listed in Exhibit 1.28.
11.5 NOTICE OF INFRINGEMENT OR MISAPPROPRIATION. [ * ] represents and
warrants to [ * ] that, as of the Effective Date, it has received no notice
of infringement or misappropriation of any alleged rights asserted by any third
party in relation to any technology to be used in connection with the
Collaboration.
12. INDEMNIFICATION AND LIMITATION OF LIABILITY
12.1 MUTUAL INDEMNIFICATION. Subject to Section 12.4, each Party
hereby agrees to indemnify, defend and hold the other Party, its Affiliates, its
licensees, and its and their officers, directors, employees, consultants,
contractors, sublicensees and agents (collectively, the "Indemnitees") harmless
from and against any and all damages or other amounts payable to a Third Party
claimant, as well as any reasonable attorneys' fees and costs of litigation
incurred by such Indemnitee as to any such Claim (as defined in this Section
12.1) until the indemnifying Party has acknowledged that it will provide
indemnification hereunder with respect to such Claim as provided below,
(collectively, "Damages") resulting from claims, suits, proceedings or causes of
action ("Claims") brought by such Third Party against such Indemnitee based on:
(a) a breach of warranty by the indemnifying Party contained in this Agreement;
(b) breach of this Agreement or applicable law by such indemnifying Party; (c)
negligence or willful misconduct of a Party, its Affiliates or (sub)licensees,
or their respective employees, contractors or agents in the performance of this
Agreement; and/or (d) breach of a contractual or fiduciary obligation owed by it
to a Third Party (including without limitation misappropriation of trade
secrets).
12.2 INDEMNIFICATION BY BMS. Subject to Section 12.4, BMS hereby agrees to
indemnify, defend and hold harmless Exelixis and its directors, agents and
employees from and against any and all suits, claims, actions, demands,
liabilities, expenses and/or loss, including reasonable legal expenses and
reasonable attorneys' fees ("Losses") resulting directly or indirectly from the
manufacture, use, handling, storage, sale or other disposition of BMS Selected
Targets, Collaboration Compounds or BMS Products by BMS or its Affiliates,
agents or sublicensees except to the extent such Losses result from (a) a breach
of warranty by Exelixis contained in this Agreement; (b) breach of this
Agreement or applicable law by Exelixis; (c) negligence or willful misconduct by
Exelixis, its Affiliates or (sub)licensees, or their respective employees,
contractors or agents in the performance of this Agreement; and/or (d) breach of
a contractual or fiduciary obligation owed by Exelixis to a Third Party
(including without limitation misappropriation of trade secrets).
12.3 INDEMNIFICATION BY EXELIXIS. Subject to Section 12.4, Exelixis hereby
agrees to indemnify, defend and hold harmless BMS and its directors, agents and
employees from and against any and all suits, claims, actions, demands,
liabilities, expenses and/or loss, including reasonable legal expenses and
reasonable attorneys' fees ("Losses") resulting directly or indirectly from the
manufacture, use, handling, storage, sale or other disposition of EXEL Selected
Targets, Collaboration Compounds or EXEL Products by Exelixis or its Affiliates,
agents or sublicensees except to the extent such Losses result from: (a) a
breach of warranty by BMS contained in this Agreement; (b) breach of this
Agreement or applicable law by BMS; (c) negligence or willful misconduct by BMS,
its Affiliates or (sub)licensees, or their respective employees, contractors or
agents in the performance of this Agreement; and/or (d) breach of a contractual
or fiduciary obligation owed by BMS to a Third Party (including without
limitation misappropriation of trade secrets).
12.4 CONDITIONS TO INDEMNIFICATION. As used herein, "Indemnitee" shall mean
a party entitled to indemnification under the terms of Section 12.1, 12.2 or
12.3. It shall be a condition precedent to an Indemnitee's right to seek
indemnification under such Section 12.1, 12.2 or 12.3:
(I) shall inform the indemnifying Party under such applicable
Section of a Claim as soon as reasonably practicable after it receives notice of
the Claim;
(II) shall, if the indemnifying Party acknowledges that such
Claim falls within the scope of its indemnification obligations hereunder,
permit the indemnifying Party to assume direction and control of the defense,
litigation, settlement, appeal or other disposition of the Claim (including the
right to settle the claim solely for monetary consideration); provided, that the
indemnifying Party shall seek the prior written consent (not to be unreasonably
withheld or delayed) of any such Indemnitee as to any settlement which would
materially diminish or materially adversely affect the scope, exclusivity or
duration of any Patents licensed under this Agreement, would require any payment
by such Indemnitee, would require an admission of legal wrongdoing in any way on
the part of an Indemnitee, or would effect an amendment of this Agreement; and
(III) shall fully cooperate (including providing access to and
copies of pertinent records and making available for testimony relevant
individuals subject to its control) as reasonably requested by, and at the
expense of, the indemnifying Party in the defense of the Claim. Provided that an
Indemnitee has complied with the foregoing, the indemnifying Party shall provide
attorneys reasonably acceptable to the Indemnitee to defend against any such
Claim. Subject to the foregoing, an Indemnitee may participate in any
proceedings involving such Claim using attorneys of its/his/her choice and at
its/his/her expense. In no event may an Indemnitee settle or compromise any
Claim for which it /he/she intends to seek indemnification from the indemnifying
Party hereunder without the prior written consent of the indemnifying Party, or
the indemnification provided under such Section 12.1, 12.2 or 12.3 as to such
Claim shall be null and void.
12.5 LIMITATION OF LIABILITY. EXCEPT FOR AMOUNTS PAYABLE TO THIRD
PARTIES BY A PARTY FOR WHICH IT SEEKS REIMBURSEMENT OR INDEMNIFICATION
PROTECTION FROM THE OTHER PARTY PURSUANT TO SECTIONS 8.5(a), 12.1, 12.2 AND
12.3, AND EXCEPT FOR BREACH OF SECTION 9.1 HEREOF, IN NO EVENT SHALL EITHER
PARTY, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR AFFILIATES BE LIABLE TO THE
OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES, WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT,
WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR OTHERWISE, ARISING OUT
OF THIS AGREEMENT, UNLESS SUCH DAMAGES ARE DUE TO THE GROSS NEGLIGENCE OR WILFUL
MISCONDUCT OF THE LIABLE PARTY. For clarification, the foregoing sentence shall
not be interpreted to limit or to expand the express rights specifically granted
in the sections of this Agreement.
12.6 COLLABORATION DISCLAIMER. EXCEPT AS PROVIDED IN ARTICLE 11 ABOVE, BMS
EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT OF THE INTELLECTUAL
PROPERTY RIGHTS OF THIRD PARTIES WITH RESPECT TO ANY RESEARCH RESULTS, TARGETS,
DATA, OR INVENTIONS (AND ANY PATENT RIGHTS OBTAINED THEREON) IDENTIFIED, MADE OR
GENERATED BY BMS AS PART OF THE COLLABORATION OR OTHERWISE MADE AVAILABLE TO
EXELIXIS PURSUANT TO THE TERMS OF THIS AGREEMENT. EXCEPT AS PROVIDED IN ARTICLE
11 ABOVE, EXELIXIS EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT OF THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES WITH RESPECT TO ANY RESEARCH
RESULTS, TARGETS, DATA, OR INVENTIONS (AND ANY PATENT RIGHTS OBTAINED THEREON)
IDENTIFIED, MADE OR GENERATED BY EXELIXIS AS PART OF THE COLLABORATION OR
OTHERWISE MADE AVAILABLE TO BMS PURSUANT TO THE TERMS OF THIS AGREEMENT.
13. MISCELLANEOUS
13.1 DISPUTE RESOLUTION. In the event of any controversy or claim
arising out of, relating to or in connection with any provision of this
Agreement, other than a dispute addressed in Section 13.3, the Parties shall try
to settle their differences amicably between themselves first, by referring the
disputed matter to the Chief Scientific Officer of Exelixis and the Senior Vice
President, Drug Discovery and Exploratory Development of BMS (or if either
foregoing position does not exist at such time, the closest successor in title
to such position) and, if not resolved by such individuals, by referring the
disputed matter to the President of Exelixis and the President of the BMS
Pharmaceutical Group or their designees. Either Party may initiate such
informal dispute resolution by sending written notice of the dispute to the
other Party, and, within 20 days after such notice, such representatives of the
scientific management of the Parties shall meet for attempted resolution by good
faith negotiations. If such representatives are unable to resolve such dispute
within thirty (30) days of their first meeting for such negotiations, then said
Officers shall meet within twenty (20) days thereafter for attempted resolution
by good faith negotiations. If the Officers are unable to resolve such dispute
within thirty (30) days of their first meeting for such negotiations, either
Party may seek to have such dispute resolved in any United States federal or
state court of competent jurisdiction and appropriate venue, provided, that if
such suit includes a Third Party claimant or defendant, and jurisdiction and
venue with respect to such Third Party appropriately resides outside the United
States, then in any other jurisdiction or venue permitted by applicable law. To
the extent permitted by law, the Party that seeks such judicial resolution
hereby consents to the other Party's forum of choice.
13.2 GOVERNING LAW. Resolution of all disputes arising out of or related to
this Agreement or the performance, enforcement, breach or termination of this
Agreement and any remedies relating thereto, shall be governed by and construed
under the substantive laws of the State of California, as applied to agreements
executed and performed entirely in the State of California by residents of the
State of California, without regard to conflicts of law rules provided, however,
that resolution of all disputes arising out of or related to the performance,
enforcement or breach of Section 2.18 of this Agreement and any remedies
relating thereto shall be governed by and construed under the substantive laws
of the State of New York, as applied to agreements executed and performed
entirely in the State of New York by residents of the State of New York, without
regard to its conflicts of law rules.
13.3 PATENTS AND TRADEMARKS. Any dispute, controversy or claim relating to
the scope, validity, enforceability or infringement of any Patent rights
covering the manufacture, use or sale of any Product or of any trademark rights
related to any Product shall be submitted to a court of competent jurisdiction
in the territory in which such Patent or trademark rights were granted or arose.
13.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the MOA Agreement set
forth the complete, final and exclusive agreement and all the covenants,
promises, agreements, warranties, representations, conditions and understandings
between the Parties hereto and supersedes and terminates all prior agreements
and understandings between the Parties, except for the MOA Agreement. There are
no covenants, promises, agreements, warranties, representations, conditions or
understandings, either oral or written, between the Parties other than as are
set forth herein and therein. No subsequent alteration, amendment, change or
addition to this Agreement shall be binding upon the Parties unless reduced to
writing and signed by an authorized officer of each Party.
13.5 EXPORT CONTROL. This Agreement is made subject to any restrictions
concerning the export of products or technical information from the United
States of America or other countries which may be imposed upon or related to
Exelixis or BMS from time to time. Each Party agrees that it will not export,
directly or indirectly, any technical information acquired from the other Party
under this Agreement or any products using such technical information to a
location or in a manner that at the time of export requires an export license or
other governmental approval, without first obtaining the written consent to do
so from the appropriate agency or other governmental entity.
13.6 BANKRUPTCY.
(A) All rights and licenses granted under or pursuant to this
Agreement, including amendments hereto, by each Party to the other Party are,
for all purposes of Section 365(n) of Title 11 of the U.S. Code ("Title 11"),
licenses of rights to intellectual property as defined in Title 11. Each Party
agrees during the term of this Agreement to create and maintain current copies
or, if not amenable to copying, detailed descriptions or other appropriate
embodiments, to the extent feasible, of all such intellectual property. If a
case is commenced by or against either Party (the "Bankrupt Party") under Title
11, then, unless and until this Agreement is rejected as provided in Title 11,
the Bankrupt Party (in any capacity, including debtor-in-possession) and its
successors and assigns (including, without limitation, a Title 11 Trustee)
shall, at the election of the Bankrupt Party made within 60 days after the
commencement of the case (or, if no such election is made, immediately upon the
request of the non-Bankrupt Party) either (i) perform all of the obligations
provided in this Agreement to be performed by the Bankrupt Party including,
where applicable and without limitation, providing to the non-Bankrupt Party
portions of such intellectual property (including embodiments thereof) held by
the Bankrupt Party and such successors and assigns or otherwise available to
them or (ii) provide to the non-Bankrupt Party all such intellectual property
(including all embodiments thereof) held by the Bankrupt Party and such
successors and assigns or otherwise available to them.
(B) If a Title 11 case is commenced by or against the Bankrupt Party
and this Agreement is rejected as provided in Title 11 and the non-Bankrupt
Party elects to retain its rights hereunder as provided in Title 11, then the
Bankrupt Party (in any capacity, including debtor-in-possession) and its
successors and assigns (including, without limitations, a Title 11 Trustee)
shall provide to the non-Bankrupt Party all such intellectual property
(including all embodiments thereof) held by the Bankrupt Party and such
successors and assigns or otherwise available to them immediately upon the
non-Bankrupt Party's written request therefor. Whenever the Bankrupt Party or
any of its successors or assigns provides to the non-Bankrupt Party any of the
intellectual property licensed hereunder (or any embodiment thereof) pursuant to
this Section 13.6, the non-Bankrupt Party shall have the right to perform the
obligations of the Bankrupt Party hereunder with respect to such intellectual
property, but neither such provision nor such performance by the non-Bankrupt
Party shall release the Bankrupt Party from any such obligation or liability for
failing to perform it.
(C) All rights, powers and remedies of the non-Bankrupt Party provided
herein are in addition to and not in substitution for any and all other rights,
powers and remedies now or hereafter existing at law or in equity (including,
without limitation, Title 11) in the event of the commencement of a Title 11
case by or against the Bankrupt Party. The non-Bankrupt Party, in addition to
the rights, power and remedies expressly provided herein, shall be entitled to
exercise all other such rights and powers and resort to all other such remedies
as may now or hereafter exist at law or in equity (including, without
limitation, under Title 11) in such event. The Parties agree that they intend
the foregoing non-Bankrupt Party rights to extend to the maximum extent
permitted by law and any provisions of applicable contracts with Third Parties,
including without limitation for purposes of Title 11, (i) the right of access
to any intellectual property (including all embodiments thereof) of the Bankrupt
Party or any Third Party with whom the Bankrupt Party contracts to perform an
obligation of the Bankrupt Party under this Agreement, and, in the case of the
Third Party, which is necessary for the development, registration and
manufacture of licensed products and (ii) the right to contract directly with
any Third Party described in (i) in this sentence to complete the contracted
work. Any intellectual property provided pursuant to the provisions of this
Section 13.6 shall be subject to the licenses set forth elsewhere in this
Agreement and the payment obligations of this Agreement, which shall be deemed
to be royalties for purposes of Title 11.
13.7 FORCE MAJEURE. Both Parties shall be excused from the performance
of their obligations under this Agreement to the extent that such performance is
prevented by force majeure and the nonperforming Party promptly provides notice
of the prevention to the other Party. Such excuse shall be continued so long as
the condition constituting force majeure continues and the nonperforming Party
takes reasonable efforts to remove the condition. For purposes of this
Agreement, force majeure shall include conditions beyond the control of the
Parties, including without limitation, an act of God, voluntary or involuntary
compliance with any regulation, law or order of any government, war, civil
commotion, labor strike or lock-out, epidemic, failure or default of public
utilities or common carriers, destruction of production facilities or materials
by fire, earthquake, storm or like catastrophe; provided, however, the payment
of invoices due and owing hereunder shall not be delayed by the payer because of
a force majeure affecting the payer.
13.8 NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement and
shall be deemed to have been sufficiently given for all purposes if mailed by
first class certified or registered mail, postage prepaid, express delivery
service or personally delivered. Unless otherwise specified in writing, the
mailing addresses of the Parties shall be as described below.
For Exelixis: Exelixis, Inc.
170 Harbor Way
P.O. Box 511
South San Francisco, CA 94083
Attention: Chief Executive Officer
With a copy to: Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Robert L. Jones, Esq.
For BMS: Bristol-Myers Squibb Pharmaceutical Research Institute
Route 206 and Province Line Road
Princeton, NJ 08543-4000
Attention: Senior Vice President - Drug Discovery
With a copy to: Bristol-Myers Squibb Pharmaceutical Research Institute
Route 206 and Province Line Road
Princeton, NJ 08543-4000
Attention: Vice President and Senior Counsel - BMSPRI
13.9 CONSENTS NOT UNREASONABLY WITHHELD OR DELAYED. Whenever provision
is made in this Agreement for either Party to secure the consent or approval of
the other, that consent or approval shall not unreasonably be withheld or
delayed, and whenever in this Agreement provisions are made for one Party to
object to or disapprove a matter, such objection or disapproval shall not
unreasonably be exercised.
13.10 MAINTENANCE OF RECORDS. Each Party shall keep and maintain all
records required by law or regulation with respect to Products and shall make
copies of such records available to the other Party upon request.
13.11 UNITED STATES DOLLARS. References in this Agreement to "Dollars" or
"$" shall mean the legal tender of the United States of America.
13.12 NO STRICT CONSTRUCTION. This Agreement has been prepared jointly and
shall not be strictly construed against either Party. Ambiguities, if any, in
this Agreement shall not be construed against any Party, irrespective of which
Party may be deemed to have authored the ambiguous provision.
13.13 ASSIGNMENT. Neither Party may assign or transfer this Agreement or
any rights or obligations hereunder without the prior written consent of the
other, except a Party may make such an assignment without the other Party's
consent to an Affiliate or to a Third Party successor to substantially all of
the business of such Party to which this Agreement relates, whether in a merger,
sale of stock, sale of assets or other transaction; provided that any such
permitted successor or assignee of rights and/or obligations hereunder is
obligated, by reason of operation of law or pursuant to a written agreement with
the other Party, to assume performance of this Agreement or such rights and/or
obligations; and provided, further, that if assigned to an Affiliate, the
assigning Party shall remain jointly and severally responsible for the
performance of this Agreement by such Affiliate. Any permitted assignment shall
be binding on the successors of the assigning Party. Any assignment or
attempted assignment by either Party in violation of the terms of this Section
13.13 shall be null and void and of no legal effect.
13.14 ELECTRONIC DATA INTERCHANGE. If both Parties elect to facilitate
business activities hereunder by electronically sending and receiving data in
agreed formats (also referred to as Electronic Data Interchange or "EDI") in
substitution for conventional paper-based documents, the terms and conditions of
this Agreement shall apply to such EDI activities.
13.15 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.16 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
13.17 SEVERABILITY. If any one or more of the provisions of this Agreement
is held to be invalid or unenforceable by any court of competent jurisdiction
from which no appeal can be or is taken, the provision shall be considered
severed from this Agreement and shall not serve to invalidate any remaining
provisions hereof. The Parties shall make a good faith effort to replace any
invalid or unenforceable provision with a valid and enforceable one such that
the objectives contemplated by the Parties when entering this Agreement may be
realized.
13.18 HEADINGS. The headings for each article and section in this Agreement
have been inserted for convenience of reference only and are not intended to
limit or expand on the meaning of the language contained in the particular
article or section.
13.19 NO WAIVER. Any delay in enforcing a Party's rights under this
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such Party's rights to the future enforcement of its
rights under this Agreement, excepting only as to an express written and signed
waiver as to a particular matter for a particular period of time.
{Rest of Page Intentionally Left Blank}
IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their proper officers as of the date and year first above written.
BRISTOL-MYERS SQUIBB COMPANY EXELIXIS, INC.
By: /s/ Elliott Sigal By: /s/ Geoffrey Duyk
- ---------------------------------------- ---------------------
Title: Sr. Vice President Drug Discovery Title: CSO
- ---------------------------------------- ---------------------
& Exploratory Development
- ----------------------------------------
Date: July 17, 2001 Date: 7/20/01
- ---------------------------------------- ---------------------
50.
Exhibit 1.25-1.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
EXHIBIT 1.25
GENETIC ENTRY POINTS
[ * ]
2.
Exhibit 5.1(a)(vii)-1.
EXHIBIT 1.28
[ * ]
EXHIBIT 5.1(A)(VII)
[ * ]
EXHIBIT 5.3(D)
[ * ]
EXHIBIT 9.5
PRESS RELEASE
Contacts:
Angela Bitting Patricia Doykos Duquette
Director, Corporate Communications Public Affairs
Exelixis, Inc. Bristol-Myers Squibb
(650) 837-7579 (609) 252-3390
abitting@exelixis.com patricia.duquette@bms.com
BRISTOL-MYERS SQUIBB AND EXELIXIS
ENTER PIONEERING CANCER-FIGHTING ALLIANCE
DRUG DISCOVERY COLLABORATION TARGETS NEW FRONTIER OF
TUMOR SUPPRESSOR GENES
PRINCETON, N.J. and SOUTH SAN FRANCISCO, Calif.- July XX, 2001 - Bristol- Myers
Squibb Company (NYSE: BMY) and Exelixis, Inc. (NASDAQ: EXEL) today announced a
broad collaboration and licensing agreement to create a new generation of cancer
drugs that selectively target tumor suppressor genes -- genes that prevent
tumors from developing. Tumor suppressor genes have long been viewed as
promising targets in fighting cancer, but it remains extremely difficult to
develop drugs that work against them.
In a cooperative effort that will leverage each company's technology and
expertise in the fields of genomics and target validation, Exelixis will
identify and validate molecular targets that trigger cell death in cancer cells,
while leaving normal cells unharmed. Bristol- Myers Squibb will then further
validate these targets in human models.
Each company will have the option to obtain exclusive worldwide rights to equal
numbers of validated targets arising from the collaboration. These rights will
enable them to pursue the development of novel, small-molecule drugs.
Bristol-Myers Squibb may also use Exelixis' expertise in assay development, high
throughput screening, medicinal chemistry and preclinical pharmacology for the
development of small-molecules directed against several of the selected targets.
"As the worldwide leader in oncology drug development, we will continue to push
the R&D envelope to extend and enhance the lives of cancer patients," said Peter
S. Ringrose, Ph.D., chief scientific officer and president, Pharmaceutical
Research Institute, Bristol-Myers Squibb. "This creative partnership with
Exelixis will help us continue to be on the cutting edge of cancer drug
development, and we believe this is what it will take to realize a new era of
treatment."
"Tumor suppressor genes represent a new frontier for the treatment of cancer and
until recently, they have been intractable as drug targets for pharmaceuticals,"
said Elliott Sigal, M.D., Ph.D., senior vice president, Drug Discovery and
Exploratory Development, Bristol-Myers Squibb. "In this collaboration, we will
be targeting the basic mechanisms that can lead to cancer. This is a novel
approach to alleviating the true bottleneck of drug development in the
post-genomics era."
As part of the collaboration, Exelixis will receive an exclusive worldwide
license to develop and commercialize a selected analogue of the Bristol-Myers
Squibb anticancer compound, rebeccamycin. The rebeccamycin analogue has shown
activity against cancers in ongoing Phase I and early Phase II clinical trials
being conducted by the National Cancer Institute under a Clinical Trials
Agreement. Bristol-Myers Squibb has agreed to provide access to its internal
clinical development prowess to support Exelixis in the development of this
compound. Each party has certain rights of first negotiation with respect to
cancer compounds that result from the targets validated in the collaboration and
that the companies elect to license out. In addition, Bristol-Myers Squibb will
make an equity investment in Exelixis.
"Bristol-Myers Squibb has been an excellent partner, and we look forward to
establishing this new relationship with them," commented George A. Scangos,
Ph.D., president and chief executive officer of Exelixis. "This collaboration,
which we believe is valued $200 million, provides us not only with working
capital, but significant upside in the form of milestones and royalties and a
clinical stage product that will enable us to build our clinical development
infrastructure." Dr. Scangos added, "When taken together with our recent PDL
collaboration, we believe our cancer strategy demonstrates our ability to
significantly leverage our core research into multiple product opportunities
both for ourselves and our partners."
Bristol-Myers Squibb is an $18 billion pharmaceutical and related heath care
products
company whose mission is to extend and enhance human life. For more information,
please visit the company's web site at www.bms.com.
Exelixis, Inc. is a leading genomics-based drug discovery company focused on
product development through its expertise in comparative genomics and model
system genetics. These technologies provide a rapid, efficient and cost
effective way to move from DNA sequence data to knowledge about the function of
genes and the proteins they encode. The company's technology is broadly
applicable to all life sciences industries including pharmaceutical, diagnostic,
agricultural biotechnology and animal health. Exelixis has partnerships with
Aventis, Bayer, Bristol-Myers Squibb, Pharmacia, Protein Design Labs and Dow
AgroSciences and is building its internal development program in the area of
oncology. For more information, please visit the company's web site at
www.exelixis.com.
This press release contains certain forward-looking statements regarding
Bristol-Myers Squibb within the meaning of the Private Securities Litigation
Reform Act of 1995 that may be identified by terminology such as "anticipates,"
and "expects" and other words or terms of similar expression or meaning. Such
forward-looking statements are based on current expectations and involve
inherent risks and uncertainties, including factors that could delay, divert or
change any of them, and could cause actual outcomes and results to differ
materially from current expectations. These factors include, among other things,
uncertainties relating to clinical trials and product development, unexpected
regulatory delays or government regulation generally. For further details and a
discussion of these and other risks and uncertainties, see Bristol-Myers
Squibb's Securities and Exchange Commission filings, including the company's
2000 annual report on Form 10-K. Bristol-Myers Squibb undertakes no obligation
to publicly update any forward-looking statement, whether as a result of new
information, future events or otherwise.
This press release contains forward-looking statements regarding Exelixis, Inc.
These forward-looking statements are based upon Exelixis' current expectations.
Forward-looking statements involve risks and uncertainties. Exelixis' actual
results and the timing of events could differ materially from those anticipated
in its forward-looking statements as a result of many factors, including
Exelixis' ability to successfully assume the development and manufacturing of
the rebeccamycin analogue in order to obtain the value ascribed to it under the
collaboration; the timing and expenses associated with the implementation of
development and manufacturing efforts for the rebeccamycin analogue; and
Exelixis' ability to successfully achieve milestones and royalties derived from
future Bristol-Myers Squibb products developed against selected Exelixis targets
under the collaboration. These and other risk factors are discussed under "Risk
Factors" and elsewhere in Exelixis' Annual Report on Form 10-K for the year
ended December 31, 2000 and other SEC reports. Exelixis expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in its
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statements are based.
CONFERENCE CALL INFORMATION ADDED HERE.
####
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
CANCER COLLABORATION AGREEMENT
BETWEEN
EXELIXIS, INC.
AND
BRISTOL-MYERS SQUIBB COMPANY
TABLE OF CONTENTS
PAGE
1. Definitions 1
1.1 "Abandoned Target" . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Affiliate". . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 "Assay". . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 "Back-up Compound" . . . . . . . . . . . . . . . . . . . . . 2
1.5 "BMS Collaboration Product". . . . . . . . . . . . . . . . . 2
1.6 "BMS Know-How" . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 "BMS Patents". . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 "BMS Product". . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 "BMS Selected Target". . . . . . . . . . . . . . . . . . . . 3
1.10 "BMS Sole Product" . . . . . . . . . . . . . . . . . . . . . 3
1.11 "Collaboration". . . . . . . . . . . . . . . . . . . . . . . 3
1.12 "Collaboration Compound" . . . . . . . . . . . . . . . . . . 3
1.13 "Controlled" . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 "Development Field". . . . . . . . . . . . . . . . . . . . . 4
1.15 "Diligent Efforts" . . . . . . . . . . . . . . . . . . . . . 4
1.16 "Decision Point 1 (DP1) Approval". . . . . . . . . . . . . . 4
1.17 "DP1 Orthologue" . . . . . . . . . . . . . . . . . . . . . . 4
1.18 "Draft Target Pool". . . . . . . . . . . . . . . . . . . . . 5
1.19 "Eligible Target". . . . . . . . . . . . . . . . . . . . . . 5
1 20 "EXEL Compound". . . . . . . . . . . . . . . . . . . . . . . 6
1.21 "EXEL Know-How". . . . . . . . . . . . . . . . . . . . . . . 6
1.22 "EXEL Patents" . . . . . . . . . . . . . . . . . . . . . . . 6
1.23 "EXEL Product" . . . . . . . . . . . . . . . . . . . . . . . 6
1.24 "EXEL Selected Target" . . . . . . . . . . . . . . . . . . . 6
1.25 "Genetic Entry Point". . . . . . . . . . . . . . . . . . . . 6
1.26 "Genetic Screen" . . . . . . . . . . . . . . . . . . . . . . 6
1.27 "Information". . . . . . . . . . . . . . . . . . . . . . . . 6
1.28 "Invention". . . . . . . . . . . . . . . . . . . . . . . . . 7
1.29 "Joint Invention". . . . . . . . . . . . . . . . . . . . . . 7
1.30 "Joint Management Team" or "JMT" . . . . . . . . . . . . . . 7
1.31 "Joint Scientific Committee" or "JSC". . . . . . . . . . . . 7
1.32 "Lead Compound". . . . . . . . . . . . . . . . . . . . . . . 7
1.33 "Major Market" . . . . . . . . . . . . . . . . . . . . . . . 7
1.34 "MOA Agreement". . . . . . . . . . . . . . . . . . . . . . . 7
1.35 "Model System Target". . . . . . . . . . . . . . . . . . . . 7
1.36 "NDA". . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.37 "Net Sales". . . . . . . . . . . . . . . . . . . . . . . . . 8
1.38 "Patent" . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.39 "Pharmacogenomic Product". . . . . . . . . . . . . . . . . . 10
1.40 "Phase I Clinical Trial" . . . . . . . . . . . . . . . . . . 10
1.41 "Phase II Clinical Trial". . . . . . . . . . . . . . . . . . 10
1.42 "Phase III Clinical Trial" . . . . . . . . . . . . . . . . . 10
1.43 "Phenotypic Screen". . . . . . . . . . . . . . . . . . . . . 10
1.44 "Product". . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.45 "PTP". . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.46 "Regulatory Approval". . . . . . . . . . . . . . . . . . . . 10
1.47 "Remains Confidential" . . . . . . . . . . . . . . . . . . . 10
1.48 "Research Field" . . . . . . . . . . . . . . . . . . . . . . 11
1.49 "Research Plan". . . . . . . . . . . . . . . . . . . . . . . 11
1.50 "Research Term". . . . . . . . . . . . . . . . . . . . . . . 11
1.51 "Reverted Target". . . . . . . . . . . . . . . . . . . . . . 11
1.52 "Selected Target". . . . . . . . . . . . . . . . . . . . . . 11
1.53 "Sole Invention" . . . . . . . . . . . . . . . . . . . . . . 11
1.54 "Target" . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.55 "Target Invention" . . . . . . . . . . . . . . . . . . . . . 11
1.56 "Third Party". . . . . . . . . . . . . . . . . . . . . . . . 11
1.57 "Threshold BMS Product". . . . . . . . . . . . . . . . . . . 11
1.58 "Valid Claim". . . . . . . . . . . . . . . . . . . . . . . . 11
2. Research Program . . . . . . . . . . . . . . . . . . . . 12
2.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Management Structure . . . . . . . . . . . . . . . . . . . . 12
2.3 Joint Management Team. . . . . . . . . . . . . . . . . . . . 12
2.4 Joint Scientific Committee . . . . . . . . . . . . . . . . . 13
2.5 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.6 Research Term. . . . . . . . . . . . . . . . . . . . . . . . 14
2.7 Research Plan. . . . . . . . . . . . . . . . . . . . . . . . 15
2.8 Genetic Entry Points . . . . . . . . . . . . . . . . . . . . 15
2.9 Identification of Model System Targets . . . . . . . . . . . 16
2.10 Identification of Human Orthologues of Model System Targets. 16
2.11 Identification of Eligible Targets . . . . . . . . . . . . . 19
2.12 Interaction with MOA Agreement . . . . . . . . . . . . . . . 20
2.13 Obligations of Parties . . . . . . . . . . . . . . . . . . . 22
2.14 Collaboration Guidelines . . . . . . . . . . . . . . . . . . 22
2.15 Conduct of Research. . . . . . . . . . . . . . . . . . . . . 22
2.16 Records. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.17 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.18 Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . 23
2.19 Targets Previously Pursued by Entity Acquired by a Party . . 23
3 Selection, Pursuit and Abandonment of Targets. . . . . . 25
3.1 Draft Target Pool. . . . . . . . . . . . . . . . . . . . . . 25
3.2 Disclosure of Data Prior to Draft Choice . . . . . . . . . . 26
3.3 Draft Choice Procedures. . . . . . . . . . . . . . . . . . . 26
3.4 Pursuit of Selected Targets. . . . . . . . . . . . . . . . . 29
3.5 Exelixis Participation in Development of BMS Products. . . . 29
3.6 Target Abandonment . . . . . . . . . . . . . . . . . . . . . 32
3.7 Targets Other Than Selected Targets. . . . . . . . . . . . . 32
3.8 Records. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.9 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4. Additional Consideration . . . . . . . . . . . . . . . . 33
4.1 Stock Purchase Agreement . . . . . . . . . . . . . . . . . . 33
4.2 Rebeccamycin Analog License Agreement. . . . . . . . . . . . 33
5. Licenses and Related Rights. . . . . . . . . . . . . . 33
5.1 Licenses to BMS. . . . . . . . . . . . . . . . . . . . . . . 33
5.2 License Limitations and Option . . . . . . . . . . . . . . . 36
5.3 Licenses to Exelixis . . . . . . . . . . . . . . . . . . . . 39
5.4 License Limitations. . . . . . . . . . . . . . . . . . . . . 41
5.5 Rights of First Negotiation. . . . . . . . . . . . . . . . . 42
6. Exclusivity. . . . . . . . . . . . . . . . . . . . . . . 44
6.1 Exelixis . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.2 Independent Research . . . . . . . . . . . . . . . . . . . . 45
6.3 Other Research . . . . . . . . . . . . . . . . . . . . . . . 46
7. Compensation . . . . . . . . . . . . . . . . . . . . . 47
7.1 License Fee. . . . . . . . . . . . . . . . . . . . . . . . . 47
7.2 Research Support . . . . . . . . . . . . . . . . . . . . . . 47
7.3 Milestone Payments . . . . . . . . . . . . . . . . . . . . . 47
7.4 Royalty Payments . . . . . . . . . . . . . . . . . . . . . . 50
7.5 Royalty Adjustments. . . . . . . . . . . . . . . . . . . . . 51
7.6 Quarterly Payments . . . . . . . . . . . . . . . . . . . . . 52
7.7 Term of Royalties. . . . . . . . . . . . . . . . . . . . . . 52
7.8 Royalty Payment Reports. . . . . . . . . . . . . . . . . . . 53
7.9 Payment Method . . . . . . . . . . . . . . . . . . . . . . . 53
7.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.11 Blocked Currency . . . . . . . . . . . . . . . . . . . . . . 53
7.12 Sublicenses. . . . . . . . . . . . . . . . . . . . . . . . . 53
7.13 Foreign Exchange . . . . . . . . . . . . . . . . . . . . . . 53
7.14 Records; Inspection. . . . . . . . . . . . . . . . . . . . . 53
7.15 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8. INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . 54
8.1 Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.2 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.3 Patent Prosecution and Maintenance; Abandonment. . . . . . . 55
8.4 Enforcement of Patent Rights . . . . . . . . . . . . . . . . 57
8.5 Defense of Third Party Claims. . . . . . . . . . . . . . . . 64
8.6 Copyright Registrations. . . . . . . . . . . . . . . . . . . 64
9. CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . 65
9.1 Nondisclosure of Confidential Information. . . . . . . . . . 65
9.2 Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.3 Authorized Disclosure. . . . . . . . . . . . . . . . . . . . 65
9.4 Termination of Prior Agreements. . . . . . . . . . . . . . . 66
9.5 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.6 Publications . . . . . . . . . . . . . . . . . . . . . . . . 66
10. TERM AND TERMINATION . . . . . . . . . . . . . . . . . 67
10.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.2 Termination for Material Breach. . . . . . . . . . . . . . . 67
10.3 Effect of Termination; Survival. . . . . . . . . . . . . . . 68
11. REPRESENTATIONS AND COVENANTS. . . . . . . . . . . . . . 69
11.1 Mutual Authority . . . . . . . . . . . . . . . . . . . . . . 69
11.2 Rights in Technology . . . . . . . . . . . . . . . . . . . . 69
11.3 Performance by Affiliates. . . . . . . . . . . . . . . . . . 69
11.4 Third Party Rights . . . . . . . . . . . . . . . . . . . . . 69
11.5 Notice of Infringement or Misappropriation . . . . . . . . . 70
12. INDEMNIFICATION AND LIMITATION OF LIABILITY. . . . . . . 70
12.1 Mutual Indemnification . . . . . . . . . . . . . . . . . . . 70
12.2 Indemnification by BMS . . . . . . . . . . . . . . . . . . . 70
12.3 Indemnification by Exelixis. . . . . . . . . . . . . . . . . 70
12.4 Conditions to Indemnification. . . . . . . . . . . . . . . . 71
12.5 Limitation of Liability. . . . . . . . . . . . . . . . . . . 71
12.6 Collaboration Disclaimer . . . . . . . . . . . . . . . . . . 72
13. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . 72
13.1 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . 72
13.2 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 73
13.3 Patents and Trademarks . . . . . . . . . . . . . . . . . . . 73
13.4 Entire Agreement; Amendment. . . . . . . . . . . . . . . . . 73
13.5 Export Control . . . . . . . . . . . . . . . . . . . . . . . 73
13.6 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . 73
13.7 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . 74
13.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 75
13.9 Consents Not Unreasonably Withheld or Delayed. . . . . . . . 75
13.10 Maintenance of Records . . . . . . . . . . . . . . . . . . 75
13.11 United States Dollars. . . . . . . . . . . . . . . . . . . 76
13.12 No Strict Construction . . . . . . . . . . . . . . . . . . 76
13.13 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 76
13.14 Electronic Data Interchange . . . . . . . . . . . . . . . . 76
13.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 76
13.16 Further Actions. . . . . . . . . . . . . . . . . . . . . . 76
13.17 Severability . . . . . . . . . . . . . . . . . . . . . . . 76
13.18 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 76
13.19 No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . 76
Exhibit 1.25 . . . . . . . . . . . . . . . . . . . . . . 1
Exhibit 1.28 . . . . . . . . . . . . . . . . . . . . . . 1
Exhibit 5.1(a)(vii). . . . . . . . . . . . . . . . . . . 1
Exhibit 5.3(d) . . . . . . . . . . . . . . . . . . . . . 1
Exhibit 9.5. . . . . . . . . . . . . . . . . . . . . . . . 1
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
EXHIBIT 10.31
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made and entered into as of
July 17, 2001 (the "Effective Date") by and between EXELIXIS, INC., a Delaware
corporation having its principal place of business at 170 Harbor Way, P.O. Box
511, South San Francisco, California 94083 ("Exelixis"), and BRISTOL-MYERS
SQUIBB COMPANY, a Delaware corporation having its principal place of business at
Route 206 and Province Line Road, Princeton, NJ 08543 ("BMS"). Exelixis and BMS
are sometimes referred to herein individually as a "Party" and collectively as
the "Parties."
BACKGROUND
A. BMS is the owner of the compound Rebeccamycin (as defined below); and
B. As part of the consideration for the Cancer Collaboration Agreement
between BMS and Exelixis dated July 17, 2001 ("CCA"), and the Stock Purchase
Agreement between BMS and Exelixis dated July 17, 2001, BMS desires to grant to
Exelixis, and Exelixis desires to receive, a license to develop and
commercialize Rebeccamycin based on the terms and conditions set forth below.
NOW THEREFORE, BMS and Exelixis agree as follows:
1. DEFINITIONS
The following terms shall have the following meanings as used in this Agreement:
1.1 "AFFILIATE" means, with respect to a particular Party, a person,
corporation, partnership, or other entity that controls, is controlled by or is
under common control with such Party. For the purposes of the definition in
this Section 1.1, the word "control" (including, with correlative meaning, the
terms "controlled by" or "under the common control with") means the actual
power, either directly or indirectly through one or more intermediaries, to
direct or cause the direction of the management and policies of such entity,
whether by the ownership of at least fifty percent (50%) of the voting stock of
such entity, or by contract or otherwise.
1.2 "BMS KNOW-HOW" means all Information Controlled by BMS or its
Affiliates as of the Effective Date that relates to Rebeccamycin or to its
manufacture or use, including without limitation: (i) cell lines, including
without limitation [ * ], and related media; (ii) technical data; (iii)
preclinical data; (iv) protocols and clinical trial information; (v) methods of
manufacturing; (vi) quality assurance and stability data; (vii) all adverse
events data; and (viii) regulatory filings. For sake of clarity, no trademarks
or tradenames Controlled by BMS are included in the BMS Know-How.
1.3 "BMS PATENT RIGHTS" means (i) the Listed Patent Rights, (ii) all other
United States and foreign patents and patent applications Controlled by BMS or
its Affiliates as of the Effective Date that would be infringed by the
manufacture, importation, use, offer for sale or sale of Rebeccamycin by an
unlicensed Third Party, and (iii) all continuations, divisions, reissues,
extensions, substitutions, re-examinations, patents of addition, supplementary
protection certificates and foreign equivalents of the patents and patent
applications described in (ii).
1.4 "CONTROL" or "CONTROLLED" means, with respect to any material,
particular item of Information or intellectual property right, (i) that the
Party owns and has the ability to grant to the other Party the licenses to such
item provided for herein, without violating the terms of any agreement or other
arrangement with any Third Party, and/or (ii) that the Party has a license to
such item and has the ability to grant to the other Party the licenses to such
item provided for herein, without violating the terms of any agreement or other
arrangement with any Third Party.
1.5 "IND" means an Investigational New Drug application, as defined in the
U.S. Food, Drug and Cosmetics Act and the regulations promulgated thereunder, or
any corresponding or equivalent foreign application, registration or
certification.
1.6 "INFORMATION" means information, material, results and data of any type
whatsoever, in any tangible or intangible form whatsoever, including without
limitation, databases, inventions, practices, methods, techniques,
specifications, formulations, formulae, cell lines, cell media, knowledge,
know-how, skill, experience, manufacturing materials, financial data, test data
including pharmacological, biological, chemical, biochemical, toxicological and
clinical test data, analytical and quality control data, quality assurance data,
stability data, studies and procedures, and patent and other legal information
or descriptions.
1.7 "LISTED PATENT RIGHTS" means (i) the patents and patent applications
listed in Exhibit 1.7 and (ii) all continuations, continuations-in-part,
divisions, reissues, extensions, substitutions, re-examinations, patents of
addition, supplementary protection certificates and foreign equivalents of such
patents and patent applications.
1.8 "PRODUCT" means (i) Rebeccamycin, (ii) any product containing or
comprising Rebeccamycin, and (iii) any formulation of (i) or (ii).
1.9 "REBECCAMYCIN" means the rebeccamycin analog compound known as
BMY-027557, with the CAS Identification No. CAS-119673-08-4 and CAS nomenclature
1 anosyl)-5H-indolo[2,3-a]pyrrolo[3,4-c]carbazole-5,7(6H)-dione.
1.10 "THIRD PARTY" means any person or entity other than Exelixis, BMS or
an Affiliate of Exelixis or BMS.
2. LICENSES AND OBLIGATIONS
2.1 LICENSES TO EXELIXIS.
2.1.1 EXCLUSIVE LICENSE. BMS hereby grants to Exelixis a worldwide,
exclusive, irrevocable (except as provided in Section 7.5), Exelixis, fully
paid, royalty-free license (with the right to sublicense), under BMS Patent
Rights and BMS Know-How, to make, have made, use, develop, test, sell, offer for
sale and import Products. For clarity, the foregoing license excludes those BMS
Patent Rights and BMS Know-How which are licensed to Exelixis under Section
2.1.2.
2.1.2 NON-EXCLUSIVE LICENSE. BMS hereby grants to Exelixis a
worldwide, non-exclusive, irrevocable, fully paid, royalty-free license (with
the right to sublicense), under (i) the BMS Patent Rights described in Sections
1.3(ii) and (iii) to which BMS only has non-exclusive rights, and (ii) the BMS
Know-How to which BMS only has non-exclusive rights, to make, have made, use,
develop, test, sell, offer for sale and import Products.
2.2 LICENSE TO BMS. Exelixis hereby grants to BMS and its Affiliates a
worldwide, non-exclusive, fully paid, royalty-free license, under BMS Patent
Rights and BMS Know-How, to make, have made, use, and test Rebeccamycin solely
for internal pre-clinical research purposes (x) to profile or test the activity
of compounds other than Rebeccamycin or (y) to synthesize compounds that are not
Rebeccamycin.
2.3 NEGATIVE COVENANTS. Except as provided in Section 2.2, BMS and/or its
Affiliates shall not (itself or directly or indirectly with a Third Party) make,
have made, use, develop, test, sell, offer for sale and import Products during
the term of this Agreement.
2.4 TRANSFER OF BMS KNOW-HOW.
2.4.1 Within [ * ] of the Effective Date, BMS shall (i) commence and
use commercially reasonable efforts thereafter to disclose to Exelixis in an
orderly fashion as promptly as reasonably practicable all BMS Know-How that is
in the possession of BMS or its Affiliates, and (ii) commence and use
commercially reasonable efforts thereafter to transfer to Exelixis in an orderly
fashion as promptly as reasonably practicable all such BMS Know-How that relates
to Rebeccamycin; provided, that the foregoing shall not apply to BMS
manufacturing Know-How, which BMS shall be obliged to disclose pursuant to
Section 2.6. The Parties agree and acknowledge that BMS may retain one or more
copies of BMS Know-How that also pertain to compounds other than Rebeccamycin
and may use such BMS Know-How for purposes outside the scope of the license
granted in Section 2.1.1 or within the scope of the license granted in Section
2.2. [ * ] shall bear its own expenses in connection with this Section 2.4.1;
provided, that Exelixis shall reimburse BMS for [ * ].
2.4.2 [ * ], during normal business hours, BMS shall at reasonable
times permit Exelixis and its representatives to have full and complete access
to all contracts, data and records relating to Rebeccamycin in BMS' possession,
and BMS shall provide Exelixis and its representatives an opportunity to meet
and discuss with the individuals who have material knowledge pertaining to such
Rebeccamycin contracts, data and records and who are officers and employees of
BMS and its Affiliates.
2.5 CLINICAL TRIAL DEVELOPMENT.
2.5.1 [ * ], BMS shall use commercially reasonable efforts to provide,
over a mutually agreed time frame, reasonable assistance to Exelixis with
respect to: (i) the design of clinical trials for Products; (ii) the selection
of investigators and end points for clinical trials of Products; (iii) the
selection of contract research organizations for clinical trials of Products;
and (iv) providing access to multinational cooperative study groups for clinical
trials of Products. It is understood that such assistance will generally be
provided through a monthly teleconference scheduled at mutually convenient
times. No travel, other than to NCI Steering Committee meetings where
reasonably necessary, shall be required of BMS without its prior consent. [ * ]
shall bear its own expenses in connection with this Section 2.5.1; provided,
that Exelixis shall reimburse BMS for [ * ]. [ * ], BMS shall promptly provide
to Exelixis any notices or other communications regarding Third Party claims
arising from clinical trials based on use of the Products prior to the Effective
Date.
2.5.2 Subject to the consent of the National Cancer Institute ("NCI"),
BMS hereby assigns to Exelixis, and Exelixis agrees to accept such assignment
of, all of BMS' rights, obligations and interests in and under the "Agreement
Between Pharmaceutical Industry and the Division of Cancer Treatment, NCI for
the Clinical Development of Diethylaminorebeccamycin" between BMS and NCI dated
December 20, 1993 (the "NCI Agreement"). [ * ], BMS shall send the NCI a letter
that informs NCI of the license between BMS and Exelixis and that requests NCI
to send a letter assigning to Exelixis all of BMS' rights, obligations and
interests in and under the NCI Agreement. [ * ], BMS: (i) use commercially
reasonable efforts to facilitate the assignment to Exelixis of all of BMS'
rights, obligations and interests in and under the NCI Agreement; and agrees to
(ii) request that NCI perform whatever actions are needed to give Exelixis (A)
the right to review NCI's clinical trial data relating to Products, including
without limitation the amending of NCI's informed consents regarding clinical
trials of Products, (B) the right to cross-reference NCI's IND for Rebeccamycin,
and (C) the ability to formulate Rebeccamycin using formulation technology
developed or used by NCI pursuant to its work on Rebeccamycin. [ * ] shall bear
its own expenses in connection with this Section 2.5.2; provided, that Exelixis
shall reimburse BMS for [ * ].
2.5.3 Effective upon the date on which BMS' interest in the NCI
Agreement is assigned to Exelixis and consented to by NCI (the "Assignment
Date")
(A) BMS shall retain all liability for its failure to fulfill any
obligations under the NCI Agreement that accrued prior to the Assignment Date.
(B) Exelixis shall assume all liability for (i) its failure to
fulfill any obligations under the NCI Agreement that accrued after to the
Assignment Date, and (ii) any loss, claim, damage or liability resulting from
Exelixis' activities under the NCI Agreement after to the Assignment Date.
Following the Assignment Date, Exelixis covenants and agrees to perform and
fully discharge in a timely manner all obligations under the NCI Agreement.
2.5.4 Following the Effective Date of this Agreement the Assignment
Date: (x) BMS covenants and agrees to perform and fully discharge in until a
timely manner all obligations required of it under the NCI Agreement; and (y)
Exelixis shall assume all liability for any loss, claim, damage or liability
resulting from BMS' activities under the NCI Agreement after to the Assignment
Date, except to the extent attributable to a breach by BMS of its obligations in
(x).
2.6 IDENTIFICATION OF MANUFACTURER. [ * ], BMS shall (i) recommend to
Exelixis candidates for a Third Party manufacturer for the supply of
Rebeccamycin to Exelixis, and (ii) disclose a sufficient amount of BMS Know-How
related to the manufacture of Rebeccamycin to enable Exelixis to select a Third
Party manufacturer for the supply of Rebeccamycin to Exelixis. At the request
of Exelixis, BMS shall, subject to the execution by a Third Party manufacturer
of an appropriate license and confidentiality agreement with Exelixis, promptly
transfer to such Third Party manufacturer chosen by Exelixis all useful BMS
Know-How that relates to the manufacture of Rebeccamycin and advise such Third
Party manufacturer concerning the manufacture of Rebeccamycin. [ * ] shall bear
its own expenses in connection with this Section 2.6; provided, that Exelixis
shall reimburse BMS for [ * ]. It is not expected that BMS will be required to
provide on-site advice in connection with the foregoing, and provision of advice
by BMS with respect to its manufacturing Know-How shall not require BMS to
provide on-site support, unless BMS agrees to same in advance and is reimbursed
for its [ * ]. If Exelixis requests BMS to transfer BMS Know-How concerning the
manufacture of Rebeccamycin to one other Third Party manufacturer in addition to
the Third Party manufacturer described above in this Section 2.6, then BMS shall
transfer such BMS Know-How to such additional Third Party Manufacturer provided
that [ * ].
2.7 NON-SOLICITATION AND NON-HIRE. For [ * ], Exelixis will not, without
the prior written consent of BMS: [ * ] Nothing in this Section 2.7 shall
prohibit a general solicitation made by newspaper or other media.
3. CONFIDENTIALITY
3.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. For all purposes
hereunder, "Confidential Information" shall mean all Information disclosed by
one Party to the other Party (i) prior to the Effective Date and relating to
Rebeccamycin or Products, or (ii) pursuant to this Agreement. The Parties agree
that for a period of [ * ] after a disclosure of an item of Confidential
Information is made hereunder, a Party receiving such item of Confidential
Information of the other Party will (i) use commercially reasonable efforts to
maintain in confidence such item of Confidential Information (but not less than
those efforts as such Party uses to maintain in confidence its own proprietary
industrial information of similar kind and value) and not to disclose such item
of Confidential Information to any Third Party without prior written consent of
the other Party, except for disclosures made in confidence to any Third Party
under terms consistent with this Agreement and made in furtherance of this
Agreement or of rights granted to a Party hereunder, and (ii) not use such other
Party's Confidential Information for any purpose except those permitted by this
Agreement.
3.2 EXCEPTIONS. The obligations in Section 3.1 shall not apply with respect
to any portion of the Confidential Information that the receiving Party can show
by competent written proof:
(A) Is publicly disclosed by the disclosing Party, either before or
after it is disclosed to the receiving Party hereunder; or
(B) Was known to the receiving Party or any of its Affiliates, without
obligation to keep it confidential, prior to disclosure by the disclosing Party;
or
(C) Is subsequently disclosed to the receiving Party or any of its
Affiliates by a Third Party lawfully in possession thereof and without
obligation to keep it confidential; or
(D) Is published by a Third Party or otherwise becomes publicly
available or enters the public domain, either before or after it is disclosed to
the receiving Party; or
(E) Has been independently developed by employees or contractors of
the receiving Party or any of its Affiliates without the aid, application or use
of Confidential Information.
3.3 AUTHORIZED DISCLOSURE. A Party may disclose the Confidential
Information belonging to the other Party to the extent such disclosure is
reasonably necessary in the following instances:
(A) Filing or prosecuting patents relating to Products;
(B) Regulatory filings;
(C) Prosecuting or defending litigation;
(D) Complying with applicable governmental regulations; and
(E) Disclosure, in connection with the performance of this Agreement,
to Affiliates, sublicensees, research collaborators, employees, consultants, or
agents, each of whom prior to disclosure must be bound by similar obligations of
confidentiality and non-use at least equivalent in scope to those set forth in
this Article 3. The Parties acknowledge that the terms of this Agreement shall
be treated as Confidential Information of both Parties. Such terms may be
disclosed by a Party to investment bankers, investors, and potential investors,
each of whom prior to disclosure must be bound by similar obligations of
confidentiality and non-use at least equivalent in scope to those set forth in
this Article 3. In addition, a copy of this Agreement may be filed by Exelixis
with the Securities and Exchange Commission in connection with any public
offering of Exelixis securities. In connection with any such filing, Exelixis
shall endeavor to obtain confidential treatment of economic and trade secret
information. In any event, the Parties agree to take all reasonable action to
avoid disclosure of Confidential Information except as permitted hereunder.
4. REPRESENTATIONS AND WARRANTIES
4.1 MUTUAL WARRANTIES. Exelixis and BMS each represents and warrants
to the other that (i) it has the authority and right to enter into and perform
this Agreement, (ii) this Agreement is a legal and valid obligation binding upon
it and is enforceable in accordance with its terms, subject to applicable
limitations on such enforcement based on bankruptcy laws and other debtors'
rights, and (iii) its execution, delivery and performance of this Agreement will
not conflict in any material fashion with the terms of any other agreement or
instrument to which it is or becomes a party or by which it is or becomes bound,
nor violate any law or regulation of any court, governmental body or
administrative or other agency having authority over it.
4.2 BMS WARRANTIES. BMS represents and warrants to Exelixis as of the
Effective Date that
4.2.1 BMS has the full right and power to grant the licenses set forth
in Section 2.1 in the manner and to the extent set forth in this Agreement
(including Exelixis' right to further sublicense), free and clear of any adverse
assignment, grant or other encumbrances inconsistent with such grant;
4.2.2 The individuals listed on Exhibit 4.2 are the individuals
employed by BMS who would be reasonably likely to have the most current
knowledge within BMS with respect to manufacture and clinical development, and
intellectual property issues, related to Rebeccamycin and Products and the
carrying out of the NCI Agreement;
4.2.3 To the knowledge of the BMS individuals listed on Exhibit 4.2:
(a) BMS and its Affiliates have not infringed any issued patents within the
United States of any Third Party or misappropriated any trade secrets of any
Third Party with respect to the manufacture (to the extent manufactured or
formulated by BMS) of, or the use in the treatment of cancer of, (i)
Rebeccamycin, or (ii) the Product being tested in human clinical trials; (b) BMS
has not entered into any agreement with any Third Party pursuant to which
royalties would be owed to such Third Party with respect to the manufacture, use
or sale of Rebeccamycin; and (c) neither BMS nor an Affiliate has received any
written notice or other written communication alleging that Rebeccamycin
infringes or misappropriates the intellectual property rights of a Third Party;
4.2.4 BMS owns all right, title and interest to the patents and patent
applications listed in Exhibit 1.7 and, to the knowledge of the individuals
listed on Exhibit 4.2, all inventors of the inventions claimed in each patent or
patent application are identified on such patent or patent application;
4.2.5 BMS has provided Exelixis with complete copies of all summaries
provided by NCI to BMS of clinical trial data relating to Products;
4.2.6 There are no regulatory filings in the U.S. or abroad with
respect to Rebeccamycin that are Controlled by BMS or its Affiliates; and
4.2.7 To the knowledge of the BMS individuals listed on Exhibit 4.2,
NCI does not Control any patents or patent application that claim (i) methods of
formulating Rebeccamycin, or (ii) Rebeccamycin formulations. For clarity, the
representations and warranties concerning intellectual property rights under
Sections 4.2.3, 4.2.4, and 4.2.7 do not create, and shall not be interpreting as
requiring an obligation for BMS to perform any additional patent searches at any
time prior to the Effective Date other than those already made by BMS in the
ordinary course of its business
4.3 NO ADDITIONAL REPRESENTATIONS.
4.3.1 Exelixis acknowledges that, upon completion of the activities
described in Section 2.4.2, it and its representatives will have been permitted
full and complete access to the contracts, data and records relating to
Rebeccamycin that it has desired or requested to see or review, and that it and
its representatives will have had a opportunity to meet with the officers and
employees of BMS and its Affiliates to discuss Rebeccamycin. For the avoidance
of doubt, Exelixis' access to such information and its opportunity to meet with
such personnel shall not limit its right to make a claim for indemnification
under Article 6.
4.3.2 Exelixis acknowledges that BMS, its Affiliates, and its and
their directors, officers, employees, agents or contractors have not made any
representation or warranty, expressed or implied, as to the accuracy or
completeness of any information regarding Rebeccamycin and its development or
commercialization, as currently conducted or planned, except as expressly set
forth in this Agreement. BMS, its Affiliates, and its and their directors,
officers, employees, agents or contractors shall not have or be subject to any
liability to Exelixis or any other Person resulting from the provision to
Exelixis, or Exelixis' use of, any such information, documents or material made
available to Exelixis in any "data rooms", management presentations or in any
other form in expectation of the transactions contemplated hereby except to the
extent such information, documents or materials is included in the
representations or warranties of BMS expressly set forth in Article 4 of this
Agreement, provided that all such information, documents or material be made
available in their original state, without redaction or alteration.
4.3.3 Except as expressly set forth in the representations and
warranties set forth in Sections 4.1 and 4.2 of this Agreement, (i) there are no
representations or warranties by BMS of any kind, express or implied, with
respect to Rebeccamycin (including without limitation its research, development
or commercialization), (ii) Exelixis is taking the license rights granted
hereunder "as is", "where is" and "with all faults" (except for the liabilities
retained by BMS pursuant to Section 2.5.3(a)), and (iii) BMS NEITHER MAKES OR
EXTENDS ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY, INCLUDING
WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR OF
FITNESS FOR A PARTICULAR PURPOSE OR USE OF ANY PRODUCT OR ANY REPRESENTATIONS OR
WARRANTIES WITH RESPECT TO INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY
RIGHTS BY REASON OF THE MANUFACTURE, USE OR SALE OF ANY PRODUCT.
4.4 SURVIVAL OF REPRESENTATIONS. The representations and warranties
contained in this Agreement (including the Schedules) and in any other document
delivered in connection herewith shall survive solely for purposes of Article 6
hereof and shall terminate at the third anniversary of the Effective Date.
5. PATENT RIGHTS
5.1 PATENT PROSECUTION, MAINTENANCE AND ENFORCEMENT.
5.1.1 PATENT PROSECUTION AND MAINTENANCE. Exelixis shall have the
first right to control, at its expense and in its sole discretion, the
preparation, filing, prosecution and maintenance of the Listed Patent Rights and
for conducting any interferences, reexaminations, reissues, oppositions, or
request for patent term extension relating thereto. At the reasonable request
of Exelixis, BMS shall provide reasonable assistance to Exelixis in matters
pertaining to the preparation, filing, prosecution and maintenance of the Listed
Patent Rights, including without limitation any interferences, reexaminations,
reissues, oppositions, or request for patent term extension relating thereto,
and [ * ]. If Exelixis elects not to maintain or enforce any Listed Patent
Right and so notifies BMS, then BMS may maintain or enforce such Listed Patents
Right at its own expense, in its own name and entirely under its own direction
and control.
5.1.2 ENFORCEMENT OF PATENT RIGHTS BY EXELIXIS. If either Party
becomes aware of a suspected infringement of the Listed Patent Rights, such
Party shall notify the other Party promptly, and following such notification,
the Parties shall confer. Exelixis shall have the right, but shall not be
obligated, to bring an infringement action at its own expense, in its own name,
and entirely under its own direction and control. BMS will reasonably assist
Exelixis [ * ] in such actions or proceedings if so requested, and will lend its
name to such actions or proceedings if required by law in order for Exelixis to
bring such action. BMS shall have the right to participate and be represented in
any such suit by its own counsel at its own expense. No settlement of any such
action or defense which restricts the scope or affects the enforceability of
Listed Patent Rights may be entered into by Exelixis without the prior consent
of BMS, which consent shall not be unreasonably withheld.
5.1.3 ENFORCEMENT OF PATENT RIGHTS BY BMS. If Exelixis elects not to
bring any action for infringement described in Section 5.1.2 and so notifies
BMS, then, BMS may bring such action or defend such proceeding at its own
expense, in its own name, and entirely under its own direction and control.
Exelixis will reasonably assist BMS [ * ] in any action or proceeding being
prosecuted or defended by BMS, if so requested by BMS or required by law.
Exelixis shall have the right to participate and be represented in any such suit
by its own counsel at its own expense. No settlement of any such action or
defense which restricts the scope or affects the enforceability of Listed Patent
Rights may be entered into by BMS without the prior consent of Exelixis, which
consent shall not be unreasonably withheld
5.2 INFRINGEMENT CLAIMS. If an allegation is made or claim is brought
by a Third Party that any activity related to a Product infringes the
intellectual property rights of such Third Party, each Party will give prompt
written notice to the other Party of such claim.
6. INDEMNIFICATION
6.1 BMS. BMS shall indemnify, defend and hold harmless Exelixis, its
Affiliates, and their respective directors, officers and employees (each an
"Exelixis Indemnitee") from and against any and all liabilities, damages,
losses, costs or expenses (including attorneys' and professional fees and other
expenses of litigation and/or arbitration) ("Liabilities") resulting from a
claim, suit or proceeding made or brought by a Third Party against an Exelixis
Indemnitee arising from or occurring as a result of (i) any breach of the
representations and warranties set forth in Section 4.1 or 4.2, (ii) any claims
based on injury to a Third Party (including death) arising from the manufacture
of Products by BMS and their use prior to the Effective Date, and (iii) any
liability retained by BMS pursuant to Section 2.5.3(a), except to the extent
that Liabilities resulting from (i), (ii), or (iii) were caused by the gross
negligence or willful misconduct of Exelixis.
6.2 EXELIXIS. Exelixis shall indemnify, defend and hold harmless BMS, its
Affiliates, and their respective directors, officers and employees (each a "BMS
Indemnitee") from and against any and all Liabilities resulting from a claim,
suit or proceeding made or brought by a Third Party against a BMS Indemnitee,
arising from or occurring as a result of (i) any breach of the representations
and warranties set forth in Section 4.1, (ii) subject to Section 6.1, any
research, development, marketing, sale, promotion, and other commercialization
activities related to any Products by or for Exelixis or its licensees after the
Effective Date, (iii) the manufacture of any Products by or for Exelixis or its
licensees after the Effective Date or the use of any Products after the
Effective Date by any person or entity, and (iv) any liability retained by
Exelixis pursuant to Section 2.5.3(b), except to the extent that Liabilities
resulting from (i), (ii), (iii) or (iv) were caused by the gross negligence or
willful misconduct of BMS.
6.3 PROCEDURE. In the event that a Party indemnified hereunder (an
"Indemnitee") intends to claim indemnification under this Article 6, such
Indemnitee shall promptly notify the other Party (the "Indemnitor") in writing
of such alleged Liability. The Indemnitor shall have the sole right to control
the defense and settlement thereof. The Indemnitees shall cooperate with the
Indemnitor and its legal representatives in the investigation of any action,
claim or liability covered by this Article 6. The Indemnitee shall not, except
at its own cost and risk, voluntarily make any payment or incur any expense with
respect to any claim or suit without the prior written consent of the
Indemnitor, which the Indemnitor shall not be required to give. The Indemnitor
shall not be required to provide indemnification with respect to a Liability the
defense of which is prejudiced by the failure to give notice by the Indemnitee
or the failure of the Indemnitee to cooperate with the Indemnitor or where the
Indemnitee settles or compromises a Liability without the written consent of the
Indemnitor. Each Party shall cooperate with each other in resolving any claim
or liability with respect to which one party is obligated to indemnify the other
under this Agreement, including without limitation, by making commercially
reasonable efforts to mitigate or resolve any such claim or liability
6.4 LIMITATIONS ON LIABILITY.
6.4.1 BMS and Exelixis each acknowledges and agrees that its sole and
exclusive remedy with respect to any and all claims and causes of action
relating to this Agreement (other than claims of, or causes of action arising
from, fraud or relating to breaches of covenants requiring performance after the
Effective Date) shall be pursuant to the indemnification provisions set forth in
this Article 6, the termination provisions as provided in Article 7 and/or,
where and to the extent permitted by applicable law, specific performance.
6.4.2 Notwithstanding any provision herein, a Party shall in no event be
liable to the other Party or its Affiliates, officers, directors, employees,
stockholders, agents or representatives for any indirect, consequential or
punitive damages (including, but not limited to, lost profits, loss of use,
damage to goodwill or loss of business), unless such damages (i) are owed under
the liable Party's indemnification obligations under Article 6, (ii) breach of
Article 3, or (iii) are due to the gross negligence or willful misconduct of the
liable Party.
7. TERM AND TERMINATION
7.1 TERM. The term of this Agreement shall commence on the Effective
Date and continue until the Agreement is terminated pursuant to Section 7.2.
7.2 MATERIAL BREACH. In the event one Party has materially breached in the
performance of any of its obligations hereunder, and such breach has continued
for [ * ] after written notice thereof was provided to the breaching Party by
the non-breaching Party, the non-breaching Party may terminate this Agreement.
Any termination shall become effective at the end of such [ * ] period unless
the breaching Party has cured any such breach prior to the expiration of the [ *
] period.
7.3 BANKRUPTCY.
7.3.1 All rights and licenses granted under or pursuant to this
Agreement, including amendments hereto, by each Party to the other Party are,
for all purposes of Section 365(n) of Title 11 of the U.S. Code ("Title 11"),
licenses of rights to intellectual property as defined in Title 11. Each Party
agrees during the term of this Agreement to create and maintain current copies
or, if not amenable to copying, detailed descriptions or other appropriate
embodiments, to the extent feasible, of all such intellectual property. If a
case is commenced by or against either Party (the "Bankrupt Party") under Title
11, then, unless and until this Agreement is rejected as provided in Title 11,
the Bankrupt Party (in any capacity, including debtor-in-possession) and its
successors and assigns (including, without limitation, a Title 11 Trustee)
shall, at the election of the Bankrupt Party made within 60 days after the
commencement of the case (or, if no such election is made, immediately upon the
request of the non-Bankrupt Party) either (i) perform all of the obligations
provided in this Agreement to be performed by the Bankrupt Party including,
where applicable and without limitation, providing to the non-Bankrupt Party
portions of such intellectual property (including embodiments thereof) held by
the Bankrupt Party and such successors and assigns or otherwise available to
them or (ii) provide to the non-Bankrupt Party all such intellectual property
(including all embodiments thereof) held by the Bankrupt Party and such
successors and assigns or otherwise available to them.
7.3.2 If a Title 11 case is commenced by or against the Bankrupt Party
and this Agreement is rejected as provided in Title 11 and the non-Bankrupt
Party elects to retain its rights hereunder as provided in Title 11, then the
Bankrupt Party (in any capacity, including debtor-in-possession) and its
successors and assigns (including, without limitations, a Title 11 Trustee)
shall provide to the non-Bankrupt Party all such intellectual property
(including all embodiments thereof) held by the Bankrupt Party and such
successors and assigns or otherwise available to them immediately upon the
non-Bankrupt Party's written request therefor. Whenever the Bankrupt Party or
any of its successors or assigns provides to the non-Bankrupt Party any of the
intellectual property licensed hereunder (or any embodiment thereof) pursuant to
this Section 7.3, the non-Bankrupt Party shall have the right to perform the
obligations of the Bankrupt Party hereunder with respect to such intellectual
property, but neither such provision nor such performance by the non-Bankrupt
Party shall release the Bankrupt Party from any such obligation or liability for
failing to perform it.
7.3.3 All rights, powers and remedies of the non-Bankrupt Party
provided herein are in addition to and not in substitution for any and all other
rights, powers and remedies now or hereafter existing at law or in equity
(including, without limitation, Title 11) in the event of the commencement of a
Title 11 case by or against the Bankrupt Party. The non-Bankrupt Party, in
addition to the rights, power and remedies expressly provided herein, shall be
entitled to exercise all other such rights and powers and resort to all other
such remedies as may now or hereafter exist at law or in equity (including,
without limitation, under Title 11) in such event. The Parties agree that they
intend the foregoing non-Bankrupt Party rights to extend to the maximum extent
permitted by law and any provisions of applicable contracts with Third Parties,
including without limitation for purposes of Title 11, (i) the right of access
to any intellectual property (including all embodiments thereof) of the Bankrupt
Party or any Third Party with whom the Bankrupt Party contracts to perform an
obligation of the Bankrupt Party under this Agreement, and, in the case of the
Third Party, which is necessary for the development, registration and
manufacture of licensed products and (ii) the right to contract directly with
any Third Party described in (i) in this sentence to complete the contracted
work. Any intellectual property provided pursuant to the provisions of this
Section 7.3 shall be subject to the licenses set forth elsewhere in this
Agreement and the payment obligations of this Agreement, which shall be deemed
to be royalties for purposes of Title 11.
7.4 EFFECT OF TERMINATION OR EXPIRATION. Termination or expiration of
this Agreement for any reason shall not release either Party hereto from any
liability which, at the time of such termination or expiration, has already
accrued to the other Party or which is attributable to a period prior to such
termination or expiration or 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, or default under, this Agreement. It is understood and agreed that monetary
damages may not be a sufficient remedy for any breach of this Agreement and that
the non-breaching Party may be entitled to specific performance as a partial
remedy for any such breach.
7.5 SURVIVAL. Articles 1, 3, 4 (where the Agreement is terminated by
Exelixis), 5, 6, and 8 and Sections 2.1 (except where terminated by BMS for
material breach under Section 7.2 by Exelixis of its obligations under Sections
2.5.3, 2.5.4, 2.7, or 6.2, breach of its representations and warranties under
Section 4.1), 2.6, 7.4, and 7.5 of this Agreement shall survive expiration or
termination of this Agreement for any reason.
8. MISCELLANEOUS
8.1 GOVERNING LAW. Resolution of all disputes arising out of or
related to this Agreement or the performance, enforcement, breach or termination
of this Agreement and any remedies relating thereto, shall be governed by and
construed under the substantive laws of the State of California, as applied to
agreements executed and performed entirely in the State of California by
residents of the State of California, without regard to conflicts of law rules;
provided, however, that resolution of all disputes arising out of or related to
the performance, enforcement or breach of Section 2.7 of this Agreement and any
remedies relating thereto shall be governed by and construed under the
substantive laws of the State of New York, as applied to agreements executed and
performed entirely in the State of New York by residents of the State of New
York, without regard to conflicts of law rules.
8.2 PATENTS. Any dispute, controversy or claim relating to the scope,
validity, enforceability or infringement of any BMS Patent Rights covering the
manufacture, use or sale of any Products shall be submitted to a court of
competent jurisdiction in the territory in which such Patent or trademark rights
were granted or arose.
8.3 CONSENTS NOT UNREASONABLY WITHHELD OR DELAYED. Whenever provision is
made in this Agreement for either Party to secure the consent or approval of the
other, that consent or approval shall not unreasonably be withheld or delayed,
and whenever in this Agreement provisions are made for one Party to object to or
disapprove a matter, such objection or disapproval shall not unreasonably be
exercised.
8.4 MAINTENANCE OF RECORDS. Each Party shall keep and maintain all records
required by law or regulation with respect to Products and shall make copies of
such records available to the other Party upon request.
8.5 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.
8.6 ASSIGNMENT. Neither Party may assign or transfer this Agreement or any
rights or obligations hereunder without the prior written consent of the other,
except a Party may make such an assignment without the other Party's consent to
an Affiliate or to a successor to substantially all of the business of such
Party, whether in a merger, sale of stock, sale of assets or other transaction;
provided, that any such permitted successor or assignee of rights and/or
obligations hereunder shall, in a writing to the other Party, expressly assume
performance of such rights and/or obligations. Any permitted assignment shall
be binding on the successors of the assigning Party. Any assignment or
attempted assignment by either Party in violation of the terms of this Section
8.6 shall be null and void and of no legal effect.
8.7 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Parties and their successors and permitted assigns.
8.8 NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement and
shall be deemed to have been sufficiently given for all purposes if mailed by
first class certified or registered mail, postage prepaid, express delivery
service or personally delivered. Unless otherwise specified in writing, the
mailing addresses of the Parties shall be as described below.
For Exelixis: Exelixis, Inc.
170 Harbor Way
P.O. Box 511
South San Francisco, CA 94083
Attention: Chief Executive Officer
With a copy to: Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Robert L. Jones, Esq.
For BMS: Bristol-Myers Squibb Pharmaceutical Research Institute
Route 206 and Province Line Road
Princeton, NJ 08543-4000
Attention: Senior Vice President - External Development
With a copy to: Bristol-Myers Squibb Pharmaceutical Research Institute
Route 206 and Province Line Road
Princeton, NJ 08543-4000
Attention: Vice President and Senior Counsel - BMSPRI
8.9 FORCE MAJEURE. Both Parties shall be excused from the performance
of their obligations under this Agreement to the extent that such performance is
prevented by force majeure and the nonperforming Party promptly provides notice
of the prevention to the other Party. Such excuse shall be continued so long as
the condition constituting force majeure continues and the nonperforming Party
takes reasonable efforts to remove the condition. For purposes of this
Agreement, force majeure shall include conditions beyond the control of the
Parties, including without limitation, an act of God, voluntary or involuntary
compliance with any regulation, law or order of any government, war, civil
commotion, labor strike or lock-out, epidemic, failure or default of public
utilities or common carriers, destruction of production facilities or materials
by fire, earthquake, storm or like catastrophe; provided, however, the payment
of invoices due and owing hereunder shall not be delayed by the payer because of
a force majeure affecting the payer.
8.10 ADVICE OF COUNSEL. BMS and Exelixis 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 shall be construed accordingly.
8.11 COMPLIANCE WITH LAWS. Subject to Article 3, Party shall use reasonable
efforts to furnish to the other Party any information reasonably requested or
required by that Party during the term of this Agreement or any extensions
hereof to enable that Party to comply with the requirements of any U.S. or
foreign federal, state and/or government agency that is consistent with the
license rights granted hereunder.
8.12 FURTHER ASSURANCES. At any time or from time to time on and after the
date of this Agreement, either Party shall at the request of the other Party
hereto (i) subject to the provisions of Article 3, deliver to the requesting
Party any records, data or other documents consistent with the provisions of
this Agreement, and (ii) execute, and deliver or cause to be delivered, all such
consents, documents or further instruments of transfer or license.
8.13 RETAINED RIGHTS; NO FURTHER RIGHTS. Only the licenses granted pursuant
to the express terms of this Agreement shall be of any legal force or effect.
No other license rights shall be granted or created by implication, estoppel or
otherwise.
8.14 SEVERABILITY. In the event that any provision of this Agreement is
determined to be invalid or unenforceable by a court of competent jurisdiction,
the remainder of the Agreement shall remain in full force and effect without
said provision. In such event, the Parties shall in good faith negotiate a
substitute clause for any provision declared invalid or unenforceable, which
shall most nearly approximate the intent of the Parties in entering this
Agreement.
8.15 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.
8.16 COMPLETE AGREEMENT. This Agreement, along with the CCA, the Stock
Purchase Agreement between BMS and Exelixis dated July 17, 2001, and the NCI
Agreement, 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, expressed or
implied, are superseded hereby, merged and 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 duly executed on behalf of both Parties. For clarity, the termination of
this Agreement does not affect in any way either the CCA or the Stock Purchase
Agreement between BMS and Exelixis dated July 17, 2001.
8.17 USE OF NAME. Except as required by law, neither Party shall use the
name or trademarks of the other Party without the prior written consent of such
other Party.
8.18 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 only and shall not affect its meaning or interpretation.
8.19 COUNTERPARTS. This Agreement may be executed in two (2) counterparts,
each of which shall be deemed an original and which together shall constitute
one instrument.
[Rest of Page Intentionally Left Blank]
IN WITNESS WHEREOF, BMS and Exelixis have executed this Agreement by their
respective duly authorized representatives as of the Effective Date.
BRISTOL-MYERS SQUIBB COMPANY EXELIXIS, INC.
By: /s/ Elliott Sigal By: /s/ Geoffrey Duyk
------------------------------------------ -------------------
Title: Sr. Vice President Drug Discovery Title: CSO
---------------------------------------- -------------------
& Exploratory Development
- ----------------------------------------------
Date: July 17, 2001 Date: 7/20/01
----------------- -------------------
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
EXHIBIT 1.7
PATENTS (BMY-027557 Rebaccamycin Analog)
COUNTRY DESIGNATION PATENT NUMBER EXPIRATION DATE
- -------------------- -------------- ----------------
United States
[ * ] 4,785,085 Nov. 21, 2006
- ------------------------------------------------- ------------- ---------------
United States
[ * ] 4,808,613 Nov. 21, 2006
- ------------------------------------------------- ------------- ---------------
Australia 614068 Nov. 12, 2007
- ------------------------------------------------- ------------- ---------------
Austria 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Belgium 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Canada 1287349 Aug. 6, 2008
- ------------------------------------------------- ------------- ---------------
China 23842 Nov. 20, 2002
- ------------------------------------------------- ------------- ---------------
Cyprus Republic 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Czech Republic 265248 Nov. 17, 2002
- ------------------------------------------------- ------------- ---------------
Denmark 165986 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
European Patent 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Finland 86189 Nov. 18, 2007
- ------------------------------------------------- ------------- ---------------
France 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Germany 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Great Britain 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Greece 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Hong Kong 490/1993 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Hungary 201773 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Ireland 60595 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Israel 84515 Nov. 18, 2007
- ------------------------------------------------- ------------- ---------------
Italy 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
South Korea 42361 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Luxembourg 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Malaysia MY102722A Sept.30, 2007
- ------------------------------------------------- ------------- ---------------
Mexico 181199 Nov. 21, 2006
- ------------------------------------------------- ------------- ---------------
Netherlands 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
New Zealand 222544 Nov. 13, 2007
- ------------------------------------------------- ------------- ---------------
Norway 167741 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Portugal 86188 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Singapore 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
South Africa 87/8714 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Spain 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Sweden 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Switzerland 0269025 Nov. 20, 2007
- ------------------------------------------------- ------------- ---------------
Taiwan 049467 Nov. 18, 2005
- ------------------------------------------------- ------------- ---------------
PATENTS (BMY-027557 REBECCAMYCIN ANALOG SOLUTION)
COUNTRY DESIGNATION PATENT NUMBER EXPIRATION DATE
- ------------------------------------------------- ------------- ---------------
United States
[ * ] 5,496,809 March 5, 2013
- ------------------------------------------------- ------------- ---------------
Australia 618896 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Austria 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Belgium 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Canada 2015632 Apr. 27, 2010
- ------------------------------------------------- ------------- ---------------
China 90102658 May 9, 2005
- ------------------------------------------------- ------------- ---------------
Czech Republic 283416 May 7, 2010
- ------------------------------------------------- ------------- ---------------
Denmark 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
European Patent 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Finland 95777 May 7, 2010
- ------------------------------------------------- ------------- ---------------
France 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Germany 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Great Britain 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Greece 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Hong Kong 1005033A May 9, 2010
- ------------------------------------------------- ------------- ---------------
Hungary 206627 May 10, 2010
- ------------------------------------------------- ------------- ---------------
Ireland 66515 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Israel 94312 May 7, 2010
- ------------------------------------------------- ------------- ---------------
Italy 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Japan 1918587 May 9, 2010
- ------------------------------------------------- ------------- ---------------
South Korea 054248 May 8, 2010
- ------------------------------------------------- ------------- ---------------
Liechtenstein 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Luxembourg 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Malaysia MY105696 Nov. 30, 2009
- ------------------------------------------------- ------------- ---------------
Netherlands 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
New Zealand 233512 May 1, 2010
- ------------------------------------------------- ------------- ---------------
Norway 176390 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Portugal 93991 Sep. 2, 2011
- ------------------------------------------------- ------------- ---------------
Russian Fed 2053766 May 8, 2010
- ------------------------------------------------- ------------- ---------------
South Africa 90/3535 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Spain 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Sweden 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Switzerland 0397147 May 9, 2010
- ------------------------------------------------- ------------- ---------------
Taiwan 061465 Mar. 20, 2008
- ------------------------------------------------- ------------- ---------------
2.
1.
EXHIBIT 4.2
INDIVIDUALS
[ * ]
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
TABLE OF CONTENTS
PAGE
1. Definitions . . . . . . . . . . . . . . . . . . 1
2. Licenses And Obligations. . . . . . . . . . . . 2
2.1 Licenses to Exelixis. . . . . . . . . . . . . . 2
2.2 License to BMS. . . . . . . . . . . . . . . . . 3
2.3 Negative Covenants. . . . . . . . . . . . . . . 3
2.4 Transfer of BMS Know-How. . . . . . . . . . . . 3
2.5 Clinical Trial Development. . . . . . . . . . . 3
2.6 Identification of Manufacturer. . . . . . . . . 5
2.7 Non-solicitation and Non-hire . . . . . . . . . 5
3. Confidentiality . . . . . . . . . . . . . . . . 6
3.1 Nondisclosure of Confidential Information . . . 6
3.2 Exceptions. . . . . . . . . . . . . . . . . . . 6
3.3 Authorized Disclosure . . . . . . . . . . . . . 6
4. Representations And Warranties. . . . . . . . . 7
4.1 Mutual Warranties . . . . . . . . . . . . . . . 7
4.2 BMS Warranties. . . . . . . . . . . . . . . . . 7
4.3 No Additional Representations . . . . . . . . . 8
4.4 Survival of Representations . . . . . . . . . . 9
5. Patent Rights . . . . . . . . . . . . . . . . . 9
5.1 Patent Prosecution, Maintenance and Enforcement.. 9
5.2 Infringement Claims . . . . . . . . . . . . . . 10
6. Indemnification . . . . . . . . . . . . . . . . 10
6.1 BMS . . . . . . . . . . . . . . . . . . . . . . 10
6.2 Exelixis. . . . . . . . . . . . . . . . . . . . 10
6.3 Procedure . . . . . . . . . . . . . . . . . . . 10
6.4 Limitations on Liability. . . . . . . . . . . . 11
7. Term And Termination. . . . . . . . . . . . . . 11
7.1 Term. . . . . . . . . . . . . . . . . . . . . . 11
7.2 Material Breach . . . . . . . . . . . . . . . . 11
7.3 Bankruptcy. . . . . . . . . . . . . . . . . . . 11
7.4 Effect of Termination or Expiration . . . . . . 12
7.5 Survival. . . . . . . . . . . . . . . . . . . . 13
8. Miscellaneous . . . . . . . . . . . . . . . . . 13
8.1 Governing Law . . . . . . . . . . . . . . . . . 13
8.2 Patents . . . . . . . . . . . . . . . . . . . . 13
8.3 Consents Not Unreasonably Withheld or Delayed . 13
8.4 Maintenance of Records. . . . . . . . . . . . . 13
8.5 Independent Contractors . . . . . . . . . . . . 13
8.6 Assignment. . . . . . . . . . . . . . . . . . . 13
8.7 Binding Effect. . . . . . . . . . . . . . . . . 14
8.8 Notices . . . . . . . . . . . . . . . . . . . . 14
8.9 Force Majeure . . . . . . . . . . . . . . . . . 14
8.11 Compliance with Laws. . . . . . . . . . . . . . 15
8.12 Further Assurances. . . . . . . . . . . . . . . 15
8.13 Retained Rights; No Further Rights. . . . . . . 15
8.14 Severability. . . . . . . . . . . . . . . . . . 15
8.15 Waiver. . . . . . . . . . . . . . . . . . . . . 15
8.16 Complete Agreement. . . . . . . . . . . . . . . 15
8.17 Use of Name . . . . . . . . . . . . . . . . . . 15
8.18 Headings. . . . . . . . . . . . . . . . . . . . 15
8.19 Counterparts. . . . . . . . . . . . . . . . . . 16
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.